Dow holds up as Bernanke dims hopes for further stimulus, Lululemon slidesReported by Proactive Investors on Thursday, 7 June 2012 (on June 7, 2012)
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U.S. equity markets rose Thursday on a surprise rate cut by China but comments from Ben Bernanke tempered hopes for immediate stimulus by the Federal Reserve .
As at 2.40pm EDT, the Dow Jones Industrial Average was up 0.90% at 12,525.93, the S&P 500 was 0.61% higher at 1,323.37 and the NASDAQ was up 0.24% at 2,851.26.
China cut its benchmark lending rate for the first time in almost four years, contributing to efforts to reverse a sharp economic downturn.
Federal Reserve chairman Ben Bernanke said the Federal Reserve is prepared to take further steps if the U.S. economy weakens, but he didn't indicate any immediate action would be taken.
Bernanke said the European debt crisis "poses significant risks to the U.S. financial markets" and noted that U.S. unemployment remains high and the outlook for inflation subdued.
According to reports, most economists don't expect further moves at the Fed's next policy meeting June 19-20.
They note that long-term rates have already touched record lows. Even if rates did decline further, analysts have said that might have little effect on the economy.
Fitch Ratings Thursday cut Spain’s long-term credit rating to BBB and left it two notches from junk, citing the cost of recapitalizing the country’s banking industry and a lengthening recession.
Spain, which saw its rating lowered from A, may need as much as 100 billion euros - $126 billion - to bolster its banking system, compared with an earlier estimate of about 30 billion euros, Fitch said.
In corporate news, Lululemon Athletica (NASDAQ:LULU)(TSE:LLL) Thursday said its first-quarter earnings rose to $43.6 million, or 32 cents per share, from $33.4 million, or 23 cents a year earlier. For the period that ended April 29, sales increased to $285.7 million from $186.8 million.
Offsetting the positive news was a slightly softer outlook from Lululemon. Looking ahead, Lululemon expects second-quarter earnings of 28 cents to 30 cents a share. For the year, the company expects earnings of $1.55 to $1.60 a share.
Anadarko Petroleum Corp. (NYSE:APC) revealed Thursday it discovered light oil at the Paon-1X well offshore in Côte d'Ivoire, West Africa.
The exploration well – located in the CI-103 block – encountered more than 100 feet of oil pay in a Turonian-aged reservoir, the company said in a statement.
Ohio-based greeting cards company American Greetings (NYSE:AM) said Thursday it has purchased the assets of UK-based Clinton Cards (LON:CC) in a deal that has saved thousands of jobs, and relieved Clinton of its £35 million bank debt.
The J.M. Smucker Co. (NYSE:SJM) said fiscal fourth-quarter profit and sales grew on acquisitions, though margins eased as the company struggled with higher commodity costs.
On the economic front, the US Labour Department said Thursday first-time claims for unemployment insurance totaled 377,000 in the week ended June 2. That's 2,000 more than the consensus forecast, but 12,000 below the prior week.
The report said that applications for weekly benefits dropped by 12,000 to a seasonally adjusted 377,000. That's down from an upwardly revised 389,000 the previous week.
A new report on consumer credit will be released at 3 p.m. EDT. Consumer credit for April is expected to have increased by $12.7 billion.
The U.S. posted a deficit of $125 billion in May to bring the total federal shortfall to $845 billion through the first eight months of fiscal 2012, according to preliminary data from the Congressional Budget Office.
On Friday, the US Commerce Department reports on the trade balance in April. Economists expect a deficit of US $49.5 billion.
Commodities
In NYMEX futures trading, crude for July delivery was up 15 cents to $85.17 a barrel while gold futures for August delivery fell $40 to $1,594.20 an ounce.
Europe
In London, the Bank of England made no changes to its monetary policy, despite a deteriorating economic outlook.
European markets closed sharply higher Thursday with shares in Germany leading the region. The DAX was up 2.93% while France's CAC 40 was up 2.85% and Britain's FTSE 100 was up 1.18%.
Links:  Full news story
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