Market Overview
- Soaring bank shares led the broader US stock market higher on Tuesday as Bank of America raised hopes it will increase dividends and share buybacks.
- The Dow Jones Industrial Average jumped 124.4 points (1.03%) to 12,214.4, while the Standard & Poor's 500-stock index added 11.7 points (0.89%) to 1,321.8 and the Nasdaq Composite gained 20.1 points (0.73%) to 2,765.8.
- Leading the gains were financial stocks, including Dow components Bank of America, up 4.5%; American Express, up 3.8%; and JP Morgan Chase, up 2.9%. PNC Financial Services Group soared 4.3%, Citigroup added 2.4%, Wells Fargo gained 2.2% and Goldman Sachs Group increased 1.4%.
- Bank of America's gains came after Chief Executive Brian Moynihan said he believes the bank has the ability to earn between $35bn and $40bn a year in pretax earnings when the business normalises. Speaking at the bank's first investor-day conference since 2007, Mr. Moynihan said the bank has no intention of making more acquisitions and will instead look to cut costs and focus on customers. Mr. Moynihan said the bank was focused on returning "every dollar" in capital to shareholders, through regular dividends, share buybacks and special cash dividends.
- European stocks ended a choppy session with small gains on Tuesday, as potential deal news for Deutsche Telekom AG sent those shares solidly higher.
- Crude retreated as investors sought to lock in profits following reports that allies of Libyan leader Moammar Gadhafi are debating the leader's exit.
INTERNATIONAL OVERNIGHT NEWS
Soaring bank shares led the broader US stock market higher on Tuesday as Bank of America raised hopes it will increase dividends and share buybacks.
The Dow Jones Industrial Average jumped 124.4 points (1.03%) to 12,214.4, while the Standard & Poor's 500-stock index added 11.7 points (0.89%) to 1,321.8 and the Nasdaq Composite gained 20.1 points (0.73%) to 2,765.8.
Leading the gains were financial stocks, including Dow components Bank of America, up 4.5%; American Express, up 3.8%; and JP Morgan Chase, up 2.9%. PNC Financial Services Group soared 4.3%, Citigroup added 2.4%, Wells Fargo gained 2.2% and Goldman Sachs Group increased 1.4%.
Bank of America's gains came after Chief Executive Brian Moynihan said he believes the bank has the ability to earn between $35bn and $40bn a year in pretax earnings when the business normalises. Speaking at the bank's first investor-day conference since 2007, Mr. Moynihan said the bank has no intention of making more acquisitions and will instead look to cut costs and focus on customers.
Mr. Moynihan said the bank was focused on returning "every dollar" in capital to shareholders, through regular dividends, share buybacks and special cash dividends.
Weighing on the market was McDonald's, off 1.2%, after the fast-food chain reported that same-store sales rose by a better-than-expected 3.9% in February, though results in its US restaurants missed Wall Street's expectations.
Energy stocks were also weak, as crude prices fell in volatile trading. Reports that more countries may step in to boost production and that Libyan leader Moammar Gadhafi may be looking for a way to step down helped cheer the market, pushing crude oil to an intraday low of $103.33 a barrel. But as forces loyal to Gadhafi launched a new round of attacks on rebel positions, crude oil retraced some of its declines.
The economic calendar was fairly quiet, though a survey of small businesses showed more firms are planning to raise their selling prices and increase hiring.
Among companies in focus, Urban Outfitters dropped 16% to make it the worst performer among the S&P 500 companies. The retailer reported fourth-quarter sales and profit that were below market expectations.
Brown-Forman added 4.9% after third-quarter earnings jumped by a better-than-expected 30%, thanks to a strong performance from its whiskey and tequila brands. Brown- Forman, the maker of Jack Daniel's and Southern Comfort, also reported signs of a rebound in its struggling US market, beating revenue expectations and raising its earnings forecast.
Home builder PulteGroup surged 8.1% to lead the S&P 500 after it said it signed 2,674 contracts in January and February, up from 2,415 a year earlier.
Boeing rose 1.7% after striking a preliminary deal to sell 38 wide-body jets to Hong Kong Airlines and also signing a deal to supply five 747-8 aircraft to Chinese flag carrier Air China Ltd. US-listed shares in Air China added 5.2%.
US Economic News No news today.
European and Asian Markets
European stocks ended a choppy session with small gains on Tuesday, as potential deal news for Deutsche Telekom AG sent those shares solidly higher.
The Stoxx Europe 600 index ended the day up 0.4% at 281.81 after two consecutive days of losses.
Deutsche Telekom rallied 4% after it was reported that USbased Sprint Nextel Corp. may buy the firm's T-Mobile USA unit. A spokesperson from Deutsche Telekom declined to comment.
Mining stocks were among the biggest decliners in Europe, as gold prices moved lower. Randgold Resources Ltd. slumped 8.2% and African Barrick Gold PLC fell 3.6%.
Greek banks also posted sharp losses, with Piraeus Bank SA tumbling 7.3% a day after Greece's sovereign debt rating was downgraded.
The German DAX 30 index ended virtually flat, rising just 2.82 points to close at 7,164.75.
In the car sector, analysts lifted Volkswagen AG to buy from neutral. The firm's shares rose 2.3%.
The downside was led by shares of chemical group BASF SE, which fell 2.1%, and steelmaker ThyssenKrupp AG, which dropped 1.8%.
In Paris, gainers included tire maker Michelin SA, which rose 2.9%, and French insurer AXA SA, which advanced 2.6%.
The French CAC 40 index rose 0.6% to end at 4,015.91. On the downside, shares of Alcatel-Lucent SA fell 1.7%, paring some recent gains. The shares have rallied more than 10% this month on bid speculation.
Energy stocks were also weaker in line with lower oil prices. In London, BG Group PLC and Tullow Oil PLC lost 1.6% and 2.2%, respectively.
The FTSE 100 index ended little changed, gaining 0.98 point to close at 5,974.76.
Shares of Old Mutual PLC rose 3.3% after the banking and insurance group narrowed its net loss for 2010, and said it was upbeat for 2011.
Telecoms were at the top of the gainers list. BT Group PLC rose 4% and Vodafone Group PLC advanced 1.8% after a broker lifted each to overweight from equal-weight, saying the sector outlook has improved.
Asian stock markets ended higher, with merger activity bolstering Tokyo shares, while a mild fallback in crude-oil futures helped inspire some investors.
Japan's Nikkei Stock Average added 0.2%, Hong Kong's Hang Seng index was up 1.7% and the Shanghai Composite rose 0.1%.
The NZX-50 ended down 0.3% at 3,421.17, reflecting weakness in offshore markets and a fall in Telecom Corp. of New Zealand.
Commodities
Copper closed higher on the London Metal Exchange, recovering day-earlier losses as an easing oil price triggered bargain hunting, though trading is likely to remain volatile in the coming days as the metal markets remain glued to macro events, said market players.
Gold prices retreated as safe-harbour demand for gold dimmed in the absence of new developments in the Middle East.
Crude retreated as investors sought to lock in profits following reports that allies of Libyan leader Moammar Gadhafi are debating the leader's exit.
AUSTRALIAN OVERNIGHT NEWS
Australian Markets
Local shares are likely to push higher following a strong lead out of the US overnight.
Ahead of the local open the March SPI futures were 7 points higher at 4,813.
Companies in the News
Leighton Holdings (LEI)
Thiess Minecs India, a unit of Leighton and Singareni Collieries have expressed interest in developing and operating an east India coal mine of NTPC, a newspaper has reported. About five companies have shown interest and submitted price bids for Chatti Bariatu mine in India's eastern state of Jharkhand, the report said. The contract could be valued at INR99.22bn (US$2.2bn). LEI advanced 4 cents (0.13%) to $31.18.
QR National (QRN)
QR is set to have its entire rail network operating for the first time since heavy flooding around Christmas washed away track and damaged bridges. QR has completed work to repair a 100km trunk line linking the Blackwater rail system and the Rolleston coal mine operated by Xstrata in Queensland, Xstrata spokesman James Rickards said. Trains will travel today to the Rolleston mine for the first time since December, he said. However, haulage on QR's network will stay below normal levels for some time as many mines still haven't been able to restore output fully. QRN rose 1 cent (0.31%) to $3.24.
Lynas Corp (LYC) and Forge (FGE)
Lynas is in talks with Forge over selling a rare earths deposit adjacent to its Mount Weld site in Western Australia, the company said. Lynas said the Crown polymetallic deposit had been the subject of sale talks with Forge. "These discussions are incomplete and the board of Lynas is not yet in a position to make a decision. The board does, however, consider the possible transaction is not a material one for Lynas," the company said. LYC fell 1 cent (0.48%) to $2.09. FGE increased 15 cents (2.26%) to $6.80. For the latest updates PRESS CTR + D or visit Stock Market news Today
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