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Market Update

U.S. and World Market Indexes Struggle with Weekly Losses


Author: Nichole Harper
ticker.com
Last Update: 1:04 PM ET July 11 2014

1:05 PM New York Reynolds America and Lorillard confirmed merger talks that could create a combined entity worth $56 billion. World markets extended weekly losses after fresh bank health worries in Europe and Cotton prices hit a two-year low and oil eased.

Stocks on Wall Street declined and market indexes are set to close the week with worst losses in three months.

S&P 500 index decreased 2.26 to 1,962.42 and the Nasdaq Composite Index increased 3.97 to 4,400.17.

World markets have been on decline since last week after the Federal Reserve brought forward its timetable to stop bond purchase and interest rates are expected to begin rising sooner.

Commodities prices have been on the decline and iron ore prices are at a one-year low and cotton prices dropped to a two-year low.

European bond yields were in focus for the third day this week. Portuguese 10-year bond yield decreased 12 basis points to 3.85% after trading as high as 4.01% yesterday.

Spanish bond yield for similar maturity eased 5 basis points to 2.77% and Italian bonds eased six basis points to 2.89%.

U.S. Stocks in Review

Lorillard and Reynolds America confirmed merger talks and if successful the combined company will have $56 billion of worth. If consummated, the merger will combine the second- and third-largest tobacco makers.

Lorillard had net sales of $6.7 billion in 2013 and Reynolds reported net sale of $8.3 billion in the year.

British American Tobacco is the largest shareholder with a stake of 42% in Reynolds America and involved in the merger talks. BAT is seeking to retain its 42% stake in the merged company.

Whirlpool Corporation (WHR) gained 1.5% or $2.14 to $141.35 after the home appliances maker said it will buy 66.8% voting stock of Italy-based Indesit Co SpA, the white goods maker for about 758 million or $1.03 billion to expand its business in Europe.

The transaction is expected to close by the end of this year.

Wells Fargo & Co (WFC) dropped 51 cents to $51.30 after the financial service provider reported revenue in the second-quarter ending in June fell 1.4% to $21.1 billion a year ago period.

Net income in the quarter jumped 4% to $5.73 billion or $1.01 a diluted share compared to $5.52 billion or 98 cents from a year earlier.

European Markets

In London trading, FTSE 100 index slid 0.1% or 6.03 to 6,666.34 and in Frankfurt the DAX index fell 0.4% or 35.29 to 9,623.84.

In Paris, CAC 40 index inched up 0.02% or 0.95 to 4,302.21.

Aker Solutions prepared to split into two and write down 1.6 billion kroner of assets and the U.K. based financial services provider Friends Life divested its Lombard unit to Blackstone for 317 million or $532 million.

Imperial Tobacco is in asset purchase talk with the U.S.-based Reynolds American and Lorillard. Whirlpool acquired a majority stake in Italy based Indesit.

Asian Markets

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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