4:10 PM New York – U.S. stocks fell after IBM missed sales expectations and Intel reported weaker than anticipated gross margins. Warren Buffett, chief executive of Berkshire Hathaway said his condition is not remotely life threatening. IMF worries that €2 trillion asset sale by European banks could destabilize markets.
U.S. indexes traded lower and a flood of earnings and merger deals dominated market focus. The mood was cautious after IBM reported lower than expected sales and Intel gross margins were weaker than anticipated.
Investors were also cautious ahead of bond auction of 2-year and 10-year debt tomorrow from Spain and worried after a report from IMF that highlighted balance sheet contraction at European banks in the next eighteen months could destabilize markets.
In its latest report multilateral agency said 58 largest banks are set to trim its asset by €2 trillion in the next eighteen months almost 7% of their assets by the end of next year. IMF anticipates deleveraging process driven by securities sales and the sale of non-core assets but also estimated credit contraction by 1.7%.
In deal news, SXC agreed to buy Catalyst Health for $4.4 billion and WOW! agreed to acquire Knology in $1.5 billion deal. Australia based Westfield plans to divest interests in eight shopping malls in the U.S. for more than $1.1 billion to cut heavy debt load.
On the earnings front, Abbott first quarter net surged 44% to $1.24 billion and raises fiscal 2012 guidance. BlackRock first quarter net rose 1% to $572 million. Dover profit rose and lifted revenue outlook. IBM first quarter net increased 7% to $3.1 billion and Intel net slumped 13% to $2.74 billion. Yahoo net surged 28% to $286 million.
Berkshire Hathaway Class A stock declined more than 1.3% after chief executive and 81-year Warren Buffett said he will begin 2-month radiation treatment for prostate cancer and his condition is “not remotely life threatening.”
The European indexes traded lower and the Euro area swung to deficit in February. Argentina rejected a $10.5 billion compensation claim from Repsol. Canada-based Alimentation agreed to acquire Statoil Fuel & Retail for $2.8 billion.
Euro area current account swung to deficit and production fell in February. Swedish central bank held rate and Swiss economic sentiment improved in April and the euro closed unchanged against the dollar.
The UK indexes dipped after the Bank of England minutes showed that the asset purchase program was retained by a split vote and some policy makers wondered if inflation was running ahead of central bank’s target.
The UK jobless rate declined in the three months to February and Tesco announced a £1 billion investment to improve its UK business.
Stocks in Japan surged the most in three weeks after central bank official showed bank’s preparedness to take steps to ease monetary policy. Japanese exporters were ahead after the IMF lifted global economic growth outlook.
Australian stocks rebounded and BHP Billiton first quarter production declined 8% from the December quarter and increased 14% from a year ago on weather related disruptions.
Commodities, Bonds and Currencies
The yields on 10-year U.S. bond decreased to 1.98% and 30-year U.S. bond edged lower to 3.13%.
The U.S. dollar closed nearly unchanged at $1.31 to one euro and inched higher against the Japanese yen to 81.28 yen.
Immediate delivery futures of Texas crude oil decreased $1.54 to $102.66 a barrel and Brent crude futures fell 81 cents to $117.97.
In New York trading, futures of natural gas decreased 0.003 cents to $1.948 per mbtu and traded near a decade low and gasoline price declined 2.76 cents to 320.65 cents a gallon.
In metals trading, copper fell 1.75 cents to $3.63 per pound, gold declined $10.20 to $1,640.90 per ounce and silver decreased 11 cents to $31.56.