4:05 PM New York – On Wall Street stocks declined after investors voiced skepticism about the upcoming meeting of European leaders. Crude oil and commodities extended losses. Microsoft agreed to acquire enterprise networking services provider Yammer for $1.2 billion.
World markets are increasingly questioning the slow pace of leadership response as the debt crisis spreads in Europe. Stocks in New York dropped and broader indexes fell as much as 2% in late afternoon.
The expectations are low ahead of the next summit of European Union and markets in Asia and Europe traded lower as patience wear thin after two years of failed talks.
The news flow from the European Union suggested more disagreement,, lack of urgency and vulnerabilities to speculative attacks on the peripheral bonds and the euro. German Chancellor Angela Merkel hardened her stance against issuing euro bonds and Greek finance minister resigned only days after appointment on health ground.
Also, emerging market currencies declined for the eight week in a row as the currencies from real to rupee to ruble to yuan declined against the dollar. Falling energy prices dragged ruble and South Africa’s rand and weakening export price of iron ore lowered the real for the third month and rupee traded at record low on rising budget and current account deficits.
On the economic front, U.S. new home sales increased more than expected in May as construction surged in the Northeast. Median home prices edged up and inventory of unsold homes held below five months. From a year ago new home sales increased 20% in the month but at 25% level of the 1.4 million peak rate in mid-2005.
In corporate news, Fidelity National Financial agreed to acquire J. Alexander''s for $72 million. Quest Software received a proposal for $27.50 a share. Linn Energy agreed to acquire properties valued $1.025 billion. Pioneer Drilling lowered second quarter outlook.
Anheuser-Busch InBev NV and Grupo Modelo SAB announced a distribution deal between the two companies. Constellation Brands Inc soared more than 10%.
Microsoft agreed to pay $1.2 billion for the enterprise networking service provider Yammer. The four year old San Francisco based company has 5 million corporate users and was founded by David Sacks, c-founder of PayPal.
Microsoft is expected to bundle Yammer with its cloud based SharePoint that includes email, file sharing, Microsoft Office and web conferencing and other networking tools. Microsoft is catching up with Oracle and Saleforce with its own acquisition that will over corporation wide networking.
Oil explorers and refiners traded at a low last seen in depth of the 2008 recession as natural gas price drops 38% and oil price falls 20% in the year so far.
European markets were on the edge on the first day of trading as leaders in the region prepare to gather to finalize a region wide banking integration. Spain requested formally for a bank aid and the prospect of a larger bailout loomed as the nation struggles with elevated unemployment and the economy that is expected to shrink two more years.
In European economic news German public debt rose in the first quarter and Hungarian retail sales fell in April. Spanish producer price inflation rose in May and Economic confidence in the Czech Republic weakened in June.
The UK indexes trended lower tracking the European markets and the UK household finance index rose in June. Shire plc plunged 13% after the U.S. drug regulator approved the abbreviated new drug applications for generic Adderall XR filed by Actavis.
Stocks in Tokyo fell for the second day in a row and retailers, resource and shipping sector stocks led the decline. The yen gained a fraction and energy prices fell as investors question the outcome of the latest meeting of the European leaders.
Investors in Australia and in Asia are increasingly turning away their focus from the euro zone as the summit paralysis sets in. Billabong plunges 47% as investors dump share as the company launches its public offer. Fairfax embarks on a restructuring and shakes up its editorial leadership.
Commodities, Bonds and Currencies
The 10-year bond yield decreased to 1.61% and 30-year bond fell to 2.68%.
The U.S. dollar inched up to $1.250 to a euro and rose against the Japanese yen to 79.69 yen.
Immediate delivery futures of Texas crude oil decreased 62 cents to $79.15 a barrel and Brent crude fell 1 cent to $90.97, futures of natural gas increased 0.06 cents to $2.64 per mbtu and gasoline price increased 7.5 cents to 264.42 cents a gallon.