12/09/07

The DJIA added 180.54 points to close at 13308.39, the S&P500 added 19.79 points to close at 1471.49 and the Nasdaq added 38.36 points to close at 2597.47.

Investors looking for further clues about central bank policy found on guidance in a Tuesday speech from Federal Reserve Chairman Ben Bernanke. Speaking to the German central bank, the Fed chairman discussed the history of the global savings glut and developments in current account imbalances.

Texas Instruments added 50 cents to close at $35.72. After the close the company narrowed its earnings forecasts to a range that is roughly in line with analysts estimates.

ImClone jumped 18 percent in active Nasdaq trading after test results showed its drug Erbitrux improved survival rates of lung cancer patients. Partner Bristol Myers Squibb added 23 cents to close at $28.23.

Ericsson added $2.01 to close at $38.26. The stock rallied after its CEO said the company is gaining market share and that the global market for wireless network technologies will grow about 5 percent this year.

Sun Microsystems added 32 cents to close at $5.71 and topped the Nasdaq's most active list after introducing new software for managing virtual desktops.

Countrywide Financial slipped 2 percent in NYSE trading on reports that the troubled mortgage lender is putting together a second multi billion dollar bailout package in less than a month.

An industry report released Tuesday morning showed that the home price slump is expected to continue through 2008. In other news, the July trade deficit narrowed to $59.2bn from an upwardly revised $59.4bn in the previous month. Economists expected a reading of $59bn.

Treasury prices fell, raising the yield on the 10 year note to 4.37 percent from 4.32 percent.

In currency trading, the dollar fell versus the euro and rose against the yen.

US light crude oil for October delivery rose 73 cents to settle at $78.22 a barrel on NYMEX, an all time high. Trading was volatile after crude closed at its second highest level on Monday, and after OPEC agreed to boost its daily oil production on Tuesday.

COMEX gold for December delivery rose $8.90 to settle at $721.10 an ounce.

Japanese stocks ended in negative territory today after the shock resignation of Prime Minister Shinzo Abe, with the Nikkei average down 80.1 points at 15797.6. Abe said he was stepping down because there would be better chance of continuing Japan's support for US military operations in Afghanistan under a new leader. The afternoon's see-saw trade, which saw the Nikkei touch both high and lows for the days as the news about Abe emerged, reflected the mixed nature of the news, traders said. Abe is expected to stay in a caretaker role until a new Prime Minister is chosen. Taro Aso, a close ally who is secretary general of Abe's ruling Liberal Democratic Party, is generally seen as a front runner.

UK stocks rebounded on Tuesday after two days of sharp losses to end up 146.6 points at 6280.7, as cheaper banks and commodity stocks were in demand on growing hopes of an imminent US interest rate cut. The index recorded its biggest one day percentage rise since August 17 when the US Federal Reserve cut its discount rate to calm panicky investors.

Fed Chairman Ben Bernanke in a speech in Berlin, did not discuss the outlook for the US economy or interest rates. Still investors remained hopeful that the US central bank will cut rates at its meeting next week. Banks were the biggest winning sector, contributing more than 30 points to the index. Northern Rock, HBOS, Lloyds TSB, Alliance and Leicester, Standard Chartered and HSBC were all up. Barclays gained 4.7 percent to top the FTSE100 gainers list. The banks President Bob Diamond, said on Monday a consortium led by RBS would probably trump its bid for ABN AMRO. RBS rose 2.9 percent.

Cairn Energy rose 3.5 percent after it said its Indian subsidiary had received a key approval for a pipeline critical to exploiting its Rajasthan fields but still awaits full government clearance.

Tesco added 4.4 percent after Lehman Brothers upgraded to stock to overweight from neutral.

Wolseley rose 3.8 percent in its largest one day rise in 3 1/2 weeks as traders cited a bounce in line with the market after hitting its lowest point since December 2004 on Monday.

Next added 4.3 percent after it beat first half profit forecasts but said trading was tough and that it remained on track to meet analysts current expectations for the full year.

JJB Sports fell more than 14 percent after it said its underlying first half profit would be nearly a third below original expectations as like for like sales fell 4.4 percent.

Economics
UK Unemployment (July/Aug) 09.30 bst

After a very weak first half of the year for the UK labour market, the last report showed a decent pick up. A further improvement is expected this month but the momentum to turn later in the year as employment in the financial sector weakens.

UK Average earnings (Jul) 09.30 bst

Although employment improved in the latest report, wage growth remained very muted. This is expected to continue as demand for labour is met by migrant inflows and those previously out of the UK labour market so not leading to a pick up in wages.

EMU Industrial production (Jul) 10.00 bst

EMU IP is expected to rebound by 0.4 percent month on month, which would translate into 3.2 percent year on year. Current PMI manufacturing readings (July/August) are off last years highs, but still speak in favour of a rebound in quarterly and yearly terms.

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