While you were sleeping: S&P 500 gains on Centex, Bed Bath

Thursday 9th April 2009

US stocks rose on expectations insurance companies will benefit from government aid and home-furnishings chain Bed Bath & Beyond posted better-than-expected profit, easing concern about the first-quarter earnings season.

Insurance and investment management group Lincoln National surged 33% to US$9.15, Principal Financial Group gained 21% to US$12.31 and Hartford Financial Services climbed 13% to US$9.59. The US Treasury said insurers with banking or savings units will be eligible for state funding.

Bed Bath and Beyond jumped 24% to US$31.70 after posting an 18% drop in profit for the three months ended Feb. 28, a smaller decline than some analysts had predicted. Shares tumbled worldwide yesterday as the US earnings season kicked off with a loss from aluminium producer Alcoa Inc. Earnings for companies on the S&P 500 will drop by an average 37%, according to estimates compiled by Reuters.

Alcoa climbed 3.5% to US$8.06 on the Dow Jones Industrial Average overnight, helping lift the Dow by 0.6% to 7837.11. The S&P 500 rose 1.2% to 825.16 and the Nasdaq Composite gained 1.9% to 1590.66.

Centex Corp. surged 19% to US$9.06 after Pulte Homes agreed to acquire the residential construction company to create the biggest US home builder. Pulte fell 10% to US$9.64.

Bank of America declined 4.1% to US$7.06 after analysts at Oppenheimer & Co. said the lender needs to raise US$36.6 billion in equity to bring its capital ratios back into step with other major banks.

Berkshire Hathaway, Warren Buffett's investment company, slipped 0.04% to US$88,960. Berkshire had its Aaa credit rating cut two levels to Aa2 by Moody's Investors Service to reflect the slide in stock prices and waning profits.

Stocks rose amid mixed economic data. Sales at US wholesalers climbed for the first time in eight months in February, rising 0.6%, according to the Commerce Department. Inventories tumbled 1.5%, a sign that distributors are running down their supplies.

Federal Reserve officials were concerned that the US economy would fall into a self-perpetuating downward spiral as the jobless queue surges and businesses and consumers curb spending, according to minutes of the Fed's meeting last month.

"Credit conditions remained very tight, and financial markets remained fragile and unsettled, with pressures on financial institutions generally intensifying," according to minutes of the meeting.

The US dollar fell against the yen as some investors sought the Japanese currency as a haven amid volatility in stock markets. The dollar extended its slide after the Fed minutes were released, and was down about 0.7% to 99.72 yen. The euro traded at 132.32 yen.

Crude oil rose for the first time in four days after US Energy Department figures showed a smaller build-up in inventories than was estimated in the American Petroleum Institute survey. Stockpiles rose 1.65 million barrels to 361.1 million barrels last week, the department said. The API had estimated a 6.94 million barrel weekly gain.

Crude oil for May delivery rose 0.5% to US$49.38 a barrel on the New York Mercantile Exchange. Copper rose on speculation China will increase purchases of the metal used to make pipes and wire after stockpiles of scrap metal fell.

Copper futures for May delivery edged up 0.4% to US$1.9985 a pound on the New York Mercantile Exchange. Gold futures for June delivery rose 0.3% to US$885.90 an ounce on the New York Mercantile Exchange.

In Europe, the Dow Jones Stoxx 600 index climbed 0.3% to 184.02. The FTSE 100 slipped 0.1% to 3925.52, the DAX 30 climbed 0.8% to 4357.92 and the CAC 40 rose 0.7% to 2921.06.

In the UK, a report from the National Institute of Economic and Social Research said the economy shrank 1.5% in the first quarter, after shrinking 1.6% in the fourth quarter. A separate survey from Nationwide Building Society showed consumer confidence held at a four-year low in March.

German manufacturing orders fell a greater-than-expected 3.5% in February on dwindling demand for the nation's exports and weaker investments at home, according to the Economy Ministry.

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