Healthy Job Market

Elena
23 Mar, 2006
New York City

Stock futures pointed to a lackluster opening on disappointing guidance from software maker Adobe Systems. Meanwhile, Yahoo gained after UBS raised its rating on the company. An unexpected drop in jobless claims gave a signal of healthy job market. 302,000 people applied for jobless benefits vs. 313,000 last week. Economists had expected a decline to 305,000.

9:00AM Stock futures pointed to a flat start on disappointing outlook from Adobe.
U.S. stock futures indicated a flat to lower start Thursday, reflecting gains in Yahoo shares and a disappointing report from software maker Adobe Systems. The lackluster opening would follow a strong performance yesterday, when stocks recovered from early tech weakness to end higher with the Dow rising to a five-year high. Shares of Yahoo ((YHOO)) rose 1.8% before the bell on news that UBS raised its investment rating on the company. After gaining ground yesterday, tech stocks are expected to show weakness after Adobe ((ADBE)) shares fell 3.6% in pre-market trading on a disappointing outlook which came after news that Microsoft Corp. decided to delay its new operating system. Adobe reported Q1 net income of 32 cents per share, which beat analyst estimates of 29 cents per share, but the company released a disappointing Q2 guidance. Standard & Poor's 500 futures were down 1.5 points, but were about even with fair value. Dow Jones industrial average futures were down 7 points, and Nasdaq 100 futures were down 2 points.

Crude oil prices moved higher Thursday, reflecting an unexpected drop in U.S. oil inventories. Light sweet crude May delivery rose 88 cents to $62.65 a barrel. London Brent trading was suspended by the ICE Future Exchange without reason provided.

Initial jobless claims unexpectedly fell.
The Department of Labor released its report on initial jobless claims in the week ended March 18, showing that jobless claims came in below economist estimates. However, the report also showed a continued increase by the less volatile four-week moving average. The Labor Dept. said that jobless claims fell to 302,000 from the previous week's revised figure of 313,000. Economists had been expecting jobless claims to fall to 305,000 from the 309,000 originally reported for the previous week. As mentioned above, the report also showed that the four-week moving average rose for the fourth consecutive week, increasing to 303,500 from the previous week's revised average of 297,500. With the increase, the moving average rose above the 300,000 level for the first time since the first week of 2006. The report


8:30 AM A batch of companies underperformed.
Fred's Inc, ((FRED)), retailer, reported Q4 net income of 24 cents a share, down from 27 cents a share a year ago despite sales growth, missing analyst estimate for a profit of 27 cents a share. The company added that profits were hurt particularly by weakness in its pharmacy sales.

ConAgra Foods Inc, ((CAG)), packaged-food company, reported that it reversed to a Q3 loss of 6 cents a share, from a profit of 32 cents a year-earlier. If not for charges for restructuring and other items, earnings would have been 37 cents a share, beating analysts' estimate for a profit of 34 cents a share.

General Mills Inc, ((GIS)), ice cream and Pillsbury products company, reported that Q3 earnings advanced nearly 7% to 68 cents a share, from 58 cents a share in the year-earlier period on 3% net sales growth, beating analysts’ expectations for a profit of 65 cents. The company added that profit growth was limited by higher input costs, higher employee benefits expense and increased advertising investment.

Apollo Group Inc, ((APOL)), education services company, reported Q2 earnings of 46 cents a share, down from a profit of 47 cents a share a year-earlier despite 12.6% revenue growth, due to expenses paid to its former CEO under a separation agreement lowered earnings in Q2 by 9 cents a share. The company was in line with analyst estimate for a profit of 46 cents a share.

Family Dollar Stores Inc, ((FDO)), discount retailer, reported Q2 net income of 35 cents a share, 48 cents a share in the same period last year. Q2 results include a litigation charge of 18 cents a share, connected with an adverse litigation judgment. Sales for Q2 were up 9.4% to about $1.74 billion and same-store sales advanced 3.2.

Scholastic Corp, ((SCHL)), children''s books publisher, reported that its Q3 net loss widened to $15.5 million, or 37 cents a share, down from $800,000 despite 1%revenue growth, missing analysts forecasts for a loss of 7 cents a share. The company added that staffing and promotional expenses had advanced as revenue from its educational publishing unit fell.

8:00 AM European averages made insignificant moves at mid-day.
European markets traded in a tight range at mid-day. Energy stocks like BP and Total were dragged down by five-week low oil prices to offset gains made on the back of higher Wall Street close and strong mining sector. The German DAX 30 inched up 0.1%, the French CAC 40 lost 0.2%, and London FTSE 100 was down 0.2%. The euro fell 0.2% to 41.2057.


7:45AM Asian markets broadly advanced on U.S. markets gains.
Asian-Pacific benchmarks closed broadly higher, supported by U.S. markets gains and improved confidence in the global economic growth. However, the Nikkei edged down 0.04%, reversing from early gains as investors locked in profit taking, selling steel, property and brokerage stocks, such as Tokyo Steel MFG and JFE Holding. Across the region, Hong Kong’s Hang Seng rose 0.8%, despite the negative impact of interest rate concerns ahead of FOMC meeting. South Korea’s Kospi gained 0.2%, lifted by Kookmin Bank. Australia’s All Ordinaries climbed 0.4% on mining and energy stocks.