J.P. Morgan in Swap Deal

Elena
10 Apr, 2006
New York City

U.S. stocks started trading modestly higher as investors looked past the steep declines Friday and focused their attenion on the opening of the new earnings season. Apart from aluminum maker Alcoa which kicks off the season, other major companies releasing Q1 results during the week are Genentech, Circuit City, Advanced Micro Devices and General Electric. Starwood Hotels & Res dropped 19%. Railroad stocks were weak with CSP CP down 1.4% and Union Pacific losing 0.8%.

[R] 9:45AM Stocks opened in the positive.[/R]
Stocks started trading above the flat line as investors looked past Friday’s declines, awaiting the new earnings season. Gains among energy and metal stocks contributed to the initial strength. Recovering from last-week weakness, gold prices jumped to $600 an ounce to send gold stocks significantly higher. An increase in the price of oil contributed to the early strength among energy stocks. Meanwhile, the higher price caused weakness in the airline sector.In the opening minutes, the Dow Jones industrial average is up 8.89 at 11,128.93, the Nasdaq Composite Index has gained 1.37 at 2,340.39 and the Standard & Poor's 500 index has inched up 1.30 at 1,296.80.


[R]9:15AM Stock futures indicated a flat start.[/R]
U.S. stock futures pointed to a flat market opening Monday, following the sharp declines on Friday after the release of better-than-expected jobs report raised interest rate concerns. JPMorgan Chase & Co. ((JPM)) is expected to be in focus as it announced plans to swap its corporate trust unit for Bank of New York Co.''s ((BK)) 338 retail branches and small business banking network. The JPMorgan deal values the Bank of New York business at $3.1 billion, and JPMorgan''s trust unit at $2.8 billion. According to the agreement, Bank of New York will receive $150 million in cash. Market also awaited the start of the new earnings season, with aluminum maker Alcoa ((AA)) reporting Q1 earnings report due out after the closing bell. Other major companies releasing quarterly results during the week are Genentech ((DNA)), Circuit City ((CC)), Gannett ((GCI)), Advanced Micro Devices ((AMD)) and General Electric ((GE)). S&P 500 futures were down 0.40 point, slightly above fair value. Dow Jones industrial average futures rose 2 points, and Nasdaq 100 futures fell 1.5 points.


Crude oil prices advanced on supply worries, rising from Iran’s nuclear standoff, violence in Nigeria and declining gasoline stockpiles. Light sweet crude May delivery gained 37 cents to $67.76 a barrel. Gasoline added 1 cent to $1.9867 a gallon, while heating oil was marginally up to $1.8854. Natural gas futures fell 2 cents to $6.722 per 1,000 cubic feet. London Brent rose 31 cents to $67.60. European gold sharply rose on weaker dollar, higher energy prices and strong speculative buying. In London gold climbed to $597.50 per troy ounce, up from $587.30. In Zurich the precious metal rose to 596.90 from $587.10 In Hong Kong gold added 35 cents to close at $596.50. Silver opened at $12.30, up from $11.90. The U.S. dollar was mixed versus major currencies ahead of jobs report. The euro traded at $1.2122, up from $1.2106. The dollar bought 118.35, up from 117.27. The British pound was quoted at $1.7465, up from $1.7431.

Schnitzer Steel Industries, ((SCHN)), metals company, reported Q2 earnings of 68 cents a share, down from a profit of $1.15 a share a year earlier despite revenue growth, missing analysts’ estimates for a profit of 72 cents a share.

GenCorp Inc, ((GY)), maker of aerospace and defense products, reported Q1 net loss of 29 cents a share, up from 58 cents a share in the year-ago. The company added that sales dropped to $128.7 million from $139.9 million in the quarter.

Frisch''s Restaurants Inc, ((FRS)), restaurant operator, reported that Q3 profit dropped to 43 cents a share, from $1.20 in the year-ago period. Sales for Q3 advanced to $67.3 million from $62.8 million in last year''s Q3. If not for a gain in the year-ago period the company would have reported a 26% increase in Q3 profit.

Orange 21 Inc., ((ORNG)), a leading developer of premium eyewear products, reported Q4 net loss of 22 cents per share on approximately 8.0 million weighted average shares outstanding, down from a net income of 13 cents per share on 5.8 million weighted average shares outstanding in the same period a year ago. Orange’s net sales for Q4 of 2005 declined 7.1%, compared to the same time previous year.


[R] 8:15 AM European averages traded mixed at mid-day.[/R]
European markets traded mixed at mid-day as strength among energy, resource and auto stocks sent the British and German averages slightly higher, but concerns over the French economy offset the positive sentiment. Oil companies like BP and Royal Dutch Shell advanced as crude prices moved higher. The German DAX 30 gained 0.04%, London FTSE 100 rose 0.3%, while the French CAC 40 declined 0.3%, reflecting disappointing industrial production data. Major automakers like Renault, Peugeot-Citroen dropped as the report showed that autos was the worst affected sector, down 3.9%.


[R]7:45AM Asia closed mostly down.[/R]
Asian-Pacific benchmarks finished mostly in the negative, reflecting weakness among interest-rate sensitive stocks on renewed concerns about further rate increases. The Nikkei slipped 0.6% to 17,456.58 on profit taking. Investors sold off technology, machinery and other stocks, following the strong rally last weak and remaining cautious ahead of the forthcoming earnings season. Sony dropped 1.2% on news that Samsung Electronics is planning to invest $2 billion to expand its joint production. Among major machinery stocks, Komatsu dropped 2% and Fanuc fell 0.6%. Hong Kong’s Hang Seng advanced for a fifth consecutive session. The index rose 0.3%, led by gains for MTR, up 5.3% and China Mobile, up 1.2%. China Shanghai Composite climbed 1.2%, boosted by automakers, while Singapore Straits Times lost 0.2% on property shares, and Australia All Ordinaries dropped 0.8% on weak resource and financial stocks.