Markets Lacked Direction

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

Broader markets traded up, down and clsoed down. Market traded in a lackluster fashion with most sectors trading lower except energy and chip sectors. Wholesale inflation report kept averages under check. Chicago Board of Trade and China Life traded higher on close to three times than average daily volume. Philippines closed at seven year high and India reached a new intra-day close. Brazil closed 2.11% lower and Venezuela closed unchanged after rising 44% year-to-date.

4:15PM MARKET LACKED DIRECTION AND FOCUS.

DOW 11,235.47 DOWN 39.06
Nasdaq 2,294.23 DOWN 19.88
S&P 1,297.23 DOWN 7.85

- Crude oil up 38 cents, $62.34/bbl and gasoline, heating oil and natural gas unchanged.
- Gold $553.20 down 2.30 per ounce. Silver closed up 2 cents to $10.56 per ounce.
- Energy and Chip sector stocks rallied.

For the most part market showed no direction during the trading session today. The inflation report at wholesale showed mixed direction of falling at headline level and rising and core level. Market remained under pressure for the most part of the afternoon and sold-off near close. Chicago Board of Trade and Options ((BOT)) closed up 6.33% on 282% rise in daily trading volume. China Life traded up 5% on 244% rise in trading volume. Target ((TGT)) department stores revised its same store sales guidance for the quarter to 1.5% and 2.5% from 1% to 3%. Market made a strong move at mid-day but failed to sustain the rise and lost all the momentum at close. Bonds remained inversely priced and 10-year yield closed at 4.725% and 30-year yield at 4.729%. Markets in Brazil lost 2.11% as investors worried that widening scandal may force finance minister to resign.


3:30PM Brazil stocks sell on graft scandal worries.
Latin American markets were under pressure. Brazil stocks sold-off 2% on the widening corruption scandal. A new witness linked Mr. Palocci, finance minister, with graft scandal related to ruling party Worker’s Party. Foreign investors sold stocks in anticipation of possibilities of slow down in reform if Mr. Palocci is forced to resign. CVRD, largest mining company in Brazil declined in Sao Paolo and New York 2% and Petrobras ((PBR)) lost 1% and airlines GOL and TAM lost a fraction on both exchanges. Markets in Mexico were closed, in each of the last seven sessions market had risen. Markets in Venezuela were unchanged. In Europe Russia lost 0.94% and in Turkey rose 1.2%. South African stocks were in demand as the main index rose 1.6% on Monday and traded near all-time high. Markets were closed today.

2:30PM Asian markets decline.
Asian markets closed lower except Philippines index rose to a seven-year high. Philippine Long Distance Telephone rose 1.9% and Petron, the largest local petroleum company, rose 1.9% on 77% rise in profit. Indexes in Korea, Singapore and Taiwan fell more than 0.6%. India’s Sensex after rising to all-time high lost 0.33% on the weakness in industrial stocks. Hong Kong shares closed unchanged but property stocks fell on the worries of higher interest rate in HK. Interest rates in HK are linked to the rates in the U.S. and talks of higher rates in the U.S. depressed property stocks in HK. Henderson Land Development and New World Development lost 0.7% and 0.4% respectively. Taiwan shares declined on the weakness in steel and electronics shares. Markets in Tokyo were closed.

12:30PM European markets closed off lows.
European markets closed mixed, rebounding from early losses. The leading decliners were energy and mining stocks like Royal Dutch Shell, BHP Billiton and Rio Tinto. Anglo-Dutch steelmaker Corus Group was in the spotlight, rising 7% on news the company is in merger talks with Russian steel producer Evraz Group. The German DAX 30 gained 0.1%, the French CAC 40 advanced 0.2%, and London FTSE 100 fell 0.1%.

Crude oil traded mixed, reflecting expectations of strong U.S. oil inventories and concerns over supply disruptions in Nigeria. Light sweet crude April delivery fell 55 cents to $59.87 a barrel. Gasoline futures lost 2 cents to $.806 a gallon, while heating oil was slightly down to $1.7377. Natural gas dropped 7 cents to $6.768 per 1,000 cubic feet. London Brent for April delivery gained 19 cents to $61.53 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 $549.70 bid per troy ounce, down from $554.50. In Zurich the precious metal traded at $549.30, down from $554. In Hong Kong gold dropped $2.90 to $552.80. Silver closed at $10.20, down from $10.30. The U.S. dollar advanced against other major currencies. The euro traded at $1.2084, down from $1.2164. The dollar bought 117.10 yen, up from 116.21. The British pound stood at $1.7467, down from $1.7561.


11:30AM Stocks moved to the upside on recovering oil prices.
The averages have recently changed direction, supported by a recovery in the energy sector, up 0.5% on oil prices decline and a slight advance in the tech sector, up 0.2% on renewed buying interest across the semiconductor industry. General Motors ((GM)) was the leading gainer within the Dow, climbing 4.7%. Intel ((INTC)) rose 2.4%. Other notable gainers were IBM ((IBM)), up 1.1%, and Boeing ((BA)), which was up around $0.8%. Alcoa ((AA)) was the most notable decliner within the Dow, falling 1.6% to over a one-week low. American International ((AIG)) lost about 1%.

Among other gainers, Cendant Corp ((CD)) gained 2.5% on positive Q1 earnings forecast. Nvidia ((NVDA)) rose 5.6% after it was upgraded at Lehman Bros. to overweight from equal-weight. Shares of Electronic Arts ((ERTS)) gained 3.7% on upgrade at Merrill Lynch to buy from neutral. Outlook Group ((OUTL)) shares rallied 13.6% after the company agreed to be acquired by Vista Group Holdings for $13.50 a share in cash. Digital River ((DRIV)) rose 7% after the company increased its Q1 profit outlook. Among declining stocks, Oracle Corp. ((ORCL)) shares fell 1.6% after the software giant reported meager growth in its key database business. Progress Software Corp ((PRGS)) fell 2.8% de to a Q1 earnings decline. American Superconductor ((ANSC)) fell 2.1% after the company named a new CFO.


10:30AM Stocks extended losses.
Stocks were pressured to move deeper in the negative, although selling was light. The three major averages set new intraday lows with the Dow going into the red and the Nasdaq extending losses to post a 4% decline. Healthways ((HWAY)), provider of health and care support programs, was one of the most conspicuous gainers in the early going, rising 17% on increased guidance for the full fiscal year. Valeant Pharmaceuticals ((VRX)) was among the morning's worst performers with a decline of 20% after a study of its hepatitis C drug missed an efficacy endpoint.

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.

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.

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.

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%.