Oil Drops 4%

123jump.com Staff
20 Mar, 2006
New York City

Sharp drop in oil, stable metal prices, and rising Asian and Latin markets kept investors focused to gains in Europe and Asia. Market is awaiting evening comments from Fed Chairman. Mexico reported a strong rise in january industrial prduction, Indian governement wants Central Bank to grant full convertibility to Rupee. One percent rise in Mexico led gainers around the Latin America.

4:15PM Markets wait for Fed Chairman comments in the evening.

DOW 11,274.53 DOWN 5.12
S&P 2,314.11 UP 7.63
NASDAQ 1,305.08 DOWN 2.17

- Yield on 10-year bond 4.66% and 30-year bond 4.7%.

- Crude oil plunged $2.24 to $61.96 per barrel and gasoline and heating oil lost 4 cents.
- Natural gas lost 21 cents to $6.835 per mBTU.
- Gold rose $1 to $556.10 and silver lost 30 cents to $10.362 per ounce.

Oil dropped but failed to spark broader averages.
Oil lost close to 4% today however market failed to take advantage of this decline. Lackluster market averages paid little attention to the commodity price moves in the oil, natural gas other markets. Wal-Mart reported that it plans to hire 150,000 people in China in the next five years and Dell plans to add as many as 10,000 people to its customer support staff in India. Wal-Mart ((WMT)) rose $1 and Dell gained 68 cents at close. After the close Oracle ((ORCL)) reported a Q3 income rise of 42% on revenue jump of 18%. Michaels Store ((MIK)) gained more than $4.39 on the news that long time CEO has agreed to retire and the company has decided to put itself on sale. Williams Sonoma ((WSM)) lost a fraction on earnings that met analyst’s expectation. U.K. and France indexes closed lower and German index gained a fraction. Tokyo rose 1.74% in overnight trading but markets in Latin America and Asia rose in general led by Indonesia, Hong Kong and India.


3:30PM Latin markets advance led by strong industrial production in Mexico.
Latin American markets gains were led by Mexico rising 1.06% near close. Chile, Argentina and Brazil gained 0.48%, 0.35% and 0.17% respectively. Strong rise in industrial production and prospects of lower interest rates in Mexico led local IPC index gain during the session. American Movil ((AMX)), Cemex ((CX)) and Wal-Mart de Mexico rose 0.9%, 0.7% and 0.6% respectively on local exchange. In Brazil markets were led by gainers in telecom, banking and mining stocks. Chilean index rose on worldwide firming of copper prices.


2:45PM Asian emerging markets gain on the back of 1.74% Tokyo advance.
Asian emerging markets rose as the 1.74% rise in the main index in Tokyo led other markets to a higher ground. Markets in Indonesia, Hong Kong and India rose 1.91%, 0.81% and 0.75%. Jakarta index rose in anticipation of higher economic growth and strong buying in local telecom giant. China Mobile and HSBC led rise in Hong Kong. China Mobile said that the company signed on 4 million subscribers in February and HSBC rose ahead of dividend distribution. Sensex index in Mumbai scaled a new high on buying from mutual funds and Finance Minister’s statement backing the request of the Prime Minister Dr. Singh to consider full convertibility for Indian Rupees. The index gained as shares in steel, cement, software and media companies rose. Zee Telefilms rose 6.6% on Monday on top of 15% rise in the last week. MTNL, local telecom company rose 7% and three leading software companies Wipro, Infosys, TCS and Satyam rose between 4% and 1%. Indexes in Korea and Philippines rose 0.4% and 0.6%.


12:30PM European markets erased early gains.
European markets closed mixed as oil prices slipped to erase early gains made on the back of further consolidation in the insurance sector, involving a 14% jump of Prudential on rejection of a $30 billion bid from its peer Aviva. The resource sector, gaining on higher metals prices, also provided support. The German DAX 30 rose 0.4% on upbeat economic data, the French CAC 40 slipped 0.05%, and London’s FTSE 100 was down 0.07%.

Crude oil prices retreated on signs of lower OPEC demand forecasts and strong U.S. oil inventories. Light sweet crude April delivery fell 97 cents to $61.80 a barrel. Gasoline fell 1 cent to $1.851, while heating oil lost 1 cent to $1.7685. Natural gas dropped 19 cents to $6.865 per 1,000 cubic feet. London Brent for April delivery lost 49 cents to $62.77 a barrel. European gold traded mixed. In London gold was unchanged at $554.10. In Zurich the precious metal fell to $554.10 from $554.70. In Hong Kong gold climbed $1.40 to $555.70. Silver traded unchanged at $10.30. The U.S. dollar advanced against other major currencies. The euro traded at $1.2173, down from $1.2195. The dollar bought 116.30 yen, up from 115.79. The British pound was quoted at $1.7550, down from $1.7568.


11:30AM Stocks lost ground on cautiousness ahead of Bernanke’s speech.
Stocks lost ground and the three major averages turned red as investors got nervous ahead of Ben Bernanke’s speech on monetary policy and decided to consolidate recent gains. As selling pressure increased, the tech sector lost most of its earlier advance to show a slight advance of 0.1%. Crude oil futures dropped about 1.3%, dragging the energy sector down 0.7% and oil companies like Exxon Mobil Corp. ((XOM)), which slipped 0.3%. The Financial sector also moved to the downside. Shares of housing-related companies and banks, including Bank of America Corp. ((BAC)) and Wachovia Corp ((WB)), declined after strong rallies last week. Bank of America shares were off 0.6%, and Wachovia shares fell 1.1% to $56.72. Wal-Mart Stores Inc. ((WMT)) was the best performing Dow component, rising 1.8% on plans for a major expansion in China, including 150,000 people employed over the next 5 years and 20 new stores in 2006. General Motors ((GM)) traded higher by around 1.3%, benefiting from reports that the company is near an agreement with he UAW. The leading decliner within the Dow Jones was Alcoa ((AA)), currently down around 1.3%. American International was another notable loser, falling by around 1.1%. The Nasdaq was supported by Sirius Satellite Radio Inc. ((SIRI)) which climbed 6.5% after the company said it recently surpassed 4 million subscribers. Microsoft ((MSFT)) advanced by about 1.6%.


10:30AM Stocks extended a five-day rally.
Stocks continued a five-day rally, rising Monday on speculations that interest-rate hikes might come to an end soon on signs of slowing economic growth and tame inflation. In the first hour of trading, the Dow rose 17.93, or 0.16%. The S&P added 1.36, or 0.1%, and the Nasdaq composite index gained 7.27, or 0.32%. Bonds also were higher, with the yield on the 10-year Treasury note falling to 4.65% from 4.67% late Friday. The HMO sector rose 1% to set a new peak, helped by a 3.5% advance in Molina Healthcare ((MOH)). In technology Internet and semiconductor stocks stood out among gainers. Transportation stocks also moved higher. The housing sector, which rallied last week on weak treasury yields, moved down 1% in early going. Disk drive and networking stocks modestly declined, bucking the positive trend in the technology group. Energy stocks also posted weakness, as oil prices declined. The airline sector received a boost from the sliding oil prices to rise about 1.2%.


9:45AM Stocks opened higher on interest-rates optimism.
U.S. stocks advanced at opening, supported by solid gains overseas and expectations that in his speech Fed Reserve’s Chairman Ben Bernanke will shed some light over interest rates a week ahead of an official decision from the U.S. central bank. On the corporate news front, Merck & Co. ((MRK)) is allegedly due to announce a deal with privately held Neuromed Pharmaceuticals to develop painkilling drugs. Wal-Mart Stores ((WMT)) is expected to draw attention on news that the world's largest retailer could hire 150,000 people in China over the next five years and open 20 stores in the country in 2006. General Motors ((GM)) is also seen in the spotlight; following accounting problems that made the company delay its annual report. Meanwhile, GM, Delphi Corp. and the United Auto Workers union reportedly continued talks on a possible labor deals. In takeover mews, R.R. Donnelley & Sons Co., is expected to announce a bid for OfficeTiger for $250 million. At the start of the session, the Dow Jones industrial average was up 3.68 at 11,283.33, the Nasdaq Composite climbed 6.02 to 2,312.50 and the Standard & Poor’s 500 gained .49 to 1,307.74.


9:00AM Stock futures pointed to a higher start ahead of data release.
U.S. stock futures pointed to a higher opening, reflecting optimism over the interest rate outlook and corporate acquisition talk. Ahead of Fed Reserve Chairman’s speech after closing bell, interest rates got into focus again. Last Thursday tame inflation data release boosted investors’ optimism the Federal Reserve is likely to end its interest rate raising campaign in the near future. In corporate news, shares of arts-and-crafts retailer Michaels Stores ((MIK)) rose 13% before the opening bell in electronic trading after the company put itself up for sale. Software maker Oracle Corp. ((ORCL)), which is due to report quarterly results after the market close, rose 0.7% before the opening bell. Standard & Poor's 500 futures were up 1.9 points, above fair value. Dow Jones industrial average futures were up 11 points, and Nasdaq 100 futures were up 5.5 points.

Crude oil prices retreated on signs of lower demand forecasts and strong U.S. oil inventories. Light sweet crude April delivery fell 40 cents to $62.37 a barrel. Gasoline fell 3 cents to $1.8360, while heating oil lost 1 cent to %1.7695. Natural gas dropped 9 cents to $6.960 per 1,000 cubic feet. London Brent for April delivery lost 28 cents to $62.98 a barrel. European gold extended gains Monday morning. In London gold advanced to $554.25 bid per troy ounce, up from $554.10. In Zurich the precious metal rose to $554.90 from $554.70. In Hong Kong gold climbed $1.40 to $555.70. Silver traded unchanged at $10.30. The U.S. dollar advanced against other major currencies. The euro traded at $1.2181, down from $1.2195. The dollar bought 116.03 yen, up from 115.79. The British pound was quoted at $1.7569, up from $1.7568.

Rockwood Holdings loss narrower, Williams-Sonoma in line with expectations
Rockwood Holdings Inc, ((ROC)), chemicals company, reported a Q4 loss of 24 cents a share, up from a loss of $3.41 a share a year-earlier. Sales advanced 6.5% in Q4. The company missed analysts’ estimates for a profit of 31 cents a share. in the December period. Q4 incorporated $38.4 million in net non-recurring and other special charges, while the year-ago performance included $200.8 million in net non-recurring and other special charges.

Williams-Sonoma Inc., ((WSM)), retailer, reported Q4 earnings of $1.02 a share, up from 95 cents a share in the year-earlier period. Adjusted earnings came to $1.09 a share, apart from a charge of 7 cents a share connected with the consolidation of its Hold Everything business. On adjusted basis the company met analysts’ expectations for earnings of $1.09 a share. Net revenues for Q4 advanced 12.1% and same-store sales advanced 5.8%.

Carrizo Oil & Gas Inc, ((CRZO)), energy company, reported that Q4 net income surged to 34 cents a share, from 14 cents a share in the year-ago period, beating analysts’ estimates for earnings of 29 cents a share. Sales climbed 63%, powered by higher natural gas production and higher prevailing oil and natural gas prices.

Books-A-Million Inc., ((BAMM)), bookseller, reported Q4 net income of 66 cents a share, up from 54 cents a share in the same period a year ago. Sales for Q4 advanced 8.1%, and same-store sales advanced 4.1%. The company raised its quarterly dividend 60% to 8 cents a share.


8:30 AM European averages rose mid-day on insurance stocks.
European markets traded positive at mid-day, reflecting continuous strength in the insurance sector on the back of merger-and-acquisition speculation, involving Prudential and its peer Aviva. The resource sector, gaining on higher metals prices and strong close of U.S. markets Friday also contributed to the upside movement of European stocks. The German DAX 30 rose 0.6%, the French CAC 40 gained 0.5%, and London’s FTSE 100 advanced 0.5%.


8:00AM Asian markets closed higher. The Nikkei surged 1.7%.
Asian-Pacific benchmarks finished in the positive, boosted by expectations of strong corporate results due out this week and gains in the resource sector on high metals prices. The Nikkei climbed 1.7%, reaching a six-week high to 16,632.74, lifted by strong earnings reports. Australia’s All Ordinaries jumped 0.6% to hit an all-time peak, crossing the key 5,000 level on mining and resource stocks. Hong Kong’s Hang Seng rose 0.8%, led by China Mobile and HSBC. South Korea’s Kospi gained 0.4%, lifted by brokerage firms, reflecting optimism on economic recovery.