Industrial Output Recovers on Utilities

Elena
17 Mar, 2006
New York City

U.S. stocks opened higher, awaiting key consumer sentiment report. General Motors and American International Group weighed on the Dow. GM shares fell 2.4% on report that its 2005 loss was $2 billion deeper than previously reported. AIG fell 2.5% on 72% drop in Q4 profit, citing a legal settlement charge and hurricane losses.

9:45AM Stocks opened higher ahead of economic data.
U.S. stocks opened higher with investors awaiting consumer sentiment data. Market largely ignored disappointing news from insurer AIG which reported sharp profit decline and automaker General Motors which said that its 2005 loss was steeper than expected. However, trading activity is expected to be volatile because of the expiration of key options contracts. The Dow Jones was up 20.49 points, or 0.18%. The Standard & Poor's 500 Index was up 2.52 points, or 0.19%. The Nasdaq was up 4.60 points, or 0.20%. In early trading the housing sector stood out as the most notable mover to the upside, rising 1.3%, building on gains posted throughout the week.

Industrial output rose 0.7% compared with expectations of 0.9% increase.
The Federal Reserve released its report on industrial production and capacity utilization in the month of February on Friday, showing that industrial production rebounded after falling in the previous month. The report showed that industrial production rose by 0.7 percent compared to a revised decrease of 0.3 percent in January. Economists had been expecting industrial production to grow by 0.9 percent compared to the 0.2 percent decrease originally reported for January. The increase in industrial production reflected a rebound in utilities output, which rose 7.9 percent in February after falling 11.5 percent in January. The Fed said that the rebound came as the weather moved closer to seasonal norms after January''s warm temperatures. The report also showed that mining output fell 0.5 percent in February after increasing by 2.3 percent in January, while manufacturing production was unchanged in February after a gain of 0.8 percent in January. The Fed also said that the capacity utilization rate rose to 81.2 percent in February from 80.8 percent in January. The increase came in below economist estimates of an increase to 81.5 percent.


9:00AM Stock futures pointed to a lackluster start ahead of data.
U.S. stock futures were sitting near the flat line, predicting a lackluster start of Friday session as investors were cautious ahead of key consumer sentiment data release, likely to prompt the direction of interest rates. On Thursday the Dow and S&P 500 extended their multi-year highs, but the Nasdaq posted modest losses. On Friday morning, Standard & Poor''s 500 futures were down 1.2 points, but above fair value. Dow Jones industrial average futures were down 19 points, and Nasdaq 100 futures were down 0.5 point. Among companies, General Motors Corp. ((GM)) and American International Group Inc. ((AIG)) weighed on the Dow. GM shares fell 4% before the bell on report that its 2005 loss was $2 billion deeper than previously reported. AIG fell 1.4% on 72% drop in Q4 profit, citing a legal settlement charge and hurricane losses. Nasdaq futures received some support from Google ((GOOG)), rising 0.7%, after a lawsuit, accusing the Web search systems of publisher''s copyright infringement, was dismissed.

Crude oil prices hovered over $63 on concerns about gasoline supplies. Light sweet crude April delivery fell 18 cents to $63.40 a barrel. Gasoline fell 1 cent to $1.8600. London Brent for April delivery lost 22 cents to $63.99 a barrel. European gold gained ground Friday. In London gold advanced to $555.50 bid per troy ounce, up from $549.70. In Zurich the precious metal rose to $555.10 from $548.60. In Hong Kong gold climbed $3 to $554.30. Silver opened at $10, down from $10.10. The U.S. dollar traded mixed against other major currencies. The euro traded at $1.2176, down from $1.2177. The dollar bought 116.31 yen, down from 116.79. The British pound was quoted at $1.7553, down from $1.7570.

Tektronix and Petco top estimates on items.
Tektronix Inc, ((TEK)), provider of technology measurement, solutions reported Q3 net earnings of 32 cents a share, up from. 30 cents a share in the year-earlier period on revenue growth,. If not for certain items, the company earned 37 cents a share up vs. 31 cents a share a year earlier, topping on that basis analyst estimate of 33 cents a share.

Petco Animal Supplies Inc ((PETC)), pet food and supplies retailer, reported Q4 net income of 46 cents a share, up a penny a share compared with the same period a year ago on sales growth. If not for one-time charges, the company would have gained earnings per share of 49 cents, beating analysts’ forecasts of 45 cents a share.

Vector Group Ltd, ((VGR)), cigarette maker, reported that Q4 net income advanced to 40 cents a share, from 24 cents in the year-ago period on revenue growth. Earnings from continuing operations amounted to 82 cents a share.

Tom Online Inc, ((TOMO)), Chinese Internet services group, reported that Q4 net income advanced 55% to 23.85 cents a U.S.-listed share on 39.5% revenue growth, almost in line with analysts’ estimates of 24 cents a share.. The company sees Q1 revenue between $47.7 million and $48.5 million.

American International Group, ((AIG)), insurance company, reported that Q4 net income dropped to 17 cents a share, from 62 cents a share a year earlier. Q4 results included a charge of $1.15 billion from previously announced regulatory settlements, as well as a $1.19 billion after tax charge for increased reserves for losses and loss expenses. The company missed analyst estimate of 24 cents a share.

Cray Inc, ((CRAY)), supercomputer maker, reported that it expects to lose 10 cents a share in Q4, and 73 cents a share in 2005. The company‘s 2004 loss could amount to $3.3 million, and its revenue reduced, if it is determined that revenue from one of the product development contracts was recognized incorrectly. The prior results may be responsible for the company’s delay of the filing of its 2005 annual report.


8:30AM European averages gained on insurance stocks at mid-day.
European markets sharply advanced at mid-day trading, boosted by solid gains in insurance stocks, including Zurich Financial, rising 10%, followed by Prudential and Royal & Sun, each climbing 5%. London FTSE 100 spearheaded gainers, reaching a five-year high of 0.8% to 6,041. The French CAC 40 rose 0.8% and the he German DAX 30 advanced 0.7%.


8:00AM Asian markets closed mostly higher. The Nikkei surged 1.5%.
Asian-Pacific benchmarks finished mostly in the positive. The Nikkei recovered from yesterday’s deep plunge, helped by brokerages and banks to lead gainers with an advance of 1.5% to 16339.73. The Japanese index surged after Softbank announced a $15.6 billion bid for the Japanese assets of Vodafone Group. Telecom and construction stocks also provided support. Hong Kong’s Hang Seng rose 0.5%, led by China Mobile. South Korea’s Kospi rebounded from earlier losses to close up 0.4%, followed by Taiwan Weighted index, also up 0.4%, while Shanghai Composite declined 0.4%.

India’s Sensex rose 0.9% for the week on solid gains in industrial stocks.
Indian market closed lower 19 point 10,860.40 on Friday after a volatile session and for the week closed up 88 points as the index rose to new highs three times during this week. Market has witnessed steady inflows of funds from domestic and foreign investors. Reliance Mutual Fund raised $1.3 billion for a domestic mutual fund Reliance Equity Fund. Large blocks of trade were conducted in State Bank of India at a premium to the market price and in Tata Steel. Bajaj auto rose after the company announced a plan to increase its annual motorcycle production capacity to 3.5 million by 2007 and then to 5.5 million capacity to produce scooters and other vehicles by the year 2009. Zee Telefilms rose again on the news that the company is planning to raise between 20% and 40% advertising rates in the coming months. Software consultant TCS rose on the news that the company is likely to get a significant outsourcing contract from Citigroup in New York.