Averages Retreat as Oil Surges

123jump.com Staff
22 Apr, 2005
New York City

Lack of conviction drove the markets in negative range and weaker earnings from the consumer sector did not help. Supply worries at refineries in the U.S. and violence in Saudi Arabia managed NY oil to spike up more than a dollar and gasoline by 4%.

Since mornings markets were nervous. The bearishness in the averages and sell off in the stocks intensified as oil gained grounds in European and NY trading. In the end inflation, gasoline supply and weaker consumer sector earnings overcame the strong earnings report from Google, International Paper, Fortune Brands, Hershey, Kenneth Cole, Haliburton and Amgen.

Oil continued to defy gravity and after touching $50 a weeks ago managed to climb back to $55. 39. There a re concerns that one of the refiners at DuPont may not restart after maintenance on schedule and recent spat of violence in Saudi Arabia has oil trader worried on the additional crude oil supplies.

Google reported six fold jump in earnings overnight and exceeded the best estimates of the analysts of 92 cents and reported $1.29 for the 1Q 2005. The stock jumped to $224 before settling to $215.80. Several analysts upgraded the stock and Piper Jaffrey raised the price target on stock to $275.

Sandisk and Lattice Semiconductor reported earnings. While Sandisk reported 39 cents for the 1Q on 17% revenue jump vs. 34 cents a year ago and beat the estimates of 32 cents. Investors rewarded company by driving the stock down 10%. In the current quarter the company expects to sell 20 to 30% more megabyte but did not give guidance for the dollar revenue.

Costco projected before the bell lower 3Q earnings and for the rest of the year. Higher gasoline prices are eating into the customer discretionary spending. Maytag earnings were also hurt by higher energy and material costs. Eastman Kodak continues to struggle through its transformation to digital platforms and managed to deliver 50 cents loss vs. 7 cents profit. The outlook for the rest of the year is still choppy.




S&P DOWN 0.68%
Nasdaq DOWN 1.54%
Dow DOWN 0.60%


In Other News

Italian Prime Minister will try one more time to form a government
China’s current account jumps 50% in March from December 2004
Major Asian exchanges close higher on the strength in the U.S. markets yesterday
Oil trades and closed at $55.39 and gasoline jumped 4%
Gold jumps$1.25 to $435.60 per ounce and silver jumped by 5.7 cents to $7.275


Earnings Headlines

The financial services company Fiserv reported 1Q profit of 71 cents vs. 47 cents a year ago
International Paper reported 1Q profit on higher prices in the U.S. market at 16 vs. 15 cents
Kodak, the film company, continues to have transition problems to the digital format and declared loss of 50 cents vs. profit of 7 cents
Costco, discount wholesale club operator, projected 3Q and full year profit below the expectations
Hershey reported 1Q profit of 47 cents vs. 41 cents a year ago, stock jumps 3.5%
Indian outsourcing and BPO companies continue to report strong revenue and earnings growth, Wipro and Satyam reported 38% and 54% earnings growth
Lattice Semiconductor reported wider loss of 10 cents and Sandisk disappointed investors with lower revenue growth