Key Drug Drags Genentech

Elena
12 Apr, 2006
New York City

Stock index futures indicated flat opening as soaring oil prices and disappointing sales of a key drug by Genentech hurt sentiment. The biotechnology company reported higher quarterly profit on strong sales of cancer medicines, but disappointing sales of a drug treating rheumatoid arthritis. Circuit City posted net sales rise of 12.8% on 11.6% increase in comparable store sales. Gannett posted Q1 income dropred to 99 cents a share, in line with expectations.

[R]9:15AM Stock futures indicated a flat opening.[/R]
U.S. stock futures pointed to a lackluster start of Wednesday session, following a sharply lower close yesterday when stocks dropped for a third day in a row, hurt by speculations that surging oil prices and other commodity prices could lead to higher inflation and lower consumer and corporate spending. On Wednesday soaring oil prices and disappointing sales of a key drug by Genentech weighed on pre-market sentiment. Genentech ((DNA)), the world''s second largest biotechnology company, reported higher quarterly profit on strong sales of cancer medicines, but its shares fell in after-hours trading on disappointing sales of a drug treating rheumatoid arthritis. In earnings news, U.S. motorcycle maker Harley-Davidson Inc. ((HDI)) reported 3.3% earnings rise in the latest quarter, matching expectations. Consumer electronics specialty retailer Circuit City ((CC)) posted strong Q1 profit growth of 84 cents a share with net sales rising to 12.8% on 11.6% increase in comparable store sales. S&P 500 futures were down 0.2 point, just slightly above fair value. Dow Jones industrial average futures fell 2 points, and Nasdaq 100 futures fell 1.25 points.

[R]U.S. trade deficit narrowed more than economists had expected.[/R]
Wednesday morning, the Department of Commerce released its report on the U.S. trade deficit in the month of February. The report showed that the U.S. trade deficit narrowed more than economists had expected. The Commerce Dept. said that the trade deficit narrowed to $65.7 billion in February from an upwardly revised $68.6 billion in January. Economists had expected the deficit to narrow to $67.0 billion from the $68.5 billion originally reported for January. The narrower trade deficit came as a decrease in the value of imports outpaced a drop in the value of exports. The report showed that the value of imports fell 2.3 percent to $178.7 billion while the value of exports fell 1.1 percent to $113.0 billion. The drop in the value of imports was partly due to decreases in imports of capital goods, automotive vehicles and parts, and consumer goods. Decreases in exports of foods, feeds, and beverages and capital goods contributed to drop in the value of exports.

Crude oil prices hovered round $69 a barrel. Light sweet crude May delivery gained 2 cents to $69 a barrel. London Brent rose 13 cents to reach $69.50. European gold retreated from record highs. In London gold fell to $596.75 per troy ounce, down from $598.50. In Zurich the precious metal slipped to 596.85 from $600.40. In Hong Kong gold dropped $6.60 to close at $595. Silver opened at $12.60, down from $12.70. The U.S. dollar traded lower versus major currencies. The euro traded at $1.2149, up from $1.2136. The dollar bought 118.07, down from 118.37. The British pound was quoted at $1.7558, up from $1.7480.

Media General Inc, ((MEG)), newspaper publisher and television station operator, reported that total revenue advanced 3% in March to $74.3 million. The company added that revenue from its publishing operations rose 4.5%, while its broadcast business dropped a 1.7%. Media General’s interactive media operations reported a revenue rise of 37.2% for the month amounting to $2.1 million on growth in demand for online classified ads.

Circuit City Stores Inc., ((CC)), consumer electronics retailer, reported Q4 earnings of 80 cents a share, up from 45 cents per share a year ago on strong sales of flat-panel televisions and fewer price cuts. Earnings from continuing operations amounted to 84 cents a share. The company beat analysts’ expectations for earnings of 77 cents per share.

Harley-Davidson, Inc., ((HDI)), producer of heavyweight motorcycles, motorcycle parts, and related accessories, reported record Q1 net income of 86 cents a share, up 3.2% from 77 cents a share for the year-ago period on 4% revenue growth. The company added that its dealers continued their retail sales growth momentum from the second half of 2005 as motorcycle sales rose by approximately 7% worldwide in Q1.

Gannett Co. Inc., ((GCI)), media company, reported that Q1 earnings dropped to 99 cents a share, down from $1.05 cents a share in the year-ago period due to a difficult advertising environment at its flagship newspaper, USA Today. The company earnings are in line with analysts’ forecasts for earnings of 99 cents a share.


[R] 8:15 AM European averages traded in the negative at mid-day.[/R]
European markets moved deeply in the negative at mid-day dealings, following a sharply lower close of U.S. markets overnight. Market sentiment was hurt by concerns that the strong increase in the oil price and the industrial metals will lead to higher interest rates. However, stock-exchange shares gained after the Nasdaq Stock Market acquired a 14.99% stake in the London Stock Exchange. Shares of the LSE jumped 15.6%. London FTSE 100 fell 0.6%, the German DAX 30 lost 0.6%, and the French CAC 40 dropped 0.9%.


[R]7:45AM Asian markets ended sharply lower.[/R]
Asian-Pacific benchmarks closed steeply lower, reflecting weak high technology stocks and concerns that rising oil prices could hurt U.S. consumption and exporter issues. Regional decliners were led by the Nikkei which fell 1.5% to 17,162.55. The third consecutive drop of the Japanese index was contributed by weakness in tech and financial shares. The chip related sector declined, dragged by Advantest, down 3.8%. Among other tech stocks, Toshiba dropped 2.6%, Sony fell 2.5%, while banking stock Mitsubishi UFJ Financial Group slipped 3%. At the same time, drug and wholesale food companies advanced. Across the region, Hong Kong’s Hang Seng was another sharp decliner, falling 1%, followed by Australia’s All Ordinaries, down 0.9%. South Korea’s Kospi was sent 0.2% lower by consumer electronics shares like L.G. Philips LCD and Samsung Electronics.