Weak Gasoline Stocks

Elena
05 Apr, 2006
New York City

After the early rise, stocks gave back some ground with investors worried about interest rate hikes. An icrease in the price of oil also contributed to the market weakness. Crude oil rose to $66.65 after the Energy Dept. showed a steeper-than-expected decline in gasoline inventories.Tech stocks were strong with shares of Apple rising 7% on the introduction of new software that enables Intel-based Macs to run Windows XP.

[R]11:30AM Stocks lost some ground in late morning.[/R]
Following the initial strength, stock markets gave back some ground and turned mixed. The three major averages came off intraday highs and the Dow fell below the flat line. Market sentiment was hurt by expectations of strong employment report and a tick up in treasury yields which raised concerns about higher interest rates. A notable increase in crude oil prices also contributed to the overall weakness. Oil prices jumped following the release of oil inventories report, which showed strong crude stockpiles, but sharper-than-expected decline in gasoline inventories. Meanwhile, housing stocks moved notably higher after the MBA showed a sharp rise in mortgage applications. The sector rose by 1.5%. Technology sector continued its strong performance, with semiconductor, networking, and computer hardware stocks posting solid gains. Shares of Apple ((AAPL)) climbed 7.4% after the company introduced its Boot Camp software. In other news, shares of St. Jude Medical ((STJ)) dropped 13% after the medical device maker warned of weaker than expected first quarter earnings.

[R]Crude oil inventories rose, while gasoline stocks dropped.[/R]
Crude oil inventories advanced in the latest week, according to government statistics released Wednesday. This added to a gain posted during the previous week. However, stocks of gasoline once again moved lower. The Department of Energy''s Energy Information Administration revealed that crude oil inventories climbed by 2.1 million barrels for the week ended March 31, rising to 342.8 million barrels from the prior week''s level of 340.7 million barrels. In the previous week, oil inventories also advanced by 2.1 million barrels, reversing a decline of 1.3 million barrels posted in the preceding week. Prior to the slide a couple weeks ago, crude inventories had put in a string of advances. In the most recent week, oil inventories were 7.7% higher than their levels of the same time last year. Gasoline inventories posted a week-over-week drop of 4.4 million barrels, the government said. This added to losses in the preceding 4 weeks, including a slide of 5.4 million barrels in the previous week. Gasoline stocks were 0.2% below their levels of last year. Inventories of distillate fuel oil declined again, falling by 2.6 million barrels in the most recent week. In the previous period, distillate inventories fell by 2.5 million barrels.


[R]10:30AM Stocks advanced, led by tech and metal shares.[/R]
Stocks moved further higher and the major indices built on recent gains with the early strength largely contributed by metal and technology stocks. Metal stocks helped to drive the markets higher, benefiting from an increase in metal prices as well as positive comments by Credit Suisse, which raised its forecasts for copper, zinc and nickel prices. Gold stocks also stood out among the movers to the upside, lifted by higher prices. Technology stocks showed considerable upward move, strongly supported by the disk drive sector. Msystems ((FLSH)) led the disk drive sector higher on expectations to exceed its Q1 revenue guidance. Semiconductor, networking, and computer hardware stocks also showed visible strength. Among hardware stocks, Apple ((AAPL)) rose 6% after it introduced new software that enables Intel-based Macs to run Windows XP. Meanwhile, oil service stocks were weak in early trading ahead of the release of the weekly petroleum report.

[R]ISM’s business activity index rose unexpectedly.[/R]
The Institute for Supply Management released its report on business activity in the services sector in the month of March on Wednesday, showing an unexpected acceleration in the pace of growth in the sector. At the same time, the report showed a slowdown in the pace of price growth. The report showed that the ISM''s business activity index rose to 60.5 in March from 60.1 in February, with a reading above 50 indicating growth in the sector. Economists had been expecting the index to dip to a reading of 59.0. The faster pace of growth in the services sector was partly due to stronger growth in new orders, as the new orders index rose to 59.5 in March from 56.2 in February. Inventories, new export orders and imports also increased at faster rates. However, the report also showed a slowdown in the pace of employment growth, with the employment index slipping to 54.6 in March from 58.2 in February. As mentioned above, the report also showed that the pace of price growth slowed in March, although it remains in a historically high range. The prices index fell to 60.5 in March from 64.8 in February.


[R] 9:45AM Stocks slightly gained at opening.[/R]U.S. stocks slightly advanced at opening with the three major averages continuing the upside trend from the previous session, although buying interest remained subdued before the release of a report on business activity in the services sector. At the start of trading the Nasdaq moved notably higher, benefiting from early strength in the tech sector. Computer hardware stocks showed considerable advance, with shares of Apple ((AAPL)) moving sharply higher after the company introduced new software that enables Intel-based Macs to run Windows XP. Strength was also visible in the gold sector, which benefited from an increase in the price of the precious metal. In the opening minutes, the Dow Jones industrial average was down 3.60 at 11,200.25, the Nasdaq Composite was up 4.46 at 2,349.82 and the Standard & Poor''s 500 index climbed .59 at 1,306.52.


[R]9:15AM Stock futures pointed to a flat opening.[/R]
Stocks futures indicated a lackluster opening, following a gaining session yesterday when lower oil prices and stable fixed income markets supported stocks and sent the Nasdaq Composite index to a five-year high. Today, investors seemed inclined to profit taking as interest-rate concerns weighed on their trading enthusiasm and couple of economic reports were expected. The Institute for Supply Management is due to release its monthly index of the national non-manufacturing sector and the government will release weekly data on petroleum inventories. S&P 500 futures were down 0.40 point but slightly above fair value. Dow Jones industrial average futures fell 4 points, while Nasdaq 100 futures rose 0.75 point.

Crude oil prices retreated ahead of weekly petroleum report and expectations of strong crude stockpiles. Light sweet crude May delivery dropped 18 cents to $65.05 a barrel. London Brent dropped 24 cents to $66.15. European gold dropped for a second day in a row as the rallying metal price deterred purchases from investment funds and jewelry makers. In London gold traded at $583.85 per troy ounce, down from $586.30. In Zurich the precious metal fell to $583.80 from $586.40. Silver fell to $11.69 from $11.70. The U.S. dollar advanced versus major currencies. The euro traded at $1.2252, down from $1.2258. The dollar bought 117.59, up from 117.42. The British pound was quoted at $1.7517, down from $1.7551.

Monsanto Co., ((MON)), seed company, reported Q2 net income of $1.60 a share, up from $1.37 a share in the year-ago period. The company said sales in Q2 advanced to $2.2 billion from $1.91 billion on a boost from corn seeds and traits. Monsanto beat analysts’ expectations for earnings of $1.52 a share. Monsanto reaffirmed a 2006 earnings outlook toward the upper end of its previously announced range of $2.35 to $2.50 a share.

Acuity Brands, Inc., ((AYI)), lighting equipment producer, reported Q2 net income of 32 cents per share, up from a net loss of 20 cents per share in the year-ago period. The results for Q2 included an additional pretax expense of approximately 5 cents per share, for certain share-based incentive plans that were impacted by the 27% appreciation in the Company’s stock price in Q2 and the adoption of SFAS123®, an accounting standard related to share-based payments.

Greenbrier Cos., ((GBX)), railcar manufacturer, reported that Q2 earnings advanced 78% to 54 cents per share, up from 31 cents per share despite a 7% decline in revenue, as better margins drove results. The company took a charge during Q2 that cut its earnings by 2 cents per share. Excluding the charge, Greenbrier matched analysts’ expectations of 56 cents per share.

Pathmark Stores, Inc., ((PTMK)), grocery stores operator, reported Q4 net loss of 28 cents per share, up from a net loss of $10.03 cents per share in the prior year''s period. The results for Q4 of fiscal 2005 and fiscal 2004 included certain adjustments. Excluding these adjustments, Q4 net loss would have been 17 cents per share. Sales for Q4 were $993.3 million, a decline of 0.4% from $996.8 million in the prior year''s period. Same-store sales declined 0.8% in Q4.

[R]8:45AM Senses in India adds 4% in three days.[/R]
Sensex Index in India is on a tear. Mumbai Stock Exchange Index is up 24% for the year on liquidity steady economic expansion and liquidity fro domestic and foreign investors. Daily new funds invested in the market are now higher than $120 million a sharp rise from $40 million a year ago and $30 million three years ago. Sensex Index is now trading at Price to Earnings multiple of 21 for 2007 significantly higher than similar ratios in Brazil, South Korea and Hong Kong. But none of these three economies are likely to generate more than 4% economic growth for the year.

Bank stocks have been on the move on the expectations that the Central Bank is soon to announce a revised credit policy for the private banks. Indus Bank closed up 12% to Rs. 55.65, State Bank of India up 1.45% to Rs. 1,010, Bank of India up 3.3% to Rs. 137 and ICICI bank closed up 1.4% to Rs. 622. L&T, infrastructure company, rose 3.9% to 2,645 on the news that the company has been awarded a $115 million project to be completed in three years. Arvind Mills, textile company rose 11% on the news that Fidelity International, American mutual funds company has raised its investment in the company to 5%. Denim maker has suffered on the global decline in denim prices as denim manufacturing capacities have rose in India and China. Local IT company stocks fell between 1% and 3% ahead of earnings from Infosys, Wipro and Satyam Comuter.


[R] 8:15 AM European averages traded flat at mid-day.[/R]
European markets turned flat at mid-day dealings. Stocks opened higher, boosted by strong U.S. markets close, but the lack of catalysts like earnings or economic reports directed investors’ attention to interest-rate hikes and they decided to lock in recent gains. EADS stood out as one of the most notable losers after DaimlerChrysler and Lagardere decided to reduce their holdings in the aerospace concern by 7.5%. Shares of European Aeronautic Defense & Space Co. dropped 3.9%. The German DAX 30 edged down 0.01%, the French CAC 40 lost 0.1%, while London FTSE 100 inched up 0.01%.


[R]7:45AM Asian markets finished higher. The Nikkei dropped.[/R]
Asian-Pacific benchmarks finished broadly higher. The Nikkei was the sole decliner in the region, closing in the negative for a second consecutive session. The Japanese index traded in the positive throughout the session, lifted by technology stocks, but eventually lost ground on profit taking to finish down 0.3% at 17,243.98. Positive sentiment boosted shares of leading tech companies like camera maker Canon, up 3.8% and computer chip equipment maker Advantest Corp., up 3.9%. Across the Region Thailand shares surged to 3.05% after Prime Minister Thaksin Shinawatra announced he would hand in his resignation. China Shanghai Composite climbed 0.8%, Singapore Straits Times rose 0.5%, Australia’s All Ordinaries surged 0.8%, and South Korea’s Kospi gained 0.2%. Markets in Hong Kong and Taiwan were closed for a public holiday.