Stocks Lack Impetus

Elena
15 Mar, 2006
New York City

Stocks opened mixed as bond yields moved up. However, the Nasdaq slightly gained after Sears Holdings reported that its Q4 earnings more than doubled. Lehman Bros reported Q1 profit rise of 24% to $1.085 billion, or $3.66 a share on 17$ higher revenue to $4.46 billion. EchoStar Communications posted Q4 profit nearly doubled, but missed expectations. General Motors edged up on news that the automaker received a bid for its GMAC arm by investors led by Kohlberg, Kravis & Roberts.

9:45AM- Stocks opened mixed.
U.S. stocks were mixed at opening as market seemed uncertain about taking a lift from declining bond yields and strong earnings results from investment banks. Investors were also cautious ahead of the release of the Federal Reserve''s Beige Book survey of regional economic conditions. A couple of economic reports were released and treasury yields moved up. On Tuesday, disappointing economic news sent the 10-year yield off a 21-month high. Financial services firm Lehman Brothers ((LEH)) announced a sharp increase in Q1 earnings on Tuesday, helped by an accounting change and a significant rise in revenues. The company reported net income of $1.1 billion, or $3.66 per common share. Dow component DuPont ((DD)) raised its Q1 earnings guidance on Tuesday. The company also revealed a cost cutting plan that will lead to the cutting of 1,500 jobs.


9:00AM – Stock futures pointed to a lackluster opening.
U.S. stock futures were sitting below the flat line, pointing to a lackluster start of Wednesday session. After a strong rally yesterday with major averages reaching five-year highs, stocks seemed uncertain about extending gains. Investors, waiting for signals about future interest-rates, remained cautious ahead of a heavy load of economic data with no catalyst to drive stocks higher in pre-market trading. Economic news will continue to be a key driver in Wednesday''s session. Monthly data on import and export prices are expected before opening. Oil inventory report is also due out in the morning. In the mid-afternoon, the Federal Reserve will release its so-called beige book, a survey of regional economic conditions. On earnings news front, Lehman Brothers ((LEH)) posted strong quarterly results, following an upbeat earnings report from Goldman Sachs yesterday. The financial-services firm, reported Q1 profit rise of 24% to $1.085 billion, or $3.66 a share vs. $875 million a year ago, when it earned $2.91 a share. Net revenue rose 17% to $4.46 billion. Standard & Poor''s 500 futures were down 0.3 point, but above fair value. Dow Jones industrial average futures were down 2 points and Nasdaq 100 futures were up 2 points.

Import prices fell in line with expectations, while export prices were unchanged.
The Department of Labor released its report on import and export prices in the month of February. The report showed that import prices fell in line with economist estimates while export prices came in unchanged. The report showed that import prices fell 0.5 percent in February after increasing by an upwardly revised 1.4 percent in January. Economists had expected import prices to fall 0.5 percent compared to the 1.3 percent increase originally reported for January. The drop in import prices was partly due to a 0.7 percent decrease in prices for petroleum imports, although prices still fell 0.5 percent excluding petroleum imports. The decrease in petroleum import prices came after a 6.9 percent increase in January. As mentioned above, the report also showed that export prices were unchanged in February after falling 0.7 percent in January. Excluding a 1.1 percent drop in prices for agricultural exports, export prices increased 0.1 percent.

Crude oil prices retreated below $63 ahead of inventory report, expected to show strong oil, but weak gasoline and heating oil supplies. Light sweet crude April delivery fell 37 cents to $62.73 a barrel. Gasoline fell 2 cents to $1.8485. Heating oil lost more than 2 cents to $1.7957. London Brent for April delivery lost 26 cents to $63.71 a barrel. European gold continued its winning streak. In London gold rose to $551.25 bid per troy ounce, up from $547.30. In Zurich the precious metal advanced to $551.70 from $543.80. In Hong Kong gold gained $6.90 to $551.70. Silver opened at $10, up from $9.90. The U.S. dollar traded mixed against other major currencies. The euro traded at $1.2028, up from $1.2018. The dollar bought 117.57 yen, up from 117.38. The British pound was quoted at $1.7453, down from $1.7463.


8:30 AM Lehman Bros tops views, while Ross Stores is in line.
Sears Holdings, ((SHLD)), full-line and specialty retail stores operator, reported that Q4 net income advanced to $4.03 a share, up vs. $3.09 a share in the year-ago period on revenue growth, beating analysts’ forecasts for earnings of $3.62 a share. In a SEC filing, the company announced that proforma revenue for the year shed 3.0%, as domestic comparable store sales were down 5.3% in the aggregate, with Sears Domestic comparable store sales decreasing 8.4% and Kmart comparable store sales decreasing 1.2%.

Charming Shoppes Inc, ((CHRS)), clothing retailer, reported that Q4 net income surged to $19.2 million, or 15 cents a share, from $4.9 million on 36% net sales growth and 7% sames-store sales growth. The company beat analysts’ expectations of 14 cents a share. The company announced that performance followed higher sales and operating margin improvement at its Lane Bryant and Catherines Plus Sizes brands.

Ross Stores Inc, ((ROST)), off-price retailer, reported that Q4 profit advanced 37% to 49 cents a share, from 35 cents a year earlier on 16% sales growth and 6% of same-store sales growth, in line with analysts’ expectations.

Lehman Bros., ((LEH)), investment banking services provider, reported Q1 earnings $3.66 a share, including a 16 cents a share accounting change gain, up from $2.91 a share a year ago. Net revenue advanced to $4.46 billion, from $3.81 billion in the year-ago period. The company beat analysts’ views for earnings of $3.17 a share. Lehman Bros added that stubbornly strong fixed income trading and near-record merger activity around the globe boosted its Q1 earnings to advance 24%. Tuesday, Goldman Sachs reported that its net income for the quarter advanced more than 60%, setting a record for any broker''s quarterly profit.

EchoStar Communications Corp, ((DISH)), satellite-television operator, reported Q4 net income of 30 cents a share, up from 15 cents in the prior year. Total revenue came to $2.18 billion for Q4, up 12.8% from the same period the previous year. The company missed analysts’ projections of 35 cents a share. Net new subscribers added to EchoStar''s Dish Network totaled about 330,000 for Q4, pushing the customer base to 12.04 million. For 2005 as a whole, EchoStar said Dish Network added nearly 1.14 million subscribers.

Consolidated Communications Holdings Inc, ((CNSL)), communications services provider, reported that Q4 net loss was narrower reaching $2.1 million, or 7 cents a share, from $10.6 million in the year-ago period, as revenue advanced 3.3%. The company missed analyst estimate for a profit of 15 cents a share. The company also added that its digital video service advanced considerably during Q4, which should be instrumental in boosting customer loyalty.


8:00AM Asian markets advanced across the region, despite Sony’s stock decline.
Asian-Pacific benchmarks advanced across the region Wednesday, boosted by solid gains on Wall Street overnight. The Nikkei rose 0.5% to 16,319.04, despite 1.8% decline in Sony’s stock as the electronic giant postponed the release of its PlayStation 3 game console until November. The index was largely supported by technology, communications and auto stocks, including Advantest, up 1.9%, NTT DoCoMo, up 0.6%, and Honda Motor rising 0.7%. Hong Kong’s Hang Seng climbed 1.3% on property stocks, helped by easing rate-hike concerns. Shanghai Composite surged 1.3%, led by gains in oil major Sinopec. Taiwan weighted index rose 0.9% on strong tech sector and South Korea’s Kospi advanced 0.6% on insurance stocks.

European markets posted gains at mid-day trading, lifted by strong resource and technology stocks, following a sharp decline in U.S. bond yields overnight. BHP Billiton, Rio Tinto, and BP advanced on higher metal prices. Among tech stocks, STMicroelectronics and Infineon Technologies showed strength. The German DAX 30 added 0.3%, the French CAC 40 gained 0.3%, and London FTSE 100 rose 0.5%.