Nasdaq Drops 1%

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

Market averages declined on worries stemming from commodities prices and stubborn oil prices. Bond yields stayed near 5%. Gold traded near $600 and silver and copper gained. European stocks fell led by a sharp decline in Italy. Emerging markets declined led by Brazil, Argentina and Korea. Bausch & Lomb is now 45% below peak price of $89 in mid-year 2005.

[R]4:15PM Nasdaq lost 1% as oil and gold gained investors focus.[/R]

- Dow down 51.7 points, Nasdaq down 22.92 and S&P down 10.05.
-Yield on 10-year bond closed at 4.934% and on 30-year bond at 5.001%.
-Crude oil up 24 cents to $68.98 a barrel. Gasoline closed up 5 cents to 2.05 a gallon.
-Gold down $2.40 to $599.40 and silver rose 4 cents to $12.60. Copper closed at $2.72.

Market averages lost ground with tech stock leading the decliners. In the absence of any economic or corporate news commodities ruled the market. Oil rose but gold declined as averages fell in the afternoon trading. Oil is trading near high for the year and gold and silver traded near 25-year peaks. Copper reached another high as traders worried that demand may grow faster than the supply.

Brokers, casinos and home builders lost ground. Energy, railroads and mining stocks gained. Bausch & Lomb lost 17% at close on the news that the company has temporarily suspended sales of certain products. McGraw Hill traded near all-time high. International Paper ((IP)) rose more than 1% on the news that the company has finished its restructuring plan to sell land.

[R]3:00PM Pakistan Karachi Index led emerging markets in Asia.[/R]
Emerging markets in Asia traded mostly unchanged with a slight negative bias. Australian index rose 0.6% on strong mining stocks but otherwise markets in Korea, Taiwan and Hong Kong lose 0.8%, 0.28% and 0.35% respectively at close. Market in India was closed on the account of Jain faith holiday. Philippines index traded near record high and added 0.43% on the strength in banking and telephone stocks. In Pakistan, Karachi Index rose another 0.5%. Index in Pakistan has risen from a low of 1,276 in November 2000 to close at 11,992 at the end of today, a gain of close to 1,100%. Similar outsized gains have been registered in Russia and India in the last five years.

Russia’s main index RTS traded unchanged at close after adding 2% yesterday. Central Bank of Russia reported a slight decline in international trade surplus in February from January 2006. The February trade surplus of $11.98 billion was lower than $12.18 billion in January. Vimpelcom ((VIP)), Russian mobile operator, rolled out cell phone service in Ukraine as of today under a brand name Beeline.

Latin markets ahead of Easter holiday were trading significantly lower led by a decline of 1.7% in Sao Paulo and 1.2% loss in Argentina. Mexico and Chile lost 0.6% and 1.1% respectively near close. Brazilian shares declined on inflation worries led by rising material and energy costs and worries that the Central Bank may not cut high interest rate of 16.5%. In Mexico, IPC index declined ahead of Thursday and Friday holidays. Cemex, Telmex and American Movil lost 1% each and Homex, home builder gained a fraction in New York trading.


[R]2:00PM Bausch & Lomb declines for the second day. McGraw Hill trades near record price.[/R]
Oil is in the news today as it has been for the last three days. Oil price retreated little after hitting year-to-date high at close of yesterday. Market averages quickly lost its early momentum of the morning and turned negative. Tech stocks and large and small cap stocks remained in the negative territory in the early afternoon trading. Bausch & Lomb ((BOL)) lost another 16% today as the company temporarily suspended shipments of ReNu and MoistureLoc. Bausch & Lomb stock has lost close to 45% from the peak of $89 since July of 2005. The company stock suffered a similar decline in the second quarter of 2001. Between June 1st, 2001 and Sept 21, 2001 stock declined from $49 to $28.

McGraw Hill ((MHP)) lost 50 cents after the company stated that it plans to take $15 million or 4 cents per share charge to eliminate stock option restoration program. The stock is trading near all-time high and has appreciated to close to 33% since its last stock split in May 2005.


[R]12:30PM European markets closed sharply down.[/R]
European markets finished deeply in the red. The Italian MIB-30 stock exchange dropped 2% and erased all of yesterday’s gains on diminished prospect for economic reforms after opposition leader Romano Prodi claimed a very thin election victory over Premier Silvio Berluskoni. The German DAX 30 dropped 1.6%, the French CAC 40 fell 1.5%, while London FTSE erased earlier gains to trade down 0.8% as mining companies Rio Tinto and BHP Billiton declined on falling commodity prices. However, oil companies like Royal Dutch Shell and BP limited decline, making gains on surging oil prices over $69 a barrel.

Crude oil prices eased back to $68, following a sharp jump over $69 on supply concerns. Light sweet crude May delivery fell 74 cents to $68 a barrel. London Brent dropped 36 cents to $68.39. European gold sharply rose on weaker dollar, higher energy prices and strong speculative buying. In London gold climbed to $598.50 per troy ounce, up from $587.30. In Zurich the precious metal rose to $600.40 from $592.90 In Hong Kong gold rose $5.10 to close at $601.60. Silver closed at $12.40, up from $11.90. The U.S. dollar was mixed versus major currencies. The euro traded at $1.2131, up from $1.2096. The dollar bought 118.55, up from 117.50. The British pound was quoted at $1.7482, up from $1.7412.


[R]11:30AM Stocks sharply fell in late morning.[/R]
Although averages moved off their worst intraday levels, they remained in the negative territory. The Nasdaq posted a sharp decline and outperformed the other two averages. The steep loss being shown by the Nasdaq reflected weakness in the technology sector, with networking, computer hardware, and semiconductor stocks posted notable losses. Some weakness was also visible in the biotechnology sector. Brokerage stocks also helped to drag the markets lower, with the sector currently down 1.5%. TD AmeriTrade ((AMTD)), Legg Mason ((LM)), and Morgan Stanley ((MS)) are turning in some of the sector''s biggest decliners. A number of sectors came under pressure. Health insurance stocks showed a considerable weakness to send the whole sector to its worst levels in over two months. Concerns about higher energy costs sent airline stocks to the negative, with the Amex Airline Index currently down 2.2%. At the same time, crude oil prices boosted Exxon Mobil Corp. ((XOM)) up 0.4%, ConocoPhillips ((COP)), up 2% and Chevron Corp.((CVX)) 0.2% higher. Gold stocks continued their advance, although the sector pulled back off its best levels of the day.


[R]10:30AM Stocks lost ground. The Nasdaq fell in the negative.[/R]
After the initial strength, stocks lost ground. The major indexes turned to mixed performance. Nasdaq fell below the flat line, while the Dow and the S&P 500 held onto modest gains. Strength among commodities stocks contributed to the early rise, with gold stocks moving higher on a sharp jump in the price of the precious metal. Other metal stocks also moved notably up. Freeport-McMoRan ((FCX)), copper, gold, and silver producer, was one of the sector''s most conspicuous advancers, currently up 3.3%. Century Aluminum ((CENX)) rose 2%, reflecting higher commodities prices and Alcoa’s strong earnings report. Among other stocks, Columbia Sportswear ((COLM)) climbed 4% on upgrade from Citigroup. Nokia ((NOK)) rose 5% on higher-than-forecasted selling prices for its phones. Energy stocks also moved to the upside, extending gains on continued increase in the price of oil. However, rallying oil prices generated some negative sentiment. Oil prices raised concerns about higher energy costs and their impact on the economy which led to the pullback by the markets. Airline stocks posted significant weakness on concerns about higher fuel costs. Health insurance stocks also came under pressure, extending a recent decline.


[R] 9:45AM Stocks opened in the positive.[/R]
U.S. stocks opened higher with the three major averages moving into the positive territory after finishing mixed in the previous session. Stocks advanced, lifted by better-than-expected earnings from Alcoa which gave investors confidence about corporate results and helped offset another rise in oil and gasoline prices. Alcoa ((AA)) reported Q1 income rise of 69 cents a share on strong metal prices and demand, beating analyst estimates for 51 cents. The early strength was partly contributed by gains for commodities stocks. Gold stocks recovered from some weakness yesterday and showed a strong move to the upside after gold for June delivery climbed to $603.20 an ounce. Oil and oil service stocks also moved higher at the start of trading, benefiting from a continued rise in oil price and currently trading at $69.10 a barrel. Some strength was also visible among housing and cyclical stocks. In the first hour of trading, the Dow Jones industrial average advanced 41.87, or 0.38%. The Standard & Poor''s 500 index was up 3.57, or 0.28%, and the Nasdaq composite index rose 5.11, or 0.22%. Bonds rebounded from last week''s plunge, with the yield on the benchmark 10-year Treasury note falling to 4.93% from 4.96% late Monday.


[R]9:15AM Stock futures indicated a higher start.[/R]
U.S. stock futures turned positive, following news that the world’s largest cell phone company Nokia ((NOK)) was selling phones at higher-than-expected value and thus boosting rival companies like Motorola ((MOT)), whose shares rose 1.4 % in trading on the Inet electronic brokerage network. Earlier in the morning futures were sitting below the unchanged mark early, despite stronger-than-expected earnings from Dow component Alcoa ((AA)), which reported a quarterly profit rise above analysts'' estimate. On Monday, the major U.S. equity indices finished with a mixed performance, as a rise in oil prices weighed on stocks. S&P 500 futures were up 0.3 point, above fair value. Dow Jones industrial average futures rose 11 points, and Nasdaq 100 futures rose 2.5 points.

Crude oil prices surged on supply worries, raised by Iran’s nuclear standoff, violence in Nigeria and declining gasoline stockpiles. Light sweet crude May delivery gained 49 cents to $69.23 a barrel. Gasoline added 2 cents to $2.0260 a gallon, while heating oil was steady at $1.9447. Natural gas futures traded at $6.862 per 1,000 cubic feet. London Brent rose 75 cents to reach an all-time high of $69.70. European gold sharply rose on weaker dollar, higher energy prices and strong speculative buying. In London gold climbed to $599.50 per troy ounce, up from $587.30. In Zurich the precious metal rose to 599.85 from $592.90 In Hong Kong gold rose $5.10 to close at $601.60. Silver opened at $12.40, up from $11.90. The U.S. dollar was mixed versus major currencies. The euro traded at $1.2118, up from $1.2096. The dollar bought 118.52, up from 117.50. The British pound was quoted at $1.7432, up from $1.7412.

Nova Measuring Instruments, ((NVMI)), manufacturer of semiconductors reported that its Q4 net loss was 10 cents a share, down from 2 cents a share a year ago due to 11% revenue decline. The company said that during Q1 of 2006 it started seeing positive changes in market conditions. The bookings stream increased relative to the previous quarters, including orders for delivery in the following quarters, and a moderate growth was expected in the following quarters.

Mosaic Co. ((MOS)), phosphate and potash crop nutrients producer, reported a Q3 loss of 19 cents a share, swinging from. a profit of 9 cents a share in the year-ago period, missing analysts’ predictions for a profit of 1 cent a share. Revenue declined to $1.07 billion from last year''s $1.14 billion, due primarily to weakness in its potash business. The company aded it expects Q4 revenue rebounding from Q3 levels.


[R] 8:15 AM European averages lost ground at mid-day.[/R]
European markets lost ground at mid-day dealings. The Italian MIB-30 stock exchange erased most of yesterday’s gains, falling sharply down to 0.9% on uncertainty over the weekend’s elections leadership victory. The German DAX 30 dropped 0.7% on disappointing economic data, the French CAC 40 fell 0.5%, while London FTSE erased earlier gains to trade down 0.1% as mining companies Rio Tinto and BHP Billiton declined on falling commodity prices. However, oil companies like Royal Dutch Shell and BP limited decline, making gains on surging oil prices over $69 a barrel.


[R]7:45AM Asia closed mostly down.[/R]
Asian-Pacific benchmarks finished mostly in the negative, reflecting general weakness among technology and semiconductor stocks. The Nikkei moved lower for a second day in a row on investor cautiousness ahead of the new stream of earnings reports and news that BOJ decided to leave benchmark interest rate at zero percent. Among losers, chip-related stocks Advantest dropped 2.8%, Elpida Memory fell 3.6%, and Kyocera lost 0.6%. Banking and retail shares were also among notable decliners. South Korea’s Kospi dropped 0.9%, awaiting quarterly corporate results. Hong Kong’s Hang Seng fell off recent highs on profit taking after a five-session rally. The index lost 0.3% as strength among automakers limited losses. Australia’s All Ordinaries surged to 0.8%, lifted by strong mining stocks.