Strong Oil, Weak Gasoline

Elena
29 Mar, 2006
New York City

Bargain hunting helped stocks trade in the positive, recovering from the heavy losses posted yesterday after the Fed Reserve released its statement on interest rate hikes. Brokerage upgrades on 3M and Sun Microsystems lifted market sentiment. Shares of 3M rose 2.6%, while Sun Microsystems jumped 6.2%. Shares of GM fell 3.9% after saying it would restate financial results for financing arm GMAC from 2003 through the third quarter of 2005.

[R]10:30AM Stocks traded higher on bargain hunting.[/R]
Bargain hunting contributed to the strength in the market, sending the Nasdaq and the S&P 500 to new highs for the session. Brokerage stocks posted significant gains with TD Ameritrade ((AMTD)) helping to lead the brokerage sector higher. The stock rose 6% on expectations Q2 earnings would come above forecast. Technology stocks stood out among advancing stocks, contributing to the gain shown by the tech-heavy Nasdaq. Computer hardware, disk drive, and semiconductor stocks showed notable gains. Sun Microsystems ((SUNW)) rose 6% on upgrade from Morgan Stanley. Energy stocks moved to the upside after a U.S. Energy Dept. report showed a much steeper than expected decline in U.S. gasoline inventories. The report showed that crude oil inventories rose by 2.1 million barrels in the week ended March 24, while gasoline stockpiles fell by 5.4 million barrels. Banking stocks posted weakness in morning trading, extending yesterday’s losses with Northern Trust ((NTRS)) and Fifth Third Bancorp ((FITB)) posting notable losses.


[R]Crude oil inventories rebounded. Gasoline stocks continued to fall.[/R]
Crude oil inventories advanced in the latest week, according to government statistics released Wednesday. This reversed a decline posted during the previous week. However, stocks of gasoline declined yet again. The Department of Energy''s Energy Information Administration revealed that crude oil inventories climbed by 2.1 million barrels for the week ended March 24, rising to 340.7 million barrels from the prior week''s level of 338.6 million barrels. This followed a decline of 1.3 million barrels in the previous week. The slide for the previous week broke a string of advances. In the most recent week, oil inventories were 8.2% higher than their levels of the same time last year. Gasoline inventories posted a week-over-week drop of 5.4 million barrels, the government said. This added to losses in the preceding 3 weeks, including a slide of 2.3 million barrels in the previous week. Gasoline stocks were 0.2% above their levels of last year. Inventories of distillate fuel oil declined again, falling by 2.5 million barrels in the most recent week. In the previous period, distillate inventories fell by 800,000 barrels.


[R] 9:45AM Stocks opened in the positive[/R]
U.S stocks started trading higher Wednesday, with the major averages rebounding from sell-off pressure in afternoon trading on Tuesday. However, buying interest was slightly subdued as traders continued to worry about interest rates. The initial rise was largely contributed by strength among computer hardware stocks, with Sun Microsystems ((SUNW)) shares soaring after Morgan Stanley upgraded its rating on the stock to overweight from underweight. Airline and brokerage stocks recovered from significant weakness in the previous session and moved to the upside. Frontier Airlines ((FRNT)) helped the airline sector move higher. Of companies in focus, General Motors ((GM)) slipped 3% after saying it would restate financial results for financing arm GMAC from 2003 through the third quarter of 2005 and added that there is a possibility it wouldn''t be able to sell GMAC. Pfizer Inc. ((PFE)) is due to receive bids for its over-the-counter health unit with GlaxoSmithKline, Colgate-Palmolive and Novartis being possible bidders. In the opening minutes, the Dow Jones industrial average was up 29.06 points at 11,183.60, the Nasdaq Composite Index gained 6.16 to 2,310.62 and the Standard & Poor''s 500 index climbed 1.99 to 1,295.22.


[R]9:15AM Stock futures pointed to a positive start.[/R]
U.S. stock futures indicated a market recovery at Wednesday opening, following the heavy losses posted Tuesday as a result of the Fed Reserve’s decision on monetary policy. The U.S. stock markets came under pressure and the three major averages moved sharply lower after the Federal Reserve announced its fifteenth consecutive interest rate hike and said that further rate hikes are expected. On Wednesday morning, market sentiment turned positive on easing investors concerns about rates and brokerage upgrades on manufacturer 3M Co. ((MMM)) and computer maker Sun Microsystems ((SUNW)). 3M shares jumped 1.4% on the Inet electronic brokerage system after Merrill Lynch raised its rating on the Dow component. On the technology front, Sun Microsystems rose 4.2%, following an upgrade at Morgan Stanley. Standard & Poor''s 500 futures were up 2.4 points, above fair value. Dow Jones industrial average futures were up 28 points, while Nasdaq 100 futures were up 2 points.

Crude oil prices retreated below $66 on profit-taking ahead of oil inventory data. Light sweet crude May delivery fell 32 cents to $65.75 a barrel. Gasoline futures lost 1 cent to $1.8765 a gallon, while heating oil fell marginally to $1.8255. Natural gas climbed 7 cents to $7.287 per 1,000 cubic feet. London Brent dropped 19 cents to $64.78. European gold lost ground, as stronger dollar helped the appeal of the precious metal diminish. In London gold traded at $562.25 per troy ounce, down from $567.30. In Zurich the precious metal fell to $563 from $567.20. In Hong Kong gold dropped $3 to $562.30. Silver fell to $10.70 from $10.80. The U.S. dollar gained strength versus major currencies, following the Fed Reserve’s decision on interest-raising policy. The euro traded at $1.1996, down from $1.2009. The dollar bought 117.91, unchanged. The British pound was quoted at $1.7373, down from $1.7434.

Steel Technologies, ((STTX)), steel producer, expects Q2 earnings of 21 cents a share on revenue of $250 million. Shipments for Q2 are estimated to be 320,000 tons, in line with previous projections.

HealthSouth Corp, ((HLSH)), health-care clinic operator, reported that its 2005 net loss was $446 million, incorporated a previously stated $215 million non-cash charge connected to a preliminary litigation settlement. The company added that the process of reconstructing its historical accounting records is now complete.

[R]9:00AM Sensex reaches another high.[/R]
Sensex in Mumbai, India scaled a new high, after advancing fourth day in a row, 11,183 up 97 points or 0.88%. The Sensex index has gained 3% in the last four days. Stocks rose on a significant lower turnover. The broad buying in small and mid cap stocks in the last hour of trading supported the advance. Sugar, engineering and IT stocks rose on the rise in global price for sugar, rising expectations of better earnings for software export and engineering companies.

Several sugar companies registered better than 10% gains during the session including Triveni Engineering, Mawana sugar and Bannari Amman sugar. Other sugar companies registered better than 5% gains including Balrampur Chini, Ugar Sugar and Bajaj Hindustan. Software exporters gainers were led by a strong rise of 4.3% in Satyam Computers, 2.5% in Infosys and 2.1% in Wipro. NDTV, local media company, rose 6% on the news that the company has entered into a partnership with Genpac to sell broadcasting services to regional and media companies. Thomas Cook India jumped 7.5% on the news that the company is in the process of acquiring three travel agencies.


[R] 8:00 AM European averages traded higher at mid-day.[/R]
European markets traded higher at mid-day, recovering from two-day losses. Markets advanced, boosted by solid gains in Asian-Pacific stocks, ignoring Wall Street weakness after the Fed Reserve raised the short-term interest rate and gave signals that further hikes are expected. European retailers like Ahold and J. Sainsbury were in the spotlight today. The German DAX 30 gained 0.2%, the French CAC 40 rose 0.5%, and London FTSE 100 climbed 0.6%.


[R]7:45AM Asian markets finished mixed. Singapore and Japan hit new highs.[/R]
Asian-Pacific benchmarks ended mixed with Singapore and Japan hitting new multiyear highs. The Nikkei reached a nearly six-year high of 1.5% to 16,938.41, lifted by improved confidence in economic recovery and fresh fund flows. Technology and exporter-related issues advanced on stronger dollar vs. the yen Gainers included Yahoo Japan, up 7.6%, Tokyo Electron 3.4%, Advantest Corp, up 3.9%. Banking stocks also gained strength. Among other regional markets, Singapore Straits Times hit a six-year high of 0.3%, China’s share prices rose 0.5%, Taiwan’s Weighted index climbed 0.7% on expectations of strong results among chip makers, while Hong Kong’s Hang Seng fell 0.7% on property stocks, following U.S. interest rate increase.