4:00 PM New York – U.S. stocks traded higher ahead of Fed meeting conclusion tomorrow on the hopes that the central bank may announce additional stimulus measures. European markets jumped as Spain met its target bond offering but yields were near 7%. Markets in Asia recalibrated and trimmed gains.
U.S. indexes gained on expectations of additional policy actions at the end of a 2-day Fed committee meeting tomorrow. The hopes ran high and bond yields were elevated in the peripheral euro zone nations.
The U.S. economic backdrop has weakened in the recent months after weak jobs reports and weaker than expected retail sales and sluggish housing market. The only bright spot has been auto sales but that has failed to dent the unemployment.
In merger news, Walgreen agreed to acquire 45% stake in Alliance Boots for $6.7 billion and Air Products agreed to buy stake in Chile-based Indura for $884 million. Brookfield Office agreed to purchase office buildings portfolio in London for $829 million.
On the earnings front, Discover Financial second quarter dropped 11% to $537 million and FedEx fourth quarter net slides 1% to $550 million and the air courier company said it will conduct “significant cost reduction.” InterDigital sells patent applications to Intel for $375 million in cash. Oracle fourth quarter net soared 8% to $3.45 billion.
The European indexes rose after the leader of pro bailout party Antonis Samaras inched closer to forming a coalition government in Greece and Spain completed the sale of €3 billion of bonds auction at record yields. Danone plunged 7% after lowering its operating margin target for the current fiscal year.
Construction output in the euro area fell in April. German economic confidence worsened and French business sentiment slid in June. Swedish jobless rate rose in May.
The UK indexes surged more than 1% and annual inflation eased to a 30-month low in May and home prices increased in April. Cable & Wireless secured shareholders approval for the £1.04 billion acquisition offer from Vodafone.
Stocks in Japan trimmed half the gains of Monday after investors focused on the widening contagion in the euro zone. Sharp Corp gained on the hopes that Taiwan based Hon Hai may increase its stake in the company. Steelmakers fell on the price decline worries.
Australian stocks edged lower as world investors shift focus to Spain and the gathering of G 20 leaders. IMF is expected to receive more capital from member nations and increase lending to the euro zone. Centro shareholders will see only 60% of $200 million in legal settlement.
Commodities, Bonds and Currencies
The 10-year bond yield increased to 1.68% and 30-year bond closed down to 2.73%.
The U.S. dollar decreased to $1.278 to a euro and rose against the Japanese yen to 78.99 yen.
Immediate delivery futures of Texas crude oil increased 81 cents to $84.08 a barrel and for Brent crude was nearly flat at $96.05, futures of natural gas fell 0.11 cents to $2.55 per mbtu and gasoline price decreased 1.06 cents to 265.05 cents a gallon.
In metals trading, copper rose 3.85 cents to $3.44 per pound, gold fell $4.70 to $1,622.30 per ounce and silver decreased $0.24 to $28.42.