Bankers Cheer Sentiment

Elena
14 Mar, 2006
New York City

U.S. stocks recovered from the initial decline, lifted by strong investment banks after Goldman Sachs reported 64% rise in Q1 on 61% revenue growth, beating expectations. The stock rose 4.5% and helped lift other financial shares. Procter & Gamble Co. fell 3.2% to $60.01 after the company lowered its quarterly sales expectations.

10:30AM U.S. stocks rebounded on investment bank shares.
It took stock averages a little time to recover from the initial slide and move to the upside, lifted by strength in investment bank shares. Better-than-expected quarterly news from Goldman Sacks sent investment banks higher. The company rose 3.9% to $146.20 after reporting 64% earnings rise in Q1, exceeding analyst expectations. Since the beginning of the year investment banks have had the best performance in the broad market with the Standard & Poor''s Investment Banking and Brokerage Index hitting an all-time high in March. The broker/dealer space was among the best performers in the early going, with Goldman Sachs strong quarterly report having the biggest contribution. The housing sector also showed strength, receiving a boost from the slide in treasury yields. Technology sector also stood out among advancers, including 1% rallies in the disk drive and semiconductor sectors. The Dow Jones rose 23.69, or 0.21%, the Standard & Poor's 500 index rose 4.05, or 0.32% and the Nasdaq composite index rose 9.58, or 0.42%. Bonds rose smartly, with the yield on the 10-year Treasury note falling to 4.73% from 4.77%late Monday.


9:45AM- Stocks opened in the negative territory.
U.S. stocks started Tuesday session lower, hurt by disappointing February retail sales, a wider current account deficit in the fourth quarter, and lowered sales outlook from Procter & Gamble ((PG)). The Dow industrials component said late Monday it expects organic sales growth of 5% to 6%, at the low end of its earlier forecast of 5% to 7%. Disappointing economic data received mixed reactions from traders as on the one hand, the data prompted unfavorable economic prospects, but on the other, traders were happy to see comparatively moderate 10-year yield. Market digested a government report, showing a 1.3% drop in February retail sales with weak auto sales to blame. Economists had expected a 0.9% slide in retail sales after a 2.3% advance in January. In another report, the Commerce Department said that fourth-quarter current account deficit was up 20.4% from the previous record of $668.1 billion set in 2004. Of companies in focus, Goldman Sachs ((GS)) kicked off the investment banking reporting season, reporting 64% profit jump in Q1, exceeding expectations.

In the opening minutes, the Dow Jones industrial average was down 9.29 points at 11,066.73, the Nasdaq Composite Index dropped 2.78 points to 2,264,25 and the Standard & Poor''s 500 index has declined 1.00 point to 1,283.13.


9:00AM – Stock futures pointed to a higher start, supported by bid activity. U.S. stock futures indicated a weak opening of Tuesday session, following a lackluster close yesterday when averages failed to extend recent highs. Standard & Poor''s 500 futures were down 2.4 points, just above fair value. Dow Jones industrial average futures were down 25 points, and Nasdaq 100 futures were down 5.5 points. Market was concerned about economic direction and further interest-rate hikes and was eagerly awaiting economic data, including February retail sales and current account deficit.

Crude oil prices retreated but gasoline and heating oil rose on potential refinery problems in U.S. Light sweet crude April delivery fell 19 cents to $61.58 a barrel. Gasoline gained 2 cents to $1.7654. Heating oil added nearly a cent to $1.7654. London Brent for April delivery lost 23 cents to $61.97 a barrel. European gold prices continued recent advance. In London gold rose to $545.25 bid per troy ounce, up from $543.30. In Zurich the precious metal advanced to $543.80 from $543.43. In Hong Kong gold gained $1.30 to $544.80. Silver opened at $10, up from $9.90. The U.S. dollar traded mixed against other major currencies. The euro traded at $1.1958, down from $1.1961. The dollar bought 118.41 yen, down from 118.79. The British pound was quoted at $1.7357, up from $1.7325.

The fourth-quarter current account deficit reached a record high.
The Department of Commerce released its report on the current account deficit in the fourth quarter. The report showed that the deficit widened more than expected to reach a record high. The report showed that the current account deficit widened to $224.9 billion in the fourth quarter from a revised $185.4 billion in the third quarter. Economists had forecast a deficit of $220 billion compared to the deficit of $195.8 billion previously reported for the third quarter. The Commerce Dept. noted that the increase in the current account deficit was primarily due to increases in net unilateral current transfers and in the deficit on goods. Additionally, the balance on income shifted to a deficit from a surplus, while the surplus on services decreased. With the increase in the fourth quarter, the current deficit rose to a record of $804.9 billion in 2005 from $668.1 billion in 2004. The increase may raise concerns about the willingness of overseas investors to fund the deficit.

February retail sales dropped more than expected.
The Department of Commerce released its report on retail sales in the month of February on Tuesday, showing that sales fell more than expected after showing a significant increase in the previous month. The report showed that retail sales fell 1.3 percent in February following an upwardly revised increase of 2.9 percent in January. Economists had expected a decline of 0.9 percent compared to the 2.3 percent increase originally reported for January. The drop in retail sales reflected a notable decline in sales by motor vehicle and parts dealers, which fell by 4.6 percent in February after rising 4.2 percent in January. Sales at furniture and home furnishings stores and clothing and clothing accessories stores also showed notable declines. The report showed that sales excluding the auto sector fell 0.4 percent in February, giving back some ground after a 2.6 percent increase in January. The decrease was slightly below the 0.5 percent drop expected by economists.


8:30 AM Evolving Systems reports profit, Liberty Global full-year loss grows.
Evolving Systems, Inc, ((EVOL)), a leading provider of innovative software solutions, reported Q4 Net income results 5 cents per share, reversing from a net loss of 20 cents share in the same period a year ago. Q4 revenue rose 6% to $10.1 million from $9.6 million in Q4 a year ago. Total costs of revenue and operating expenses in Q4 declined 7%. The decline reflects the synergies of the Tertio acquisition, which resulted in lower employee and subcontractor costs.

Liberty Global Inc, ((LBTYA)), broadband cable operator, reported that its 2005 net loss grew to $80.1 million, from $21.5 million in 2004, while pro forma revenue advanced 28% to $5.15 billion. The company added that revenue growth was powered mainly by acquisitions, while profit was reduced by higher interest expense and increased foreign currency transaction losses. The company announced that it expects 2006 revenue to be $6.8 billion.

Air Methods Corp, ((AIRM)), provider of medical air transportation services, reported Q4 earnings of 29 cents a share, up from a loss of 2 cents a share a year-ago on higher profit to a significant increase in same-base transport as well as an increase in revenue per transport after bad debt expense for its community-based operations. Revenue soared 32%.

Southern Union Co, ((SUG)), natural gas distributor, reported Q4 loss of $1 a share, incorporating a non-cash charge of about $175 million related to the planned sale of certain natural gas distribution businesses. If not for the charge, the company earned 57 cents a share in Q4, up versus a profit of 19 cents a share a year-earlier. Operating revenue advanced to $691.7 million from $559.8 million in the same period a year earlier. The analysts’ estimate was for a profit of 42 cents a share.

Capital Title Group Inc, ((CTGI)), real estate and mortgage services group, reported Q4 net income of 14 cents a share, down a penny from the year-ago equivalent results. The company added that revenue gained 7.9%. The analyst estimate was for earnings of 13 cents a share. Capital Title said it will be delaying the filing of its annual report on Form 10-K, due mainly to the completion of new audit procedures required under Sarbanes-Oxley legislation. It expects to file the report on or before March 31 2006.

Goldman Sachs Group Inc., ((GS)), banking and securities services company, reported that Q1 net income advanced 64% to $5.08 a share a share, almost double from $2.94 a share a year ago and $3.35 a share for Q4 of 2005. Overall, total net revenue grew 61%, amounting to $10.34 billion, from the previous year''s $6.41 billion. Goldman also lifted its quarterly dividend to 35 cents a shares from 25 cents.


8:00AM Asian markets lost ground. New Zealand hit a new record high.
Asian-Pacific benchmarks lost ground Tuesday as rising oil prices and concerns about higher interest rates discouraged investors from buying. The Nikkei slipped 0.8% to 16,238.36, ending a three-day rally during which the market surged 4.7%. The index was dragged by weakness in major shipping companies like Kawasaki Kisen Kaisha and tech stocks, such as Tokyo Electron. Taiwan weighted index led decliners, falling 1.3% on heavy sell-off. South Korea’s Kospi dropped 0.9%, Hong Kong’s Hang Seng lost 0.1% on property stocks, while New Zealand hit a fresh all-time high of 1.7% thanks to a lower NZ dollar. In currency trading, the dollar fell to 118.60 yen.

European markets traded mixed at mid-day as lackluster close on Wall Street, recovery in oil prices, and some corporate news, weighed on sentiment. However, bid activity among retailers provided some support. The German DAX 30 dropped 0.4% on economic data with BMW rising 3.1% on upgrade from UBS. The French CAC 40 lost 0.2%, while London FTSE 100 gained 0.2%, lifted by mergers in the retail sector, including Kingfisher, up 6.9% and BSG International, up 5.9%.