Volatile Market

123jump.com Staff
04 Apr, 2006
New York City

Market averages are in the decline after rising in the morning. Falling oil in the morning contributed to the rise in averages. Google rose 3.5%. Apple Computer lost 2% on broker downgrade. Brokerage and construction equipment stocks rose for the second day in a row. Las Vegas Sands jumped up 5% and Lehman Bros and Bear Stearns up 3% at close.

[R]4:30PM Market Index remain volatile for the day.[/R]

-Dow up 17.63, S&P up 8.12 and Nasdaq up 8.63 points.
-Crude oil down 51 cents to $66.23, natural gas fell 18 cents to $7.065.
-Gold down $3.70 to $590.60, silver down 3.7 cents to $11.73 copper lost a cent to $2.5333.

Market averages rose in the morning and fell at close for the second day in a row but Nasdaq managed to close at five-year high to 2,345.36. S&P and Dow rose at close but lower than the day’s peak. Falling oil price in the morning sparked a rally but broader market failed to join the surging indexes. Yield on 10-year bond held at 4.87%. General Motors lost 3% on the news that the February sales fell 14%. Citigroup rose 1.7% on the news that Federal Reserve has lifted a restriction, after one year so that the company can purse a major acquisition. Computer Science Corp ((CSC)) put itself up for sale for $10 billion. International Paper rose 18 cents on the news that the company has sold 5.1 million acre of land for $6.1 billion to investors group.

Steady merger activity has kept the shares of brokerage firms on the rise. Bear Stearns ((BSC)), Lehman Bros ((LEH)) and Goldman Sachs ((GS)) rose at least 3% during the day. Shares of mutual funds managers were also on the rise as steady flow of funds kept trickling in the market. Legg Mason ((LM)), T. Rowe Price ((TROW)) and Franklin Mutual ((BEN)) rose 1.26%, 3.5% and 1.6% respectively during the day.

At close markets in Europe closed lower led by decline of 0.95% in CAC-40 in Paris.

[R]3:45PM Thailand and India lead emerging market gainers.[/R]
Asian markets closed higher led by rise in Thailand, India and South Korea of 0.9%, 0.64% and 0.43% respectively. Thailand has been mired in a snap election and ruling party of Prime Minister Thaskin received more than 50% in overnight election. Mr. Thaskin still resigned under mountain of rising pressure and widespread abstained in voting in urban areas. Thai investors sighed relief on the news and market is likely to remain choppy in the days to come. Hong Kong reached a new peak for the year as the index rose to 16,100 after making several attempts to close above 16,000 in the last few trading sessions.

Chinese conglomerate CITIC Pacific rose 8% on the news that the company is in the process of acquiring two iron ore projects in Australia for $415 million. In Korea Kospi index rose 0.43% on strength in semiconductor and auto stocks. Hynix rose 4.2% on the strength in chip stocks in Europe and in U.S. trading. India rose for the second day in a row as Sensex closed above 11,600 for the first time. Banks, metals and select info tech stocks led the advance. Infosys rose on earnings forecast but local bank stocks including Dena Bank, HDFC Bank and Bank of Baroda led the advancers. Mphasis, local IT company, pursued by American EDS fell on lower than expected bid for acquisition.

Russia closed unchanged but local main index in Turkey rose 1.36% on strength of European institutional buying.

Brazilian stocks rose on continued foreign buying as the Bovespa Index rose 0.3%. February industrial production rose 1.2% from January 2006 and 5.4% from February 2005. International investors have been buying more than $60 million of shares of Brazilian stocks. Utilities companies Cemig and Copel rose 1.9% and 0.8% respectively. Geradu and Usiminas rose 1.4% at close. Mexican IPC Index was up 0.6% to 19,745 at close on continued buying from local investors. Home builders Ara and Homex rose on the news that Ara is to split the stock and issue a special dividend of 3.80 Mexican pesos per share. American Movil and Telmex closed fractionally lower.

[R]2:30PM Google and Apple move in the opposite direction.[/R]
Google ((GOOG)) is up $13 or 3.4% on no news. The stock hit low of $337 after missing the earnings on January 31st and has recovered 16% since then. Apple Computer ((AAPL)) lost 2% on two broker downgrades. Lehman Brothers lowered its price target to $73 from $80 on account of weakness in PC and iPod sales in the fiscal second quarter. The analyst at the firm also lowered its earnings forecast for the quarter to 42 cents from 44 cents and revenue to $4.4 billion from $4.6 billion. Analyst at UBS also lowered its price target to $95 from $100 but kept its ‘buy’ rating. Apple Computer has remained in a trading range between $86 and $58 in the last three months. Delta & Pine Land ((DLP)) reported Q2 earnings of 40 cents vs. 48 cents a year ago on a revenue decline of 4% and the stock is down 4%.

[R]12:30PM European markets finished in the negative.[/R]
European markets closed in the red, reflecting losses in the energy sector as well as weakness in mining stocks. Oil prices retreated to send energy stocks lower. BP dropped 1.5%, Royal Dutch Shell fell 0.7%, and Total declined 1.8%. Miners such as Rio Tinto and BHP Billiton failed to sustain recent gains. Arcelor eased 0.9% after it unveiled a series of takeover defenses, including a special payment of more than $6 billion to shareholders. Automakers posted gains, following the release of U.S. sales data yesterday. The German DAX 30 fell 0.2%, the French CAC 40 lost 0.9%, and London FTSE 100 dropped 0.3%.

Crude oil prices declined on profit taking. Light sweet crude May delivery dropped 74 cents to $66 a barrel. Gasoline fell 1 cent $1.1850 per gallon, while heating oil lost over a cent to $1.8458. Natural gas futures dropped 18 cents to $7.065 per 1,000 cubic feet. London Brent dropped 74 cents to $66.10. European gold traded mixed Tuesday. In London gold traded at $586.30 per troy ounce, down from $589.90. In Zurich the precious metal rose to $586.40 from $582.90. In Hong Kong gold surged $1.30 to $585.80. Silver closed unchanged at $11.70. The U.S. dollar traded lower versus major currencies. The euro traded at $1.2257, up from $1.2141. The dollar bought 117.46, down from 117.65. The British pound was quoted at $1.7557, up from $1.7384.


[R]11:30AM Stocks moved to the upside.[/R]
Having traded near the flat line throughout morning session, stocks gained momentum going into afternoon trading, although buying interest remained somewhat subdued. Airline stocks continued their strong performance, benefiting from a notable decrease in the price of oil with Continental Airlines ((CAL)) leading gainers in the sector after reporting a higher March load factor. The transportation sector also benefited from declining oil prices to send the Dow Jones Transportation Average up 1.1%, to a new record intraday high. Bank stocks moved notably to the upside, leading the sector 0.9% higher. Among bank stocks, Citigroup ((C)) rose 1.3% after the Federal Reserve Bank of New York lifted a year-long ban on big acquisitions by the company. The utilities sector contributed to the market strength, with the Dow Jones Utilities Average currently up 0.9%. Some disk drive, semiconductor, and telecommunication stocks also posted considerable gains. Among individual stocks, Computer Sciences Corp. ((CSC)), IT services provider, climbed notably by 4.3% after CSC said it is considering a possible sale of the company. 3M ((MMM)) was the bet Dow performer, rising 2.5% on considering alternatives for its branded drugs business, including a possible sale. Meanwhile, the decrease in the price of oil contributed to some weakness in the oil service sector.

[R]10:30AM Stocks traded in a lackluster fashion.[/R]
Cautiousness ahead of the start of the first-quarter earnings report kept stocks trading in a tight range. There were no new economic report and investors stayed away from making significant moves ahead of the Labor Department report on job creation, due out Friday. In midmorning trading, the Dow Jones industrial average rose 13.92, or 0.13%. The Standard & Poor''s 500 index added 1.25, or 0.1%, and the Nasdaq composite index gained 4.98, or 0.21%. Bonds edged higher, with the yield on the 10-year Treasury note falling to 4.85% from 4.87% late Monday. Among companies in the spotlight today, shares of Computer Sciences ((CBC)) rose 4.2% after the company announced that it will put itself for a sale which could lead to a deal worth more than $10.6 billion. Dow industrial Citigroup ((C)) gained after the Federal Reserve Bank of New York lifted a year-long ban on new acquisitions. While the bigger part of the broad market showed a lack of direction, the airline sector notably advanced on lower oil prices. Continental Airlines ((CAL)) climbed 2.3% after the company said its March load factor rose to 81.2% from 80.5% a year ago. Disk drive stocks also moved to the positive territory, contributing to a 1.2% advance by the sector. Maxtor ((MXO)) and Seagate Technology ((STX)) were among the sector''s best performers. Notable gains were visible among telecommunications, banking, and utilities stocks. Meanwhile, the networking sector was sent lower, helped by Ciena ((CIEN)) which announced a plan to sell up to $250 million in convertible senior notes due 2013 and dropped 3.5%. Lower oil prices due to profit taking sent energy stocks to the downside.


[R] 9:45AM Stocks were steady at opening.[/R]
Stocks lacked direction in early Tuesday trading with investors reluctant to make significant moves before the release of key economic data. In the opening minutes, the Dow Jones industrial average was up .08 at 11,145.02, the Nasdaq Composite was unchanged and the S&P’s 500 index climbed .03 to 1,297.84. Among stocks in focus, Computer Sciences ((CSC)) is expected to be active on deal talk and a report it will cut jobs. The company is in talks to sell itself for more than $10.6 billion, and also is expected to announce 5,000 job cuts. Merrill Lynch ((MER)) lowered its Q1 net earnings forecast by $1.2 billion after taxes as a result of a new accounting standard for stock-based employee compensation. In other corporate news, Arcelor announced a series of measures to spurn Mittal Steel''s hostile offer. The measures included putting Dofasco into a Dutch foundation and announcing a special cash return of $6 billion. Although, the broad market was lackluster, energy stocks showed visible weakness on profit taking after yesterday’s gains. HMO, defense, and networking stocks also moved to the downside. Among networking stocks, shares of Ciena ((CIEN)) fell 3.8% after the company announced that it plans to sell up to $250 million in convertible senior notes due 2013. Airline stocks posted significant strength in early trading, benefiting from the decline in oil prices. As the price of gold advanced, gold stocks also moved to the positive territory, rebounding from weakness in the previous session.


[R]9:15AM Stock futures pointed to a modestly higher opening.[/R]
U.S. stock futures were sitting near the flat line, pointing to a slightly higher start on optimism about corporate earnings at the start of the new earnings season, which will be kicked off by aluminum producer Alcoa Inc. ((AA)) next week. Stocks seemed likely to continue the mixed performance shown at close yesterday, when averages reversed from earlier gains and the Nasdaq fell into negative territory after setting a five-year intraday high. On Tuesday, buying interest is expected to remain subdued with investors awaiting the March employment report. In company news, Computer Sciences ((CSC)), computer services company, advanced 4.7% in pre-market trading after it said it is considering a possible sale of the company. The company said it plans to cut 5,000 employees in the next two years, mostly in Europe. Shares of Merrill Lynch ((MER)) dropped 2.8% in pre-market trading after the company said it will take a $1.2 billion charge in the Q1 after it adopts new accounting standards for stock options. S&P 500 futures were up 0.80 point, just barely above fair value. Dow Jones industrial average futures rose 6 points, and Nasdaq 100 futures rose 1.25 point.

Crude oil prices retreated on speculations of strong crude stockpiles. Light sweet crude May delivery dropped 64 cents to $66.10 a barrel. London Brent dropped 50 cents to $66.34. European gold traded mixed Tuesday. In London gold traded at $585 per troy ounce, down from $589.90. In Zurich the precious metal rose to $586.70 from $582.90. In Hong Kong gold surged $1.30 to $585.80. Silver fell to $11.69 from $11.70. The U.S. dollar lost ground versus major currencies. The euro traded at $1.2181, up from $1.2141. The dollar bought 117.51, down from 117.65. The British pound was quoted at $1.7459, up from $1.7384.

AES Corp, ((AES)), power company, reported Q4 net income of 27 cents a share, up 77% from 16 cents a share in the same period last year. Earnings from continuing operations came to 27 cents a share, up from 3 cents a share. Adjusted earnings came to 28 cents a share, up from 10 cents a share last year. Revenue soared 18%. The company was expected to earn 19 cents a share, according to analysts’ forecasts. AES added it expects 2006 earnings from continuing operations of 90 cents a share and adjusted earnings of 95 cents a share, compared to analyst estimate of $1.02 a share.

Walgreen Co, ((WAG)), drug store operator, reported that March same-store sales advanced 4.3%, while total sales advanced 9.2%. This year''s March sales were influenced by the shift of the Easter holiday to April from March last year. To combat the ""Easter effect,"" Walgreen will report next month total and same-store sales for both April and for the combined months of March and April.

Delta & Pine Land Co, ((DLP)), cotton seed manufacturer, reported Q2 net income of 40 cents a share, down from 48 cents a share in the year-ago on 4% revenue decline. Delta & Pine raised its 2006 earnings outlook to $1.15 to $1.25 a share, after charges of 10 cents a share related to its lawsuit against Pharmacia Inc. and Monsanto Co.

Layne Christensen Co, ((LAYN)), energy markets provider, reported that Q4 profit advanced to 20 cents a share, more than double from 9 cents a share in the year-earlier period on 63.8% revenue growth, missing analysts’ forecasts for a profit of 25 cents a share. The advance in profitability during the quarter was primarily due to strong performance by the energy and geo construction divisions.


[R]8:45AM Sensex registers second record in April.[/R]
Sensex in India rose 74 points to 11,638 at close on strong buying from recently launched mutual funds. Banks and select industrial stocks remained in favor. 1,557 stocks advanced and 978 stocks declined with 49 remaining unchanged. At the morning opening Sensex managed to gain 150 points, however settled at a lower level in a volatile trading. In the last six months of trading Sensex has advanced 51%.

Reliance Industries raised $550 million in a private placement at $1.55 per share for a 27 million ton refinery project. RIL closed at Rs. 840. Other refineries joined the rally. HPCL and BPCL rose 7% and 4% in the session. VSNL, international telecom and Internet services provider rose 5.5% to Rs. 500 on the recent acquisition news. Tata Motors lost 1% despite the news that March unit sales rose 27% to a record level of 55,400. Mphasis BFL dropped 2% on the news that the acquisition offer from American company EDS is at a discount to the current market price. Mphasis trades at Rs. 211 and the offer is at Rs. 204.50 per share. In other IT news Geometric Software rose 20% in anticipation of Q4 earnings results. In other major movers, Thermax and BOC India jumped 14% and 10% respectively. Apollo Tyres rose 10% on the news that the management is to discuss the various financing options to fund new acquisitions.


[R]8:15 AM European averages lost ground at mid-day.[/R]
European markets lost ground at mid-day, following a strong trading session Monday. The decline was contributed to a mixed closing of U.S. markets overnight as investors locked in profits, as well as weakness in mining stocks, such as Rio Tinto and BHP Billiton, which failed to sustain recent gains. On the merger-and-acquisition front, Arcelor eased 1.8% after it unveiled a series of takeover defenses, including a special payment of more than $6 billion to shareholders. Automakers brightened the gloomy mood as DaimlerChrysler, Porsche, Volkswagen gained, following the release of U.S. sales data yesterday. The German DAX 30 fell 0.2%, the French CAC 40 lost 0.5%, and London FTSE 100 dropped 0.4%.


[R]7:45AM Asian markets finished largely higher. The Nikkei dropped.[/R]
Asian-Pacific benchmarks finished broadly higher. The Nikkei ended its seven-session winning streak to close in the negative after hitting a six-year high on Monday. The Japanese index fell 0.2% to 17,292.91, dragged by weakness in the tech sector and exporter blue-chip stocks like Kyocera, down 1.7%, Tokyo Electronics 1.6%, Honda Motor and Toyota Motor each falling 0.5%. Data released by BOJ, which showed that Japan’s monetary base declined 1% for the first time in five years, caused weakness among banking and insurance stocks with Mitsubishi UFJ Holding falling 1.6% and Mizuho Financial Group, down 0.3%. Across the region, Hong Kong’s Hang Seng reversed from earlier losses to rise 0.2% to 16,100.09, hitting a five-year high on fresh fund flows. South Korea’s Kospi advanced 0.4%, led by tech and auto stocks. India’s Sensex hit an all-time high of 2.5% at 11,564.36, lifted by foreign fund buying.