Slower Industrial Activity

Elena
03 Apr, 2006
New York City

Stocks traded in the positive, lifted by acquisitions. GM announced that it is selling a 51% stake in GMAC to an investor group, including Cerberus Capital Management, Citigroup Inc. and Aozora Bank Ltd. In another takeover deal, Alcatel agreed to acquire Lucent for $13.4 billion. Verizon Communications sold its Caribbean and Latin American operations for $3.7 billion.

[R]11:30AM Stocks extended gains.[/R]
The Nasdaq hit a new five-year intraday high after the three major averages further advanced, extending early-morning gains. The market sentiment was lifted by economic data which helped to offset lingering concerns about interest rate hikes. Gold stocks were among the market''s best performers after the price of gold extended gains to reach a 25-year high. The sector climbed 2.5%. Energy sectors also posted significant strength, as higher oil prices increased buying interest. Some networking stocks posted strong gains. Shares of Alcatel ((ALA)) gained 5.5% after the company agreed to acquire Lucent ((LU)) for $13.4 billion. Meanwhile, General Motors ((GM)) dropped 1.4% after the company agreed to sell its 51% stake in GMAC. The Standard & Poor's 500 index was up 12.20, or 0.94%, and the Nasdaq composite index gained 14.82, or 0.63%. Bonds extended last week's losses, with the yield on the 10-year Treasury note rising to 4.87% from 4.86% late Friday.


[R]10:30AM Stocks posted gains.[/R]
Stocks moved further to the upside. The networking sector advanced on news that Alcatel ((ALA)) agreed to acquire Lucent ((LU)) in a deal valued at $13.4 billion, forming a telecommunications conglomerate with more than $25 billion in annual sales. Again in the sector, Verizon Communications sold its Caribbean and Latin American operations for $3.7 billion. General Motors Corp ((GM)) announced a plan to sell a 51% stake in its auto financing unit. The $14 billion deal boosted the shares of GM and eased concerns that the automaker would not be able to find a buyer for its GMAC. Gold stocks posted strong gains in early trading on notably higher gold price, helping the sector rebound from weakness at the end of the previous week. An oil price advance contributed to strength in the energy sector. A barrel of light crude rose to $67.15 on the Nymex. In morning trading, the Dow climbed 75.08, or 0.68%. The Standard & Poor''s 500 index was up 7.04, or 0.54%, and the Nasdaq composite index gained 8.23, or 0.35%. Bonds extended last week''s losses, with the yield on the 10-year Treasury note rising to 4.89% from 4.86% late Friday.

[R]Construction spending exceeded expectations.[/R]
The Department of Commerce released its report on construction spending in the month of February on Monday, showing that spending growth exceeded economist estimates. The increase reflected notable growth in spending on private construction. The report showed that construction spending rose 0.8 percent in February following a 0.4 percent increase in January. The growth exceeded economist estimates of an increase of about 0.5 percent. The increase in spending came as spending on private construction rose 1.2 percent in February, reflecting growth in spending on both residential and non-residential construction. At the same time, the report showed a decrease in spending on public construction, which fell 0.5 percent in February.

[R]Manufacturing activity slowed down in March.[/R]
The Institute for Supply Management released its report on business activity in the manufacturing sector in the month of March, showing that the pace of growth in the sector slowed unexpectedly. The ISM said that its purchasing managers index fell to 55.2 in March from 56.7 in February. While a reading above 50 indicates growth in the sector, economists had been expecting the index to increase to 57.5. The decrease reflected a slowdown in the pace of new orders growth, with the new orders index falling to 58.4 in March from 61.9 in February. The report also showed a slowdown in employment growth, as the employment index dipped to 52.5 in March from 55.0 in February. At the same time, the report showed an acceleration in the pace of price growth, with the prices index rising to 66.5 in March from 62.5 in February.


[R]10:20AM India adds 2.52% on the first day of the second quarter.[/R]
Robust buying in Indian stocks both from local and foreign institutions prompted heavy volume and index advance on the second day of trading. Sensex index rose 284.40 points or 2.52% to 11,579.10. The index has advanced 20% in the first quarter of the year. Total value turnover at the close on Bombay Stock Exchange was $900 million significantly lower from $2.2 billion on Friday. Sensex took 21 days to rise from 11,000 to 11,500 and added more than 300 points in the last seven trading days. Other markets in Asia rose too, when Hong Kong’ Hang Seng rose 1.64% and Nikkei rose 1.6% at close on Monday.

IT stocks jumped ahead of earnings from Infosys. The company stock jumped 5.54% and other IT leaders rallied in the buying. Satyam, I-Flex and TCS rose 4.45%, 2.9% and 2% at close respectively. Infosys closed at all time high of Rs. 3,146. Vehicle manufacturers rose on robust unit sales report. Maruti Udyog, maker of small Japanese car Suzuki, rose 4.22% on the news that the March unit sales rose 16%. Bajaj Auto added 2.8% to close at Rs, 2,824 on the news that its March unit sales rose 30% to 212,419. Third largest motorcycle maker, TVS, rose 12% to Rs. 156 on the news that March unit sales of two-wheeler scooters and motorcycles rose 31% to 84,000.


[R] 9:45AM Stocks opened in the positive.[/R]
Stocks showed a strong upward move at the start of the second quarter, with the positive sentiment generated by merger-and-acquisition activity and corporate news, involving Lucent Technologies which agreed to be bought by Alcatel and the General Motors-GMAC deal. GM ((GM)) announced a decision to sell a majority stake in GMAC for $14 billion over three years to investors led by Cerberus Capital Management. Also on the takeover front, Ameristar Casinos offered $2.25 billion for U.S. gaming operator Aztar, topping the offers of Colony and Pinnacle. The networking sector posted strength on news that Alcatel ((ALA)) agreed to acquire Lucent ((LU)) in a deal valued at $13.4 billion. Shares of Alcatel showed considerable move to the upside, up nearly 5%. Commodities stocks also moved to the positive territory. In the opening minutes, the Dow Jones industrial average is up 54.19 to 11,163.51, the Nasdaq Composite Index has gained 7.75 to 2,347.54 and the S&P 500 index is unchanged.

Crude oil prices advanced to $67 on strong buying interest from investment funds as tensions in major oil producers Iran and Nigeria continue. Light sweet crude May delivery gained 38 cents to $67.01 a barrel. London Brent climbed $1.09 to $67. Gold sharply rose Monday to lead a broad metals rally. Gold for June delivery advanced $4.80 to trade at $591.50 per troy ounce in electronic trading. Silver futures climbed 11 cents to $11.63 and copper rose to an all-time high of $2.525 a pound. The U.S. dollar hit a three-week high against the yen. The dollar bought 118.32, up from 117.78. The dollar advanced to $1.2069 from $1.2118.

Epicor Software Corp, software company, reported that it expects 2006 earnings to be between 69 cents and 70 cents a share, with revenue between $372 million and $377 million. If the company achieves the abovementioned goals, it will still be missing the analysts’ projections which stand 78 cents a share on revenue of $384 million.

Epicor Software also restated its figures for 2003 through to September 2005 to correct its revenue recognition policies with respect to allocating revenue derived from software licenses and maintenance agreements. Epicor Software added that the restatements negatively affected profit and revenue for those periods, but did not impact the total revenue or profit associated with the contracts in question over the lifetime of the contracts.

Sourcecorp Inc, ((SRCP)), business process outsourcing company, reported that its Q4 net loss was $1.48 a share, swinging from a net income of 11 cents a share in the year-ago period. The company added that quarterly pro forma per-share income came to 25 cents, compared with 15 cents in the previous year. Revenue for Q4 reached $98 million, up from $92 million in the previous year.

Imperial Industries Inc., ((IPII)), building products company, reported Q4 net earnings of 28 cents a share, up 58% from 19 cents a share in the year-earlier period on 31% revenue growth.

Progressive Gaming International Corp, ((PGIC)), provider of gaming technology and content, reported that Q4 net loss came to 22 cents a share, reversing from prior year net income of 9 cents a share, missing analyst expectations of a penny a share. Quarterly revenue was $19.2 million, down vs. $26.3 million in the prior year''s period.

Enesco Group Inc, ((ENC)), home and garden decorative products supplier, reported that Q4 net loss came to 99 cents a share, up from a net loss of $2.80 a share in the year-ago period despite revenue decline, compared with the same period last year.


[R] 8:15 AM European stocks rallied at mid-day.[/R]
European markets made a strong performance at the start of the second quarter, following a broad rally in the Asian-Pacific region. Merger-and-acquisition activity also provided support. The German DAX 30 reached a five-year high of 0.6% on news that Alcatel agreed to acquire Lucent Technologies for $14.45 billion in stock, a deal which will place the French mobile phone maker among the world’s two leading makers of communications equipment. The French CAC 40 advanced 0.6% and London FTSE 100 also gained 0.6%.


[R]7:45AM Asian markets finished higher, led by Japan and Hong Kong.[/R]
Asian-Pacific benchmarks sharply advanced Monday to reach multi-year highs. The Nikkei led gainers, reaching its highest level in six years of 1.6% to 17,333.31. The index rallied on business sentiment survey which showed broad economic recovery and strong buying interest in technology, banking and insurance stocks. Among the electronics makers, Toshiba rose 3.8% and Sony climbed 1.5%, while banking stocks Mitsubishi Financial Group gained 2.2% and Mizuho Financial Group rose 2.2%. Hong Kong’s Hang Seng hit a five-year high of 1.6% at 16063.75, lifted by 3.2% gain in China Mobile stock and improved demand for property blue-chip stocks, such as Hang Lung, up 5.1%. China Shanghai Composite also surged 1.6% and Taiwan Weighted index rose 0.7% on semiconductor and steel shares.