Business Blog Posts

Auto sales are an early indicator each month of U.S. consumer demand, and GM, as the biggest U.S. seller of autos and the first to report April sales on Tuesday, indicated that industry sales will be strong.

A Thomson Reuters poll of 40 economists and analysts had predicted a gain of 16 percent over last year.

GM said that its retail sales were up 25 percent, driven by higher sales for its fuel-efficient Chevrolet compact cars and compact crossovers: the Cruze, Equinox and Terrain.

The Cruze, the compact car that GM introduced last year, is now the second-biggest selling vehicle in the automaker's lineup, behind only its Silverado pickup truck. Cruze sales so far this year are about triple the sales of the car it replaced, the compact Cobalt.

"Consumers are continuing to rethink their vehicle choice," said Don Johnson, GM vice president for U.S. sales.

Ford Motor Co sales analyst George Pipas said this week that Ford is also showing a major shift in consumer taste toward smaller and more fuel-efficient cars as gasoline prices rise.

U.S. retail gasoline prices rose 8 cents in the past week to $3.96 per gallon and are now $1.07 higher than a year ago, according to government figures released on Monday.

Pipas said the he believes that high gasoline prices are convincing many consumers to "pull the trigger" on a new vehicle purchase.

"I believe there is a call to action," Pipas said of consumer purchases this spring. "Summer is the driving season, and I'm going to pull the trigger," he said of consumers.

Sales for the other automakers in the U.S. market will be issued later on Tuesday.

On Monday in Japan, new-vehicle sales in April halved, sinking to the lowest monthly tally on record, as Japanese automakers felt the full brunt of the March earthquake.

Also on Monday, French car sales fell 1.2 percent, reflecting the end of a scrappage scheme. In Italy, they fell to the lowest level in 15 years.

Last month, Ford outsold GM for only the second time in 13 years. Ford and other automakers will report U.S. sales later on Tuesday.

The world's top automaker by sales, Toyota Motor Corp, is expected to show weaker sales than its U.S. counterparts, due to production and inventory problems, analysts said.

GM shares were up 2.4 percent at $32.94 on the New York Stock Exchange on Tuesday morning.

(Additional reporting by Deepa Seetharaman, editing by Matthew Lewis)

Sales of Pfizer's core business of prescription drugs fell 2 percent to $14.2 billion. Cholesterol fighter Lipitor, the company's biggest product, led the downturn, as its revenue tumbled 13 percent to $2.39 billion due to generic competition in overseas markets.

The world's largest drugmaker, whose shares fell 1.3 percent in premarket trading, said it earned $2.22 billion, or 28 cents per share, in the first quarter. That compared with $2.03 billion, or 25 cents per share, in the year-earlier period, when Pfizer took charges related to its late 2009 purchase of rival U.S. drugmaker Wyeth.

Excluding special items, including its Capsugel business that is being sold and is now considered to be a discontinued operation, Pfizer earned 60 cents per share. Analysts on average expected 59 cents per share, according to Thomson Reuters I/B/E/S.

Global company revenue of $16.5 billion was a bit lower than the year-earlier quarter and slightly trailed Wall Street expectations of $16.63 billion.

Revenue would have fallen 2 percentage points if not for the weaker dollar, which boosts the value of overseas sales, and for new products obtained in Pfizer's recent purchase of specialty drugmaker King Pharmaceuticals.

Many investors fear Pfizer, which has bought three of the largest U.S. drugmakers over the past decade, will be far too big to deliver strong profit growth once Lipitor faces cheaper U.S. generics in November, and more than a half dozen other Pfizer drugs lose U.S. patent protection in the next few years.

Wall Street expects Pfizer's new chief executive, Ian Read, will eventually sell off one or more of its non-pharmaceutical businesses, or perhaps even its generic drugs operation.

By divesting such products, which have far lower profit margins than branded prescriptions drugs, the hope is that newly approved medicines will have a better chance to bolster overall earnings of the smaller company.

Pfizer on Tuesday said it aims in the second half of the year to complete its ongoing assessment of what businesses it may sell.

Animal-health sales jumped 16 percent to $982 million in the quarter, while sales of consumer healthcare products rose 12 percent to $745 million. Nutritional product sales rose 3 percent to $470 million.

(Reporting by Ransdell Pierson and Lewis Krauskopf; Editing by Maureen Bavdek)

The U.S. dollar struggled to pull away from a three-year trough, while oil and copper prices eased as investors focused on the still-fragile state of the recovery in many developed economies.

A slew of data this week will help gauge the strength of the world economy, with particular focus on U.S. non-farm payrolls on Friday.

"Everyone is waiting to see how uncertainties in the macro-economic situations of major economies will pan out," China Futures Co. analyst Yang Jun said.

European shares were expected to open mostly down, with Euro Stoxx 50 futures shedding 0.4 percent, while S&P 500 futures fell 0.3 percent, pointing to a weaker start on Wall Street. Financial spreadbetters called London's FTSE 100 .FTSE flat-to-higher after a four-day weekend. .EU .N

MSCI's broadest index of Asia-Pacific shares excluding Japan .MIAPJ0000PUS fell 0.9 percent, with South Korea .KS11 stocks losing 1.3 percent and Australian stocks .AXJO down 0.8 percent. Japan's financial markets were closed for a public holiday. .AX .KS

"Our number one headwind for equities right now is the Aussie dollar," said IG Markets institutional dealer Chris Weston.

The U.S. currency has been under pressure for months due to the Federal Reserve's ultra-loose monetary policy, which has opened up a yield gap between the dollar and currencies such as the euro and the Aussie.

DATA SURPRISE

The dollar index .DXY, which tracks the dollar against a basket of major currencies, crept up 0.1 percent, still not far from three-year low plumbed in New York trade. <FRX/>

The euro was around $1.4815, having risen to a 17-month high above $1.49 after surprisingly strong manufacturing data boosted the chances of another European Central Bank interest rate rise.

The Aussie eased from a 29-year high above $1.10, to trade around $1.09 after the Reserve Bank of Australia kept interest rates unchanged, as expected.

The central bank, the first in the developed world to begin tightening policy in late 2009, said underlying inflation was likely to head higher, laying the groundwork for further rate rises in the months to come.

"That addition to the statement suggests they're preparing to move in the next few months -- though there's no sense of urgency about it," said Brian Redican, a senior economist at Macquarie.

LOONIE GAINS

The Canadian dollar edged up as provisional results from Canada's election showed the pro-business Conservatives cruising to victory, on course to transform their minority administration into a majority government.

The loonie has lagged other commodity-linked currencies, in part due to uncertainty about the outcome of Monday's election, with the opposition New Democrats pledging to raise corporate taxes, increase social spending and toughen climate change policies.

"I think generally this is probably very good for the Canadian dollar," said Firas Askari, head of foreign exchange trading at BMO Capital Markets. "We haven't had a majority government in some years and I think this provides a measure of stability that the market was looking for."

Oil, the asset often most sensitive to perceptions of geopolitical risk, fell nearly half a percent, but remained about $2 above the Monday low hit after news of the killing of Osama bin Laden in Pakistan by U.S. special forces.

While the death of bin Laden could reduce the threat against the United States by militant Islamists in the long-term, the potential for retaliatory attacks in the short-term would support prices, analysts said.

"The potential of violence from retaliation has more upside than downside risks, and would support the market," said Serene Lim, commodities analyst with ANZ Bank in Singapore.

U.S. crude futures eased 50 cents to $113.02 a barrel, while Brent crude fell 42 cents to $124.70.

Spot gold was a little firmer at $1,547.59 an ounce, after retreating from a record $1,575.79, and copper fell 0.3 percent.

Weaker industrial metals prices dragged on shares of big mining firms, with BHP Billiton (BHP.AX) down 1.4 percent and Rio Tinto (RIO.AX) 0.7 percent.

(Editing by Richard Borsuk)

The impact of bin Laden's death by U.S. forces on financial markets prompted a quick flurry of buying, which was viewed as an emotional response. The Dow swung 92 points from its high of the day to its low.

"His death should not have affected the markets much ... (but) just people feeling a little better about the world sometimes impacts the stock market," said Bryant Evans, investment adviser and portfolio manager at Cozad Asset Management, in Champaign, Illinois.

Energy and materials were the weakest performers. Investors pulled back from shares that have outperformed lately following declines in commodities. The S&P energy index .GSPE was down 1.3 percent.

U.S. crude prices ended lower but were off the sharp declines that immediately followed word of the al Qaeda leader's killing, and silver dipped after a recent rally.

Monday's fall followed the Dow's and Nasdaq's posting their best monthly gains since December, and analysts forecast little resistance for the S&P 500 until 1,400.

"We've seen a great stock market this year, and that shows you that the broader economy is what's important," Evans said.

Stocks also were helped by merger and acquisition announcements, which often reflect optimism about the longer-term outlook. The S&P 500 is up 30 percent since the start of September, roughly when the current rally began.

The Dow Jones industrial average .DJI was down 3.18 points, or 0.02 percent, at 12,807.36. The Standard & Poor's 500 Index .SPX was down 2.39 points, or 0.18 percent, at 1,361.22. The Nasdaq Composite Index .IXIC was down 9.46 points, or 0.33 percent, at 2,864.08.

The CBOE Volatility Index, Wall Street's fear gauge, rose 8.8 percent. The VIX index, which often moves inversely to the S&P 500, measures the cost of hedges or protection investors are willing to pay against a fall in the S&P 500.

Among the deal news, Israel-based Teva Pharmaceuticals Industries Ltd (TEVA.TA)(TEVA.O) will buy Cephalon Inc (CEPH.O) for $6.8 billion, and Arch Coal Inc (ACI.N) will acquire International Coal Group Inc (ICO.N) for $3.4 billion.

U.S.-listed shares of Teva rose 3.4 percent to $47.27, while Cephalon gained 4 percent to $80.11. Arch shares were down 2.2 percent at $33.53, but International Coal soared 30.8 percent to $14.43 and was the among the most actively traded stocks on the New York Stock Exchange.

In addition, Community Health Systems Inc (CYH.N) raised its bid for Tenet Healthcare Corp (THC.N) by $1.75 per share to $7.25.

Community Health fell 1.7 percent to $30.22, and Tenet dropped 3.5 percent to $6.69.

In other deal news, Nasdaq OMX Group (NDAQ.O) and IntercontinentalExchange Inc (ICE.N) took their $11 billion takeover bid for NYSE Euronext (NYX.N) directly to the Big Board's shareholders with a tender offer. NYSE shares were up 0.8 percent at $40.40, while Nasdaq shares were up 0.07 percent at $27.14.

About 7.35 billion shares traded on the New York Stock Exchange, NYSE Amex and Nasdaq, below last year's estimated daily average of 8.47 billion.

Declining stocks outnumbered advancing ones on the NYSE by a ratio of 3 to 2, while on the Nasdaq, about 9 stocks declined for every 4 that rose.

(Reporting by Caroline Valetkevitch; Editing by Kenneth Barry)