Slower economy and higher inflation

123jump.com Staff
15 Apr, 2005
New York City

Markets in Europe, Asia and America decline on the slower ecnomic growth in the U.S. and weaker tech earnings from Samsung Electronics, IBM and other semiconductor companies. Investors are also concerned about the energy prices fueling the inflation forces.

Earnings skepticism rises by the hour. IBM lower earnings forced market to rethink the upcoming tech earnings and put investors on the edge. The sell-off continued for the day. In the overseas market Korean company Samsung reported 52% decline in earnings and SonyEricsson reported 61% decline. This only helped the negative sentiment in the tech market. The Friday’s sell-off came despite better earnings by GE and drop in oil prices.

Dow and most other indexes have erased majority of gains built since the last November Presidential election. The market was further unnerved by the drop in manufacturing activity reported by Federal Reserve and Labor department reported higher energy prices driving the cost of import and fueling inflation. Oil dropped 64 cents to $50.49. In the metals markets June gold delivery jumped 90 cents to $426.50 per ounce and May silver lost 3.8 cents to $7.022.

On earnings front, last night IBM reported 1Q earnings of 85 cents vs. analysts estimate of 90 cents. IBM had faced some difficulties in closing few large contracts resulting from the reluctance on part large corporation to keep up the capital spending.

GE reported 1Q earnings 38 cents vs. 32 cents a year ago beating 37 cents estimates. GE’s eleven business division performed well in the tough economic environment. The company gave a cautious outlook for the 2Q. The company chairman Jeff Immelt reported a ‘broad-based strength’ in global markets for GE products. GE reported 25% increase in earnings on 33% jump in sales.

Several banks reported earnings. Citigroup reported 3% earnings gain in 1Q, Wachovia $1.01 cents and KeyCorp reported 64 cents vs. 59 cents. Citigroup also announced to buyback up to 6.3% of outstanding shares for $15 billion.

S&P DOWN 1.68%
Nasdaq DOWN 1.98%
Dow DOWN 1.93%


In Other News

China decides not to send senior officials to the G7 meeting
Growing corruption scandal may force second election in Canada in less than a year
Private equity group probe DaimlerChrysler split
Weak performance in regional election plunges Italian election into a chaos
Toronto stocks loose 1% and Mexico loose 2%

European shares sell-off, London – down 1%, Paris – down 1.5%, Frankfurt – down 2.1%


Earnings Headlines

Carnival raises quarterly dividend by 33%
Samsung Electronics report 52% decline in 1Q earnings on 4% lower sales and operating margin decline from 43% to 31%
SonyEricsson 1Q net decline 61%
Charles report lower earnings of 10 cents vs. 11 cents a year ago