U.S. stocks and exchange traded funds (ETFs) are positive territory this morning as encouraging economic news gets investors hopeful that the recession has come to an end.
June marked the third straight month that economic indicators rose more than expected. More plans to build homes, fewer pink slips being handed out and higher stock prices sent the New-York based Conference Board’s index of leading economic indicators up 0.7% last month beating analysts’ expectations of a 0.4% increase. Of the 10 economic indicators that the index tracks, seven gained ground in June with the interest rate spread leading the pack.
In financial news, business lender CIT Group’s (CIT) board of directors approved a deal with major bondholders approving $3 billion in a rescue loan to keep the company out of bankruptcy. This loan will provide temporary financing to launch an exchange of outstanding debt for equity, comes with a hefty interest rate of 10.5% and will force the company to put up some of its highest quality loans up as collateral against the loan. This comes a few days after the federal government refused to bailout CIT.
Oilfield services company Halliburton (HAL) reported that its second-quarter profits declined by 48% as sluggish exploration and production activity dampened the bottom line. The company reported net income of $0.29/share and beat Wall Street’s expectations of $0.27/share. Despite the outperformance, the company painted somewhat of a bleak future for the remaining of the year, sending the iShares Dow Jones U.S. Oil Equipment Index (IEZ) down 0.6% in morning trading.
Diversified manufacturer Eaton Corp. (ETN), which makes parts for airplanes, vehicles and electrical equipment reported a plunge of 92% in second-quarter earnings, or $0.23/share. On the upside, the weak sales seen by the company still enabled them to beat Wall Street’s anticipation of $0.17/share.