Airlines Gain on Lower Oil

Elena
21 Mar, 2006
New York City

Stocks started trading in a lackluster fashion, reflecting a wholesale inflation report which added to investors'' worries about further interest rate hikes, following Fed. Bernanke''s speech that gave no sign whether monetary policy makers would continue raising interest. Tech stocks declined on earnings report from Oracle Corp. Housing stocks were also weak. The airline sector reached a record high for the year on lower energy prices.

9:45AM Stocks opened mixed on interest-rates concerns.
U.S. stocks opened Tuesday session mixed, reflecting a conflicting report on wholesale inflation and continuous concerns over interest-rate increases after Fed Reserve Chairman Bernanke’s speech Monday. In the first hour of trading, the Dow Jones industrial average rose 12.00, or 0.11%. The Standard & Poor''s 500 index fell 0.72, or 0.06%, and the Nasdaq composite index dropped 6.22, or 0.27%. Bonds were little changed, with the yield on the benchmark Treasury note steady at 4.66% from late Monday.
The housing sector declined, which rallied significantly last week as treasury yields fell, dropped 1.2% in the early going. The airline sector, which has been strong recently on oil prices decline, advanced 1.8%, moving to its highest level of 2006. Technology stocks came under selling pressure after Oracle Corp. issued quarterly earnings a penny over forecasts, but slipping licensing revenue. Again in the tech sector, Rambus Inc. rose $1.10 after the microchip technology licensing company lifted Q1 revenue outlook. Retailer Target Corp slid 42 cents after it tightened its March sales forecasts. Bally Total Fitness Holding Corp. surged 12% on report that Britain''s Virgin Group was considering a takeover of the fitness chain.


9:00AM Stock futures declined on PPI data.
U.S. stocks pointed to a flat to lower opening, following news that core inflation rose more than expected. In addition, Federal Reserve Chairman Ben Bernanke’s speech yesterday signaled that interest-rates will be further increased. Standard & Poor''s 500 futures were down 1.5 points, but about even with fair value. Dow Jones industrial average futures were down 12 points, and Nasdaq 100 futures down 1.50 points. Tech bellwether Oracle Corp. ((ORCL)) reported disappointing sales after Monday''s close, dragging the stock down 2.6%.

Tuesday morning, the Labor Department said that its producer price index, a key measure of wholesale inflation, fell 1.4 percent in February following a 0.3 percent increase in January. Economists had been expecting a much more modest decrease of about 0.2 percent. Meanwhile, the core producer price index, which excludes food and energy prices, rose 0.3 percent in February after increasing 0.4 percent in January. The increase came in slightly above economist estimates of an increase of 0.2 percent.

Crude oil prices dropped below $60 a barrel on strong U.S. oil inventories. Light sweet crude April delivery fell 57 cents to $59.85 a barrel. London Brent for April delivery lost 8 cents to $61.26 a barrel. European gold lost ground as Ben Bernanke’s speech gave a positive economic outlook which boosted the U.S. dollar. In London gold fell to $552.70 bid per troy ounce, down $2.20. The U.S. dollar advanced against other major currencies. The euro traded at $1.2144. The dollar bought 116.65 yen, up from 116.39.

FactSet Research Systems, ((FDS)), online integrated database services provider, reported Q2 net income of 38 cents a share, up 11.6% from 34 cents a share in the year-earlier period on 23% revenue growth, beating analysts’ estimate by a penny.

Commercial Metals Company ((CMC)), steel and metal products producer, reported Q2 net earnings of $1.29 per share, up from 91 cents per share on net sales of $1.6 billion for Q2 of 2006, ranking it as the strongest Q2 ever reported for the Company and the second best quarter in history. This year''s Q2 included after-tax LIFO income of 4 cents per share compared with an expense of 4 cents per share in last year''s Q2.

Progress Software Corp, ((PRGS)), software maker, reported Q1 earnings of 14 cents a share, down vs. a profit of $9.3 million, or 23 cents a share a year-earlier. If not for items, such as charges for stock-based compensation and amortization of acquired intangibles, the company earned 31 cents a share in Q1 on 6% revenue, in line with analysts’ estimates for a profit of 31 cents a share.

Perry Ellis International Inc., ((PERI)), a designer and licenser of men''s and women''s clothing, reported Q4 net income of 81 cents per share, slightly down from a profit of 83 cents per share a year-ago despite 24% revenue growth, due to operating expenses, soaring 24 % to. Interest expense soared 47 %.

8:30 AM European averages lost ground at mid-day.
European markets traded lower at mid-day with energy stocks leading decliners after the 4% drop of oil Monday. Miners like BHP Billiton and Rio Tinton also lost ground, following the sharp jump in copper price. Ben Bernanke’s speech yesterday and some corporate earnings failed to provide inspiration to the market. The German DAX 30 dropped 0.6% on SAP earnings, the French CAC 40 slipped 0.4%, and London FTSE 100 fell 0.2%.

8:00AM Asian markets closed broadly lower.
Asian-Pacific benchmarks closed broadly in the negative, following Ben Bernanke’s speech which was interpreted as one, giving signals that the Fed Reserve will soon raise interest rates. Tokyo Stock Exchange was closed for a holiday. South Korea’s Kospi ended a five-day winning streak to close down 0.8%, dragged by tech and brokerage shares. Taiwan Weighted index slipped 0.9% on weak electronics and steel shares, Hong Kong’s Hang Seng ended down 0.1% in a light trading day ahead of FOMC meeting, while Shanghai Composite advanced 0.2%, lifted by property stocks and currency gains. Philippine stocks hit a seven-year high, rising 1% on strong earnings reports. India Sensitive Index hit an intra-day high, breaking the 11,000-point level, but closed down 0.1%.