U.S. Retail Sales; Import Prices Fall

Arthi Gupta, Mayank Mehta and Sanjay Barot
14 Jul, 2010
New York City

U.S. stocks gain after Intel reported encouraging quarterly sales. U.S. retail sales fell 0.5% and import prices dropped 1.3% in June. BP stalls well integrity test after U.S. presses for additional analysis. U.S.-based Zumiez discontinues talks to acquire Canadian-based West 49.

[R]9:35 AM New York – U.S. stocks gain after Intel reported encouraging quarterly sales. U.S. retail sales fell 0.5% and import prices dropped 1.3% in June. BP stalls well integrity test after U.S. presses for additional analysis. U.S.-based Zumiez discontinues talks to acquire Canadian-based West 49.[/R]

U.S. and Asian markets rose after Intel swung to profit, helped by higher revenue and improved margins. The European markets pared six sessions of gains.

The Commerce Department retail sales report showed a decline larger than anticipated with auto and gasoline sales showing notable decreases in the month of June.

Retail sales fell 0.5% in June following a revised 1.1% decrease in May. Retail sales declined by only 0.1% compared to a 1.2% decrease in the previous month, excluding a 2.3% drop in sales by motor vehicle and parts dealers.

Import prices declined for the second consecutive month in June, according to a report released by the Labor Department today, with the report also showing a modest decrease in export prices.

The Labor Department said that import prices fell 1.3% in June after slipping by a revised 0.5% in May. Excluding a 4.0% drop in prices for fuel imports, import prices fell by a more modest 0.6%.

Additionally, the report showed that export prices edged down 0.2% in June following a revised 0.6% increase in the previous month. Export prices still fell 0.2% excluding a 0.1% drop in prices for agricultural exports.

BP plc said the integrity test on the damaged MC252 well could not be started on Tuesday, as National Incident Commander Thad Allen said additional analysis of the well testing procedure should be performed before starting the well integrity test. According to the British oil company, this analysis would be conducted Tuesday night and into Wednesday. The decision follows a meeting with Energy Secretary Steven Chu and his team of scientific and industry experts.

The pressure test will verify whether a cap weighing 75 tons can block the leak without affecting the structural integrity of the well.

Admiral Thad Allen, National Incident Commander, said in a separate statement, ""Today I met with Secretary Chu, Marcia McNutt and other scientists and geologists as well as officials from BP and other industry representatives as we continue to prepare and review protocols for the well integrity test - including the seismic mapping run that was made around the well site this morning. As a result of these discussions, we decided that the process may benefit from additional analysis that will be performed tonight and tomorrow.''''

West 49 Inc., the Canadian action sport retailer to be acquired by the Australian apparel retailer Billabong International Ltd. said today that Zumiez, Inc. discontinued its plans to make a superior offer to the company, citing disagreements on the terms of the due diligence process.

According to West 49, its board of directors has concluded that there is no longer a reasonable expectation that Zumiez, a U.S.-based action sports apparel retailer, will make a proposal that is financially superior to the Billabong transaction.

According to the Wall Street Journal, Nokia Siemens Networks B.V., a joint venture between Nokia Corp. and Siemens AG is in talks to acquire the telecom-equipment unit of Motorola Inc. The deal expected to be reached in the next few weeks could reportedly fetch Motorola about $1.1 billion to $1.3 billion.

Commodities, Currencies and Yields

Dollar increased against euro to $1.2709 and decreased against the Japanese yen to 88.67.

Crude oil decreased $0.49 to $76.66 a barrel for a front month contract, natural gas edged higher $0.01 cents to $4.35 per mBtu and gasoline decreased 1.390 cents to 206.82 cents.

Gold decreased $0.20 in New York trading to close at $1,213.30 per ounce, silver closed higher $0.018 to $18.27 per ounce and copper for the front month delivery increased 1.900 cents to $3.03.

Yields on 10-year U.S. bonds increased to 3.10% and on 30-year U.S. bonds traded at 4.09%.

Stock Movers

Benihana Inc. added 6.3% after the Japanese steakhouse chain announced that its board of directors has decided to explore strategic alternatives available to the company, including a possible sale, in order to maximize shareholder value.

Expeditors International of Washington, Inc. gained 7.9% after the manager of cargo ships said second-quarter profit was 38 cents a share.

Earnings Review

Aar Corp. ((AIR)), the provider of parts and maintenance services to the aviation industry said fourth quarter sales rose 0.2% to $372.3 million from $371.7 million a year ago. Net income in the quarter fell 21% to $11.2 million or 29 cents per diluted share compared to net income of $14.2 million or 36 cents per share a year ago.

Century Bancorp, Inc. ((CNBKA)), the bank holding company said second quarter net interest income rose 9% to $13.1 million from $12.0 million a year ago. Net income in the quarter rose 50% to $3.0 million or 54 cents per diluted share compared to net income of $2.0 million or 36 cents per share a year ago.

Healthcare Services Group, Inc. ((HCSG)), the housekeeping and food services provider to hospitals and nursing homes said second quarter revenues rose 13% to $193.0 million from $170.9 million a year ago. Net income in the quarter rose 11.5% to $8.7 million or 20 cents per diluted share compared to net income of $7.8 million or 18 cents per share a year ago.

Intel Corporation ((INTC)), the chip equipment maker said second quarter revenues rose 34.3% to $10.77 billion from $8.02 billion a year ago. Net income in the quarter was $2.89 billion or 51 cents per diluted share compared to net loss of $398.0 million or 7 cents per share a year ago.

NovaGold Resources Inc. ((NG)), the metals company said second quarter sales fell 79.5% to $3.3 million from $16.1 million a year ago. Net loss in the quarter was $15.8 million or 7 cents per diluted share compared to net loss of $4.8 million or 3 cents per share a year ago.

Yum! Brands, Inc. ((YUM)), the restaurant operator said second quarter revenues rose 3.6% to $2.57 billion from $2.48 billion a year ago. Net income in the quarter fell 5.6% to $286.0 million or 59 cents per diluted share compared to net income of $303.0 million or 63 cents per share a year ago.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 258.01 or 2.71% to 9,795.24, Hang Seng index in Hong Kong increased 129.75 or 0.64% to 20,560.81 and CSI 300 index in China higher 19.02 or 0.72% to 2,653.61. ASX 200 index in Australia increased 82.10 or 1.87% to 4,462.40. The FTSE Bursa KL Composite index in Malaysia closed higher 8.21 or 0.62% to 1,341.08.

The Kospi Index in South Korea increased 22.93 or 1.32% to close at 1,758.01. SET index in Thailand closed higher 2.19 or 0.27% to 819.54 and JSE Index in Indonesia increased 19.55 or 0.66% to 2,981.06. The Sensex index in India decreased 47.74 or 0.27% to 17,938.16.

Europe Markets Review

In London FTSE 100 Index traded lower 40.38 or 0.77% to 5,230.64, in Paris CAC 40 Index decreased 22.16 or 0.61% to 3,615.60 and in Frankfurt DAX index traded lower 8.20 or 0.13% to 6,182.93. In Zurich trading SMI decreased 16.07 or 0.26% to 6,282.52.

Nikkei 225 Average Movers

Resona Holdings, Inc led the decliners in the Nikkei 225 index of 1.1% followed by losses in Nichirei Corporation of 0.8%, in Tokyo Gas Co., Ltd of 0.7%, in Osaka Gas Co., Ltd of 0.6% and in The Shizuoka Bank, Ltd of 0.5%.

Taiyo Yuden Co., Ltd led gainers in the Nikkei 225 index with a rise of 7.5% followed by gains in Advantest Corporation of 5.6%, in Minebea Co., Ltd of 5.4%, in Hino Motors, Ltd of 5.4% and in Komatsu Ltd of 5.4%.