While you were sleeping: Wall St gains on Cisco earnings, jobless claims

Friday 6th November 2009

Shares on Wall Street rallied after Cisco Systems posted earnings that beat estimates and jobless claims fell, stoking optimism the world’s biggest economy is recovering.

The Nasdaq Composite advanced 2.2% to 2101.34 after Cisco said first-quarter earnings fell 19% to US$1.79 billion and exceeded forecasts on a per-share basis. The company announced plans to buy back as much as US$10 billion of stock and Chief executive John Chambers says a global economic recovery is driving sales at the manufacturer of networking equipment.

The Dow Jones Industrial Average gained 1.7% to 9972.86 and the Standard & Poor’s 500 rose 1.6% to 1062.98.

Research in Motion, maker of the BlackBerry, rose 1.5% to US$62.30 after announcing plans to repurchase US$1.2 billion of shares.

Qualcomm Inc. rose 5.1% to US$43.70 after the world’s biggest maker of mobile-phone chips said sales will increase this quarter.

The VIX, a measure of stock-market volatility known as Wall Street’s fear gauge, fell 4.4% to 25.91.

Initial claims for unemployment benefits fell to 512,000 last week, while worker productivity advanced, according to the Labor Department. Worker output rose at an annual pace of 9.5% and labour costs fell 5.2%. The data comes a day before the government releases payrolls figures, which are expected to show companies pared 175,000 workers last month while the jobless rate climbed to 9.9% from 9.8%.

Gap Inc. rose 3.8% to US$22.93, pacing an advance in retailers after the International Council of Shopping Centers said same-store sales at 32 store owners rose 2.1%, the biggest gain since July last year.

The U.S. dollar was little changed ahead of Friday’s payrolls data, amid speculation the figures will back up the Federal Reserve’s intention to interest rates low for longer, as other central banks resume raising rates.

The dollar traded at US$1.4862 in New York, from US$1.4861.The euro traded at 134.75 yen from 134.85. The greenback slipped 0.1% to 90.64 yen.

European Central Bank President Jean-Claude Trichet and Bank of England Governor Mervyn King both signalled stimulus measures will come to an end next year.

Trichet said some of the ECB’s liquidity measures will be needed to the same extent, Bloomberg reported. The BoE’s King said the pace of bond purchases would slow. The ECB kept its benchmark interest rate unchanged at a record low 1% and the Bank of England held its key rate unchanged at a record low 0.5%.

European stocks rose after the U.S. jobless claims and after France’s biggest bank, BNP Paribas, reported earnings that beat estimates.

The Dow Jones Stoxx 600 climbed 0.6% to 240.52. Among national benchmarks, the U.K.’s FTSE 100 rose 0.4% to 5125.64, Germany’s DAX 30 rose 0.7% to 5480.92 and France’s CAC 40 gained 1.1% to 3708.73.

BNP Paribas rose 3.3% after reporting a 45% jump in third-quarter profit.

ITV Plc, the U.K.’s biggest private television network, rose 9.6% after saying the advertising market is stabilising and sales will pick up next month.

Germany’s Commerzbank fell 4.7% after saying it has to set aside more money for bad loans.

Gold, which touched a record US$1,098.50 an ounce this week, rose for the fourth straight day as traders bet the U.S. dollar will remain weak as the Fed lags behind other central banks in raising rates, underpinning the appeal of the precious metal as an alternative investment.

Gold futures for December delivery rose 0.3% to US$1,090.60 an ounce on the New York Mercantile Exchange.

Copper prices fell as rising stockpiles stoked concern demand for the metal will wane. Stockpiles monitored by the London Metal Exchange rose 1.5% to 379,825 metric tons, the highest since May.

Copper futures for December delivery shed 0.9% to US$2.967 a pound on the New York Mercantile Exchange.

Crude for December delivery was little changed at US$80.43 a barrel in New York.

Fourteen people, including a former employee of the Galleon Group hedge fund firm, have been charged as part of the probe into the alleged US$20 million insider trading scheme, Bloomberg reported.

Galleon founder Raj Rajaratnam and five others were charged last month in what may be America’s biggest-ever prosecution of a hedge fund insider-trading ring.

Businesswire.co.nz

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