Market Snapshot August 12, 2009, 4:25PM EST

Stocks End Higher as Fed Holds Steady

(page 2 of 2)

Story Tools

In other economic news Wednesday, the U.S. Treasury posted a $180.7 billion budget deficit in July, a 75.8% increase compared to the $102.8 billion shortfall last July, reflecting further erosion in fiscal conditions.

The U.S. trade deficit widened 4.0% to $27.0 billion in June, after a surprise narrowing in the deficit to $26.0 billion in May. Excluding petroleum, the deficit narrowed to $9.8 billion from $12.7 billion in May. Imports rose 2.3%, with a 19.0% rebound in petroleum imports (excluding petroleum, imports fell 1.0%). Exports rose 2.0%. The deficit with China widened slightly to $18.4 billion, vs. $17.5 billion previously.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications, which includes both purchase and refinance loans, decreased 3.5% to 499.0.for the week ended Aug. 7. The MBA's seasonally adjusted purchase index rose 1.1% to 267.2, the third gain in the last four weeks. The four-week moving average of mortgage applications, which smooths the volatile weekly figures, was down 0.7%. The refinance share of applications decreased to 52.3% from 54.2% the previous week. The adjustable-rate mortgage share of activity increased to 5.8% in the latest week, up from 5.4% the previous week.

The ABC News consumer comfort index rose two points to -47 from -49 in the week ended Aug. 9. Eight percent of the survey respondents expressed confidence in the economy, unchanged from the week before. Also, 47% of those polled said their own finances were in good standing, up from 44% in the prior week. In assessing the buying climate, 25% of respondents said it was good, up from 24% a week earlier.

The economy will expand 2% or more in four straight quarters through June, the first such streak in more than four years, according to the median of 53 forecasts in the monthly Bloomberg News survey. Analysts lifted their estimate for the third quarter by 1.2 percentage points compared with July, the biggest such boost in surveys dating from May 2003.

Meanwhile, Goldman Sachs boosted its forecast for U.S. economic growth to an annualized 3% rate for the second half of 2009, up from 1% previously.

Bloomberg News reports the Bank of England said the inflation rate will drop and economic growth may resume on an annual basis by 2010. Its main predictions are based on current plans to spend £175 billion (US$288 billion) in U.K. debt markets to aid the economy and market expectations of interest-rate increases. U.K. unemployment rose to the highest level in 14 years as companies cut job even as the recession showed signs of easing, government data showed Wednesday.

Reuters reported one industry analysis forecast a steady decline in "clunker" related business even though the Obama administration and Congress added $2 billion to the program in recent days with hopes of matching the success of its first weeks. Sales during that period topped 250,000 and rebates exceeded $1 billion at least, according to government and industry figures. "We see that interest dying down," Edmunds.com Senior Analyst Michelle Krebs said on the consumer auto industry resource group's analysis of buyer intentions. "It's still high. It's better than pre-clunker levels, but it's off its peak."

In company news Wednesday, chipmaker Applied Materials (AMAT) rallied after its earnings report revealed it would break even due to cost containment and fresh orders.

Retailer Macy's (M) also rose after better than expected quarterly results, despite a 90% earnings plunge.

Homebuilder Toll Brothers (TOL) surged after reporting a rise in net new orders, though revenues sank 42%.

Bob Evans Farms (BOBE) reported fourth-quarter EPS of $0.52, vs. $0.45, despite 3.0% lower same-store sales (SSS) at Bob Evans Restaurants and 6.4% lower SSS at Mimi's Cafe, 2.5% lower total sales. Wall Street was looking for EPS of $0.52.

Clearwire Corp. (CLWR) reported a second-quarter loss of $0.38 per share, vs. a $0.40 loss, on an 8.6% revenue rise. Revenue was seen coming in below Street expectations, notes S&P MarketScope.

Cree Inc. (CREE) reported fourth-quarter non-GAAP EPS of $0.18, vs. $0.16, on a 9.0% revenue rise. Wall Street was looking for EPS of $0.17.