Small Cap Index Up 13%

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

Market averages rose in the first quarter as interest rates rose two 0.5% to 4.75% and oil price rode back to near peak levels. Robust price of commodities such as oil, iron ore, copper, gold and silver did not slow down the market climb. Small cap stocks outpaced the large cap stocks one more time. Emerging markets led the world markets in the first quarter as Venezuela, Russia and India led the gainers with 44%, 26% and 20% returns respectively.

[R]4:30PM Market averages closed lower and GM and Delphi woes deepen.[/R]

- Dow lost 41 points, S&P lost 5.42 points and Nasdaq lost 1.03 points
- Dow up 3.7%, S&P up 3.8% and Nasdaq up 6.1% for the first quarter 2006.
- Crude oil lost 52 cents to close at $66.53.
- Gold lost $4.90 to close at $581.80 and silver lost 14 cents to $11.52.
- Venezuela, Russia and India led world markets with 44%, 26% and 20% gains.

Market averages tried a second comeback on the second day of this week and failed. The early gains in broad averages were lost as the day progressed and investors locked the gains for the quarter. Flood of economic data on inflation, personal income and spending report and regional economic report did not sway the market.

Broader averages registered healthy gains at the end of the first quarter but index for small cap stocks, Russell 2000, gained 13.3%. Caterpillar delivered the best gain of 25% and the worst performer Intel lost 20% in the quarter in the Dow Jones Index. Oil prices at $66 per barrel, near the peak of $70 in the previous quarter and after two interest rates increases by the Fed to 4.75% did not slow the rise in the averages.

For the day market remained focused on the Treasury bond yields as yield on 10-year bond rose to 4.857% and 30-year bond rose to 4.897%. General Motors endless woes deepened more as Delphi and United Auto Workers may be heading for a path of confrontation. Delphi is reported to ask bankruptcy court to void its contract with the Union and cut 8,500 salaried staff and close third of its plants worldwide.

[R]3:30PM Emerging markets lead first quarter gainers.[/R]
Emerging markets in Asia generally traded higher led by a rise of 1.6% in Korea and 1.1% in Taiwan. India closed the quarter with the gain of 20%. South Korea and Taiwan closed the quarter with the loss of 4.2% and 2.6% respectively. South Korean shares lost on strong currency as local electronics companies reported decline in profits. Chinese shares in Shanghai and Hong Kong rose 12% and 5.6% respectively. Twenty Seven percent rise in PetroChina led the advance in Shanghai Index. Hong Kong gained 5.6% on steady rise in property and telecom stocks for the quarter.

India led the advance in Asian markets with a gain of 20% on strong economic growth, rising corporate earnings and healthy industrial production. Consumer driven stocks, banks and IT companies were market leaders. Markets in Latin America also showed a strong showing. Brazil index gained 0.42% for the day and 13% for the quarter on strong economic performance and expectations of declining interest rates. Venezuela was the best performing market in the world with a gain of 44%. Strong prices for commodities such as sugar cane and oil helped the index to advance. Russia added 26% for the quarter on strong profits from oil and consumer companies. Lukoil gained 36% for the quarter on 58% jump in profit. Markets in the Middle East were the sole exceptions and most suffered worst declines in three years led by 35% drop in Dubai index.


[R]12:30PM European markets finished in the negative.[/R]
European markets closed in the negative territory on the last day of the first quarter, dragged by weakness in mining and technology stocks. Tech giants Nokia and Ericsson declined, reversing from recent gains. However, British hedge-fund manager Man Group bucked the downward trend, rising 2.5%. The German DAX 30 fell 0.2%, the French CAC lost 0.4%, and London FTSE 100 dropped 0.8%. In the first quarter European markets advanced 8% on surging materials and utilities sectors.

Crude oil prices retreated below $67 as Nigeria resumed normal oil production. Light sweet crude May delivery dropped $1.45 to $65.75 a barrel. European gold lost ground Friday, falling from a 25-year high. In London gold traded at $582.90 per troy ounce, down from $585.10. In Zurich the precious metal fell to $582.90 from $583.70. In Hong Kong gold surged $5.20 to $582.80. Silver closed at $11.50, up from $10.80. The U.S. dollar gained strength versus major currencies. The euro traded at $1.2109, down from $1.2161. The dollar bought 117.86, up from 117.29. The British pound was quoted at $1.7371, down from $1.7461.


[R]11:30AM Stocks turned mixed on weakness in the energy sector.[/R]
U.S. major averages hovered near the flat line as weakness in the energy sector offset the positive sentiment generated by tame inflation data. Recently the S&P 500 slipped into negative territory while the Dow and the Nasdaq posted modest gains. In morning trading, significant strength was visible among airline stocks, benefiting from a decrease in the price of oil. The sector jumped 2%, recovering from a 2% drop in the previous trading session. Financial stocks also moved higher, with both brokerage and banking stocks showing strength. Among brokerage stocks, A.G. Edwards ((AGE)) advanced, extending yesterday’s gains.

Some computer hardware stocks moved notably higher, sending the sector higher by 0.8%. The sector was also supported by gains in Palm ((PALM)) and Dow component Hewlett-Packard ((HPQ)). Also weighing on the Dow, General Motors ((GM)) fell 1.7% after the UAW said a long strike would be impossible to avoid if a bankruptcy court allows Delphi Corp. to void its labor contracts. The upward momentum was limited by significant weakness among energy stocks. Oil service stocks sharply declined, dragging the sector down by 2.2% as a decrease in the price of oil inspired traders to do some profit taking. A notable decrease in the price of gold contributed to weakness in the sector after considerable gains in the last sessions. Google ((GOOG)), which will join the S&P 500 on Friday, fell 0.5%. Shares of General Electric ((GE)) were up 0.7%, while shares of Bank of America Corp. ((BAC)) gained 0.6%.


[R]10:30AM Stocks traded modestly higher.[/R]
Although stocks advanced on tame inflation data, buying interest remained subdued. A report from the Commerce Dept. helped to offset the inflation worries, raised by the GDP report released on Thursday. Airline stocks showed significant strength in early trading, reflecting a considerable decline in oil prices as traders turned to profit taking after recent gains. The sector moved higher after coming under pressure in the previous session. Computer hardware stocks were also notable gainers, contributing to the market strength, with Palm ((PALM)) and Network Appliance ((NTAP)) posting solid gains. Semiconductor and brokerage stocks were among the conspicuous advancers, too.

While airline and other oil-sensitive stocks took advantage of the price decrease, it contributed to notable weakness among energy stocks. The oil service sector dropped 1.8%.In morning trading, the Dow Jones industrial average rose 25.61, or 0.23%. The Standard & Poor''s 500 index was up 1.33, or 0.1%; the Nasdaq composite index gained 7.04, or 0.3%, reaching a five-year high for the third session in a row. Bonds were little changed after two days of declines, with the yield on the 10-year Treasury note flat at 4.86% from late Thursday.


[R]Orders for manufactured goods edged up 0.2%.[/R]
The Department of Commerce released its report on orders for manufactured goods in the month of February on Friday, showing that orders rebounded by much less than expected after showing a notable decline in January. The report showed that orders for manufactured goods edged up by 0.2 percent in February following a revised 3.9 percent decrease in January. Economists had expected orders to rebound by 1.3 percent following the 4.5 percent drop originally reported for January. The modest increase in orders came as a 2.7 percent increase in orders for manufactured durable goods was partly offset by a 2.5 decrease in orders for manufactured nondurable goods. The Commerce Dept. also said that shipments of manufactured goods fell 1.1 percent in February following a 0.1 percent increase in January. The drop in shipments in February came on the heels of four consecutive monthly increases. Inventories of manufactured goods also fell, dropping by 0.4 percent in February following five consecutive monthly increases. As a result, the inventories-to-shipments ratio came in at 1.17 in February, up from 1.16 in January.


[R]9:45AM Stocks opened in the positive.[/R]
U.S. stock advanced at opening as tame inflation data helped to offset recent concerns about higher interest rates. A report released by the Commerce Dept. showed that core consumer price rose by 0.1%in February after a 0.2% increase in January and core prices rose at an annual rate of 1.8% in February, unchanged from the previous month. Meanwhile, the market awaited data on consumer confidence and domestic manufacturing activity. In early trading, airline stocks posted significant gains, benefiting from a sharp decline in the price of oil. At the same time, the lower oil prices contributed to weakness among energy stocks. The Dow Jones industrial average was up 36.82 points, or 0.33%. The Standard & Poor''s 500 Index was up 2.44 points, or 0.19%. The Nasdaq Composite Index was up 5.79 points, or 0.25%. Bonds extended their losses to a third session, with the yield on the 10-year Treasury note edging up to 4.87% from 4.86% late Thursday.



[R]9:15AM Stock futures pointed to a positive start on economic data.[/R]
U.S. stock futures looked poised for a positive started, rebounding from early losses as the Commerce Department released a report on personal income and spending which helped investors overcome inflation worries. On Thursday stocks made a mixed performance with the Dow and the S&P 500 closing in negative territory while the Nasdaq managed to hold onto a modest gain. Stocks lost ground on fourth-quarter GDP data, which raised some concerns about the possibility of further interest rate hikes. Friday marks the end of the first financial quarter. The S&P 500 and the Dow advanced more than 4% each, while the Nasdaq posted more than 6% growth for the quarter. Standard & Poor''s 500 futures rose 0.2 point, about even with fair value. Dow Jones industrial average futures rose 22 points, while Nasdaq 100 futures rose 1.5 points.

Personal income and spending modestly rose.
The Commerce Dept. released a report on personal income and spending in the month of February. The report showed modest growth in both personal income and spending. The Commerce Dept. said that personal spending edged up 0.1 percent in February following a downwardly revised increase of 0.8 percent in January. Economists had expected spending to come in unchanged compared to the 0.9 percent growth originally reported for January. The report also showed that personal income rose by 0.3 percent in February after rising by 0.7 percent in January. The increase came in slightly below economist estimates of an increase of 0.4 percent. Based on this data, the personal savings rate was a negative 0.5 percent in February, unchanged from the previous month. This suggests that consumers are dipping into their savings in order to continue spending. The report also showed that the price index for consumer spending was unchanged in February after rising by 0.5 percent in January. Excluding food and energy prices, the index edged up by 0.1 percent in February after a 0.2 percent increase in the previous month. Additionally, the price index showed an annual rate of growth of 2.9 percent in February compared to the 3.1 percent year-over-year growth seen in January. Core prices rose 1.8 percent year-over-year, unchanged from January.

Crude oil prices retreated below $67 as Nigeria resumed normal oil production. Light sweet crude May delivery dropped 40 cents to $66.75 a barrel. London Brent climbed 14 cents to $66.60. European gold lost ground Friday, falling from a 25-year high. In London gold traded at $584 per troy ounce, down from $585.10. In Zurich the precious metal fell to $582.90 from $583.70. In Hong Kong gold surged $5.20 to $582.80. Silver climbed to $11.90 from $10.80. The U.S. dollar gained strength versus major currencies. The euro traded at $1.2108, down from $1.2161. The dollar bought 117.59, up from 117.29. The British pound was quoted at $1.7369, down from $1.7461.

Osteotech, Inc, ((OSTE)), reported that it incurred a Q4 net loss of 67 cents per share, down from a net loss of 27 cents per share in the prior year period. Revenues for Q4 grew 7% over Q4 of 2004 revenues of $20.4 million. Domestic revenues rose 8% in Q4 of 2005, while international revenues in Q4 of 2005 were relatively flat with international revenues in the Q4 of 2004.

Willis Lease Finance Corp, ((WLFC)), jet engine leasing company, reported that Q4 net income advanced 15.8% to 22 cents a share, on 16.3% revenue growth. The company added that the cost cutting and fleet rationalization efforts from the past few years are beginning to show solid results, especially here in the U.S.

Global Payments Inc, ((GPN)), payment processing company, reported that Q3 net income advanced 39% to 36 cents a share on 15% revenue growth, beating analysts’ forecasts for earnings of 34 cents a share. The company added that Q3 earnings reflect strength in its North American direct merchant channels.

Best Buy Co. Inc, ((BBY)), retailer of consumer electronics, reported that Q4 net earnings advanced to $1.29 per share, from $1.13 per share in the year-ago period, matching analysts’ forecasts. The company attributed its rise in profit on strong sales of flat-panel televisions, digital music players and laptop computers. Best Buy added that online sales soared by 50% and customers at its stores ran up larger bills, offsetting a slight drop in customer traffic.


[R]8:45AM India closes up 20% in the first quarter.[/R]
Sensex index in India fell 27 points to 11,280 on the last day of the week but rose 3% or gained more than 300 points for the week. For the first quarter of this year the index has jumped 1,882 or 20% from the 2005 year end close of 9,398. Strong fund flows from domestic and international investors managed to attract more than $120 million per day in new capital.

Auto manufacturers and light commercial vehicle makers rose on higher sales in the fist quarter of this year. Tata Motors, Bajaj Auto and Maruti Udyog rose 3%. 1.7% and 2% respectively. Bajaj Auto closed at Rs. 2,741 and Tata Motors closed at Rs. 936. Eicher Motors jumped 15% on better than expected sales for the current quarter. Metal makers rose for the second time this week as market expects a metal price hike of between 7% and 10% in April month by Tata Steel, stock rose 2.7%. Hindustan Zinc rose 4.5% as zinc prices have firmed in the international markets. IT companies stock fell on profit taking. TCS, Infosys and Wipro lost 2.7%, 1.9% and 0.8% on profit taking.


[R] 8:00 AM European averages declined at mid-day.[/R]
European markets rebounded from yesterday’s solid gains and traded lower at mid-day, taking their cue from weak close of U.S markets Thursday when most blue-chip stocks lost ground as higher interest rates concerns weighed. Technology stocks like Nokia and Ericsson failed to sustain recent gains. However, British hedge-fund manager Man Group bucked the downward trend, rising 3.1%. The German DAX 30 lost 0.4%, the French CAC 40 fell 0.4%, and London FTSE 100 dropped 0.4%. In the first quarter European markets advanced 8% on surging materials and utilities sectors.

[R]7:45AM Asian markets finished largely higher. South Korea led gainers.[/R]
Asian-Pacific benchmarks finished broadly higher. The Nikkei advanced 0.1% to 17,059.66, extending recent rally that sent the index to a multi-year high. The index closed the financial year above the key level of 17,000, supported by economic data, property and pharmaceutical stocks. NEC climbed 4.4%, Sumitomo Realty jumped 2.8%, Daiichi Sangyo rose 1.3%. South Korea’s Kospi surged to 1.6%, boosted by strength in the tech and financial sectors on expectations of solid earnings results. The biggest gainers were Kookmin Bank, rising 3.2% and Hynix Semiconductor, up 2.1%. Taiwan Weighted index rose 1% on strong buying interest in tech and financial stocks. China Shanghai Composite gained 0.3%, lifted by copper and gold stocks. Hong Kong’s Hang Seng was the most notable decliner across the region, falling 0.5%, led by losses in China Mobile and weak property stocks.