Stocks Advance on Mubarak Resignation

NEW YORK—Stocks ended last Friday higher as the resignation of Egyptian President Hosni Mubarak and higher consumer confidence boosted investor optimism.

The Standard & Poor’s 500 Index rose 7.28 points on Friday afternoon, or 0.55 percent. The Dow Jones Industrial Average jumped 43.97 points, and the Nasdaq Composite Index rose 19 points, or 0.7 percent.

Investors globally breathed a sigh of relief as Egyptian president Mubarak handed power over to the military and caved into the protesters who have occupied Cairo for almost three weeks, and erased any concerns that the unrest would linger, impacting shipping and regional oil production.

The news also sent Egyptian financial markets higher. According to the Daily Star, an English-language Lebanese newspaper, Egyptian dollar denominated bonds gained on Friday, and the global depository receipts (GDRs) of Egyptian construction giant Orascom Construction Industries pared its losses in London after Mubarak’s announcement. Orascom is Egypt’s biggest publicly listed company.

“Even if it is a military rule, I see it as a stabilizer,” Mona Mansour, research director at CI Capital, a Cairo-based investment bank, told the Star.

“It’s better than always having demonstrations. I see it as a transitional period that we need to stabilize economic performance.”
Regards,

The S&P was led by jumps in the financial sector, with Bank of America Corp. and JPMorgan Chase & Co. both rising more than 1 percent. The third biggest bank in the United States, Citigroup Inc., also rose 2.09 percent.

Charlotte, N.C.-based Bank of America said last week that it would reorganize its mortgage division and create a new business led by Terry Laughlin. It will focus on modifying troubled loans, address foreclosures, and other mortgage-related matters.

Investors also saw Treasury Secretary Timothy Geithner going to Congress earlier on Friday to present a plan to unwind Fannie Mae and Freddie Mac, the two mortgage finance behemoths currently under government conservatorship. The firms together guarantee roughly $11 trillion in mortgages.

Established in 1938, the Washington-based Fannie has bought consumer mortgages and repackaged them into guaranteed securities, fueling U.S. home-ownership for several decades.

U.S. equity markets were also buoyed by ConocoPhillips, the third-largest integrated U.S. oil company, which said that it would increase its quarterly dividend and increase stock buyback for up to $10 billion. Last month, the company reported a 59 percent gain in quarterly profits. Starting on Feb. 22, the company will bump its quarterly dividend by 20 cents to 66 cents, which is the highest dividend yield among all U.S. oil firms, according to Bloomberg figures.

In currencies, the dollar lost 0.34 percent against the euro and around 0.5 percent against the pound.

Kinder Morgan’s IPO

Texas-based energy company Kinder Morgan Inc. saw its shares jump as much as 7 percent after its initial public offering (IPO) last Friday.

Kinder became the biggest leverage buyout-backed IPO in corporate history, raising more than $2.9 billion in stock. The company was taken private by a consortium of private equity firms including Goldman Sachs Capital Partners and the Carlyle Group in 2007.

According to a filing with the Securities and Exchange Commission, Kinder plans to pay a 3.9 percent dividend annually (based on its IPO price), or $1.16 per year. Kinder’s IPO eclipsed last month’s IPO of Nielsen Holdings NV, a media company that was the biggest buyout-backed IPO in corporate history.

Consumer Sentiment Higher
A rising stock market and gradually smaller unemployment rates are boosting consumer confidence, which reached an eight-month high this month.

According to the Thomsen Reuters/University of Michigan preliminary index of consumer sentiment, confidence increased 0.9 points from 74.2 to 75.1 last month, the highest reading since last June.

The results, which came on the heels of a positive movement in U.S. unemployment rate this month, could mean that consumer spending is likely to increase in the coming months, accelerating business activity.

Another Week of Earnings

This week, more corporate earnings will take center stage as investors will look for signs to continue the recent surge in stocks, or for signs that the economic road to recovery ahead may be bumpier than previously imagined.

Computer maker Dell Inc. will report its quarterly earnings on Tuesday. Dell, which has felt enormous pressure from rivals Hewlett-Packard Co. and Apple Inc., historically has disappointed investors with its earnings releases.

On Wednesday, farming equipment maker Deere will report—the company is expected to have an optimistic outlook for 2011 as agriculture commodity prices are rising and many farms are expanding production. Cable company Comcast Corp. and diary distributor Dean Foods will also report.