US stocks rose, sending the Standard & Poor’s 500 Index to its biggest rally since March, as President Barack Obama endorsed a bipartisan deficit-reduction plan. Strong corporate earnings from Coca Cola and Apple also boosted sentiment. The S&P 500 gained 1.6% to 1,326.73, rebounding from a three-week low. The Dow Jones Industrial Average advanced 202.26 points, or 1.6%, to 12,587.42. (Bloomberg)
US: Housing starts in US surge on apartment construction; permits increase
Housing starts in the US jumped more than forecast in June as better weather allowed the struggling industry to break ground on delayed projects. Work began on 629k houses at an annual pace, up 15% from May and the highest level in five months, figures from the Commerce Department showed today in Washington. The level topped the most optimistic forecast in a Bloomberg News survey of 71 economists. Building permits, a sign of future construction, unexpectedly climbed 2.5%. While the increase points to stabilization in construction, declining home values and delays in processing foreclosures mean it may take years to clear the market of distressed properties. (Bloomberg)
US: Obama Embraces Senators’ Deficit-Cutting Plan
President Barack Obama embraced a $3.7 trillion debt-cutting plan by a bipartisan group of senators that would combine tax increases and spending cuts, saying it could offer a way out of the congressional deadlock over raising the U.S. borrowing limit.
China: China’s 30% Gain in Tax Revenue Counters Risks from Local-Government Debt
China’s tax revenue rose 29.6 percent to 5 trillion yuan ($773 billion) in the first half of the year, giving officials more room to maneuver as they grapple with swelling local-government debt. “Stable” economic growth and rising company profits helped to bolster revenue, with inflation also playing a role, the ministry said. The fiscal strength that encouraged Standard & Poor’s to raise China’s debt rating in December may help the nation to absorb any fallout from banks’ loans going bad after stimulus spending that began in 2008.
EU: German investor confidence falls more than forecast as debt crisis worsens
Investor confidence in Germany, Europe’s largest economy, dropped more than economists forecast in July as the euro-area debt crisis worsened. The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations, which aims to predict developments six months in advance, fell to -15.1 from -9 in June. That’s the lowest since January 2009. Economists expected a decline to -12.5, according to the median of 42 estimates in a Bloomberg News survey. (Bloomberg)
EU: Greek crisis poses serious contagion risk even without default, IMF says
Greece’s sovereign-debt crisis risks contaminating the rest of the euro region even if officials avert a default, the International Monetary Fund said. Both the European Commission and the European Central Bank “considered that a sovereign default or a credit event would likely trigger contagion to the core euro-area economies with severe economic consequences,” according to an IMF staff report on the region’s economy released yesterday. “Staff however also saw serious risks of contagion, even under a strategy which tries to avoid default or credit events.” Government chiefs are meeting on 21 July for the second time in a month as they aim to break a deadlock over a new Greek rescue that has spooked investors. (Bloomberg)
Canada: Keeps key rate at 1%; stimulus ‘will be withdrawn’
The Bank of Canada kept its main interest rate unchanged and said borrowing costs will increase as the economy recovers, with policy makers dropping the word “eventually” to describe the timing of their next move. The target for overnight loans between commercial banks remained 1%, where it’s been since Sept, as forecast by all 26 economists surveyed by Bloomberg News. The Ottawa-based bank also raised its outlook for so-called core inflation and affirmed the economy will reach full output by the middle of 2012 while trimming this year’s growth forecast. (Bloomberg)
Bank of America posts 2Q net loss of US$8.8b
Bank of America Corp posted a second-quarter net loss after an $8.5b settlement with mortgage bond investors. The largest U.S. bank by assets on Tuesday, July 19 reported a net loss of $8.8b, or 90 cents per share, compared with net income of $3.1b, or 27 cents per share, a year earlier. (Reuters)
Coca-Cola profit up on strong growth abroad
Coca-Cola Co reported a higher quarterly profit on Tuesday, helped by strong growth in emerging markets. The world's largest soft drink maker, with brands like Sprite, vitaminwater and Powerade, reported net income of $2.80b, or $1.20 per share, for the second quarter, compared with $2.37b, or $1.02 per share, a year earlier. Excluding one-time items, earnings were $1.17 per share. (Reuters)
Apple profit tops estimates on record sales
Apple Inc, the biggest technology company by market value, reported thirdquarter profit that topped estimates, lifted by record sales of iPhones and iPad tablets. The stock jumped to an all-time high in late trading. Net income in the period more than doubled to $7.31b, or $7.79 a share, from $3.25b, or $3.51, a year earlier, Apple said today in a statement. Sales climbed 82% to $28.6b. Analysts had predicted profit of $5.87 a share and revenue of $25b, according to Bloomberg data. (Bloomberg)
Goldman Sachs Profit Misses Estimates
Goldman Sachs Group Inc., the U.S. bank that makes most of its money from trading, reported second- quarter profit that fell short of analysts’ estimates as fixed- income revenue plunged 63 percent from the first quarter. Net income climbed 77 percent to $1.09 billion, or $1.85 per share, from $613 million, or 78 cents, in the same period a year earlier.
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