While you were sleeping: U.S. housing starts slow

While you were sleeping: U.S. housing starts slow

(BusinessDesk) January 20 - Stocks in Europe and on Wall Street pulled back from recent gains on disappointment with Goldman Sachs Group Inc’s earnings and as U.S. housing starts fell more than expected.

In early afternoon trading, the Dow Jones Industrial Average was steady. The S&P 500 Index fell 0.66% and the Nasdaq Composite Index dropped 0.94%.

Investors weren’t happy with earnings reported today. Goldman Sachs reported a 52% drop in fourth-quarter profit because of a decline in trading revenue. Wells Fargo & Co posted a fourth-quarter profit that fell short of some analysts' estimates.

American Express Co said fourth-quarter net income would be less than some analysts estimated as it disclosed costs tied to job cuts in its servicing network

With financials, "I think expectations were for some better results after a fairly robust fourth quarter and start to 2011," Thomas Villalta, portfolio manager for Jones Villalta Asset Management in Austin, Texas, told Reuters.

Villalta said he was still bullish on financials for 2011.

U.S. housing starts fell 4.3% to a 529,000 annual rate in December, the lowest since October 2009.

Investors hammered Cree Inc shares as the maker of energy-efficient lighting products forecast third-quarter profit, excluding some items, of as low as 38 U.S. cents a share. Analysts were forecasting 58 U.S. cents a share on average, according to a Bloomberg survey.

Good news included fourth-quarter earnings from Apple Inc and International Business Machines Corp, both released after the market close on Tuesday.

Meanwhile, the U.S. and China reached agreement on export deals worth US$45 billion, a senior U.S. official said today. The agreement will be announced today, as Chinese President Hu Jintao starts his state visit to U.S.

The agreements included China's final approval of a US$19 billion contract to buy 200 Boeing aircraft for delivery between 2011 and 2013. Other deals involved Honeywell and Caterpillar.

Altogether, the Boeing and other deals will support an estimated 235,000 American jobs, U.S. officials said.

In a sign of increasing confidence that European Union leaders were getting a grip on the region’s sovereign debt crisis, the euro rallied to an eight-week high.

The euro rose more than 1% on the day to US$1.3538, according to Reuters data.

"People are very impressed with the determination of European officials and are expecting them to successfully deal with the sovereign debt crisis," Steven Englander, head of G10 strategy at CitiFX in New York, told Reuters.

Spot gold rose 0.4% at US$1,373.00 by 1608 GMT.

"The broader concerns driving gold prices still remain intact," Barclays Capital analyst Suki Cooper, told Reuters.

"Given that we're now in the run-up to the Lunar holidays, we have seen some strong physical demand materializing in China and reports about bar premiums trading at two-year highs and mint shortages, so there's good physical demand on the downside providing a cushion to prices."

U.S. crude oil prices fell 55 cents to US$90.83 a barrel by 1524 GMT.

(BusinessDesk)

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