17/09/07

US stocks closed higher on Friday as expectations of an interest rate cut offset a warning by Merrill Lynch that revived concerns about credit conditions and the impact of the weak US housing market. Keeping the global credit squeeze at the forefront of investors concerns, Merrill Lynch said it has adjusted the value of securities linked to risky subprime mortgages and other products. Merrill said the move could hurt its third quarter profits. The DJIA closed 17.64 points higher at 13442.52, the S&P500 added 0.30 points to close at 1484.25 and the Nasdaq added 1.12 points to 2602.18. For the week, the Dow closed 2.5 percent higher, the S&P500 added 2.1 percent and the Nasdaq gained 1.4 percent. Stocks began the day lower, with government data showing retail sales, excluding vehicles, unexpectedly declined in August. A separate report showed the preliminary consumer sentiment index inched up this month to 83.8 to 83.4 in August.

United Technologies boosted the Dow and S&P500 after brokerage Sanford C Bernstein upgraded the stock, citing the profit outlook for its Carrier air conditioner and Sikorsky helicopter units. The stock rose 1.5 percent to $76.14.

Intel fell 1.7 percent to close at $24.93 after Merrill Lynch cut its rating on the stock.

The Tokyo stock market is closed today.

The FTSE100 closed 74.6 points higher at 6289.3 on Friday after Northern Rock became a casualty of the global credit squeeze, weighing on banks and property related stocks. Northern Rock issued a profit warning and was offered an emergency loan from the Bank of England, the first time the central bank had acted as lender of last resort in the way since becoming independent on interest rate policy in 1997. Shares in the company fell more than 31 percent, its biggest one day fall and taking its losses so far this year to over 62 percent. S&P and Fitch cut their credit ratings on the company, while people queued outside its branches and its Website struggled as customer scrambled to withdraw cash. Fellow mortgage lenders, Paragon, Alliance and Leicester, Bradford and Bingley, HBOS and Lloyds also slipped. Barclays fell 3.1 percent. The bank said it would abandon its proposed E58bn takeover of ABN if it cannot get the right terms. Northern Rocks funding issue also weighed on housebuilders and property stocks, which were hurt by a Rightmove survey showing asking prices for homes in England and Wales fell last month for the first time this year. Taylor Wimpey fell 5.7 percent, Persimmon fell 6.6 percent and Barratt Developments lost 4.7 percent, while British Land slipped 3.6 percent and Land Securities shed 3.8 percent.

Reed Elsevier rose 1.1 percent after Merrill Lynch upgraded the stock to buy on the back of the agreed sale of its education arm Harcourt to rival Houghton Mifflin.

Economics

US Empire manufacturing (Jul) 13.30 bst

The Empire Index has failed to show any signs of weakening so far, coming in at over 25 in each of the past three months. The ISM weighted average of the components has also been strong but at a lower level, rising to 16.9 last month. The headline index is seen falling to 18.

Aventus Capital Management is a trading style, "Aventus" is a trade mark and the Aventus logo is a registered trade mark of Rickerbys Solicitors. Rickerbys is regulated by the Solicitors Regulation Authority. Authorised and regulated by the Financial Services Authority.