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Market Update

Calm Returns to World Markets, Brazil in Recession


Author: Nichole Harper
ticker.com
Last Update: 7:46 PM ET August 28 2015

5:25 PM New York City, New York – Calm returned to world financial markets after seven days of volatile trading that saw major indexes swing wildly and plunge as much as 10%. Crude oil jumped for the second day in a row. Brazil entered technical recession after second quarterly contraction.

Stocks and market indexes struggled on Wall Street after calm returned to financial markets around the world.

Indexes on Wall Street and in Europe lacked direction of three days of rebound following wild swings in six previous sessions. Crude oil extended 2-day gains and commodities generally traded higher.

On the economic front, the U.S. personal income in July increased 0.4% and disposable personal income rose 0.5%. Personal consumption expenditure grew 0.3% in the month, the Department of Commerce said.

On Wall Street, Tollbooth Strategy Index slid 14.91 to 10,456.76.

S&P 500 index fell 7.94 or 0.4% to 1,979.51 and the Nasdaq Composite Index slid 13.58 or 0.3% to 4,798.19.

Crude oil in New York jumped $3.19 to $45.75 a barrel and gold gained $11.80 to $1,134.10 an ounce.

Brazil government’s statistics bureau said gross domestic product contracted for the second quarter in a row. The back-to-back quarterly contraction sent the largest economy in South America into a technical recession.

The economy shrank 1.9% in the second quarter from the first quarter when the economy contracted by 0.7%. Construction output fell 8.4% and household spending declined 2.1%.

U.S. Movers

Celgene Corporation rose 46 cents to $123.50 after the biopharmaceutical company said completed the acquisition of Receptos Inc for about $7.2 billion or $232 a share in cash.

Neogen Corporation (NEOG) slid 2 cents to $52.10 after the diagnostic test kits maker agreed to acquire U.K.-based rival Lab M Holdings for undisclosed terms.

Ulta Salon, Cosmetics & Fragrance, Inc (ULTA) slipped 80 cents to $159.55 after the beauty retailer reported net sales in the second-quarter ending on August 1 soared 19.4% from a year ago to $877 million.

Comparable store sales in the quarter surged 10.1% and retail comparable sales jumped 8.9%, including salon comparable sales advanced 10.1%.

Net income in the quarter increased 22% to $74.2 million or $1.15 per diluted share compared to $60.8 million or 94 cents from the same quarter last year.

European Markets

In the second estimate, the U.K. second-quarter GDP growth was left unchanged at 0.7% from the increase of 0.4% in the first-quarter but declined 2.6% from year ago period, Office of the National Statistics reported.

Separately, the department said the seasonally adjusted U.K. service sector index jumped 3% in June from a year ago month.

Kier Group Plc jumped 3% to 1,499 pence after the U.K.-based residential construction services provider secured contracts worth about £1.5 billion from an environment specialist Scape Group for construction and maintenance work over the next four years.

Asian Markets

Market indexes in Japan soared following a similar rebound in overnight trading in New York after the latest data offered a brighter view of the U.S. economic growth.

However, caution prevailed and short selling ratio in Tokyo shot up to a record high of 39.8%.

Nikkei average in Tokyo jumped following brighter view on the U.S. economy and export-focused companies led the gainers. Also, Shanghai market index jumped in Asia-wide rebound, helping the trading sentiment.

Market indexes opened sharply higher in Tokyo after the U.S. economic growth in the second quarter was revised higher to 3.7% from 2.3% largely on the higher buildup in inventories.

Yesterday, the government said retail sales in July rose 1.6% followed by 1% increase in June, according to the Ministry of Economy, Trade and Industry.

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Sources: Data collected by 123jump.com and Ticker.com from company press releases, filings and corporate websites. Market data: BATS Exchange. Inc