Crude, Gasoline Stocks Fall

Elena
26 Apr, 2006
New York City

Stocks rallied in late morning trading, supported by robust earnings reports and continuous decline of oil prices. Stronger-than-expected economic data failed to hurt market sentiment. PepsiCo reported profit rise of 12% on improved sales. The company also backed its 2006 outlook. A broker''''s upgrade of General Motors Corp. also lifted sentiment.

[R]11:30AM U.S. stocks rallied, despite strong economic data.[/R]
Stocks continued trading in the positive, boosted by better-than-expected quarterly reports and continuous decline in oil prices. Strong economic data on durable goods orders and new home sales failed to hurt sentiment. Housing stocks recovered from recent decline, posting significant strength on strong new home sales. According to the Commerce Department report new home sales rose 13.8% to a seasonally adjusted annual rate of 1.213 million units in March. Oil service stocks sustained gains, although oil prices fell into negative territory following the release of U.S. oil inventory data, which showed a smaller-than-expected drop in gasoline stocks. The sector posted gains on the back of strong earnings from oil service companies like Baker Hughes ((BHI)). The networking sector also moved notably higher as reflected by the 1.6% gain shown by the Amex Networking Index. Tellabs ((TLAB)) helped to lead the sector higher for the second consecutive session. Meanwhile, biotechnology stocks came under pressure sending the Amex Biotechnology Index 1% lower. Vertex ((VRTX)) helped to lead the sector down after reporting a wider Q1 net loss. Additionally, concerns about higher interest rates contributed to some weakness in the rate-sensitive utility sector. The Dow Jones Utilities Average fell 0.7%, falling to a five-month intraday low. Shares of General Motors ((GM)) rose 6.2% after Merrill Lynch upgraded its rating on the stock to neutral from sell.

[R]Crude and gasoline stocks declined.[/R]
Crude oil inventories ticked down again in the latest week, according to government statistics released Wednesday. This followed a slight drop during the previous period. Meanwhile, stocks of gasoline moved down once again, adding to recent streak of declines. The Department of Energy''s Energy Information Administration revealed that crude oil inventories fell by 200,000 barrels for the week ended April 21. Specifically, the measure dipped to 345.0 million barrels from the prior week''s level of 345.2 million barrels. The move in the latest period followed a decline of 800,000 barrels in the previous week. Prior to that slide, oil inventories posted 3 consecutive weeks of gains. In the most recent week, oil inventories were 5.6% higher than their levels of the same time last year. Gasoline inventories posted a week-over-week drop of 1.9 million barrels, the government said. This added to losses in the preceding 7 weeks, including a slide of 5.4 million barrels in the previous week. In the latest period, gasoline stocks were 5.6% below their levels of last year. Inventories of distillate fuel oil recorded an advance in the most recent, rising by 1 million barrels. This ended a recent string of losses, including a decline of 2.8 million barrels in the previous period.


[R]10:30AM Sensex in India rebounded on domestic demand.[/R]
Sensex in India climbed 292.75 points or 2.5% to land at 11,938.53. The daily turnover on Bombay Stock Exchange was recorded at $1.2 billion, slightly lower than yesterday. Maruti Udyog put on 6.6% to Rs 924.90 on surprisingly good Q4 results. A substantial 1.2 million shares were traded in the counter on BSE. Maruti reported 39% rise in fourth quarter profit to $72 million. Maruti’s results lifted rival car maker Tata Motors, up 3.6% to Rs 950.75. Bajaj Auto advanced 4% to Rs 2,950 and Hero Honda rose nearly 3% to Rs 850.

MTNL advanced nearly 7% to Rs 216.40 after it was announced by the company that it has decided to form a new entity to deal with its real estate assets in a bid to revive its falling bottomline. MTNL posted 56.6% drop in Q4 net profit to Rs 140.27 crore (Rs 323.26 crore). Income shed 3.8% to Rs 1,594.51 crore (Rs 1657.61 crore). The stock advanced on heavy volume of 45.3 lakh shares on BSE. Cipla gained nearly 6% to Rs 262.20. Total of 1.4 million shares were traded. The company posted 80.6% jump in Q4 net profit to $40 million. Bargain hunters bid up software export companies with Wipro rising 4.5%, Infosys gaining 2.6% and Satyam adding 1.4%. Cement stocks regained strength after falling this week. UltraTech Cement rose 10%, ACC added 4.5% and Grasim advanced 3.5%.


[R] 9:45AM Stocks opened slightly higher.[/R]
As futures had predicted, stocks opened in the positive, reflecting robust quarterly earnings from major companies which partly offset higher interest rate concerns, raised by strong durable goods orders. Some disk drive stocks posted significant gains in early trading, with shares of M-Systems ((FLSH)) currently up 5.9% on better-than-expected Q1 earnings and revenue. Commodities stocks also showed strength in early trading, with oil service stocks regaining some ground despite declining oil prices. Baker Hughes ((BHI)) led the oil service sector higher after reporting strong earnings growth. Colgate-Palmolive rose 1.2% on higher Q1 profit. The consumer products maker posted profit rise of 8.1% to 59 cents a share, from 53 cents, a year ago, citing solid sales and volume gains. The company reported that quarterly sales rose 4.5% to $2.87 billion. In the opening minutes, the Dow Jones industrials were up 26.74 at 11,309.99, the Nasdaq Composite gained 4.44 to 2,334.74 and the S&P 500 improved 3.17 to 1,304.91.

[R]New homes sales sharply rose.[/R]
The Department of Commerce released its report on new home sales in the month of March on Wednesday, showing that sales rose sharply. The increase in sales exceeded analyst estimates by a wide margin. The report showed that new home sales rose 13.8 percent to a seasonally adjusted annual rate of 1.213 million units in March from a revised February rate of 1.066 million units. Economists had expected a much more modest increase to a 1.125 million unit rate. The Commerce Department also said that the seasonally adjusted estimate of new houses for sale at the end of March was 555,000. This represents a supply of 5.5 months at the current sales rate. The report also showed that the median sales price of new houses sold in March 2006 was $224,200, while the average sales price was $279,100.


[R]9:00 AM Stock futures indicated a positive market opening.[/R]
U.S. stock futures indicated a slightly higher start of Wednesday session on strong earnings reports, generating optimism about the economy. At the same time investors digested much stronger-than-expected data on durable-goods orders, remaining cautious ahead of other economic reports later in the day. In earnings news, Boeing ((BA)) said Q1 profit rose sharply by 29% on higher sales of its commercial planes and military equipment, but revenue missed analysts'' forecast. The company posted profit rise to $692 million or 88 cents per share, beating analyst estimates of 76 cents per share and revenue growth of 12% to $14.3 billion, below estimates of $14.5 billion. Boeing shares fell 1.5% in pre-market trading. Colgate-Palmolive Co. ((CL)) posted a higher Q1 profit as volume growth helped offset restructuring costs and higher spending on advertising. Shares of Amazon.com Inc. ((AMZN)) rose 1%, following a release of 20% rise in quarterly sales and a full-year outlook in line with estimates, but 34% profit drop in Q1. S&P 500 futures were up 1.60 points, above fair value. Dow Jones industrial average futures were up 9 points and Nasdaq 100 futures were up 1.50 points.

[R]Growth in durable goods orders exceeded expectations.[/R]
Wednesday morning, the Department of Commerce released its report on durable goods orders in the month of March, showing that orders rose much more than economists had expected. The data may add to recent concerns about higher interest rates.The report said that durable goods orders rose 6.1 percent in March following an upwardly revised 3.4 percent increase in February. Economists expected orders to increase by a much more modest 1.7 percent compared to the 2.7 percent growth originally reported for February. The growth in durable goods orders was due in large part to a significant increase in orders for transportation equipment, which reflected a 71.1 percent increase in orders for commercial aircraft. Excluding transportation, orders rose by a more modest 2.8 percent in March. Outside of the technology sector, significant growth in orders for machinery and computers and electronic products contributed to the overall increase in orders. The report also showed that shipments of durable goods rose 0.3 percent in March following a 0.4 percent increase in February. At the same time, inventories of durable goods rose 0.7 in March after falling 0.4 percent in February.

Crude oil prices slightly gained ahead of weekly petroleum report. Light sweet crude June delivery rose 10 cents to $72.98 a barrel. Gasoline futures rose to $2.1350 a gallon, while heating oil fell marginally to $2.0540. Natural gas gained 3 cents to $7.287 per 1,000 cubic feet. London Brent added 21 cents to $73.42.European gold advanced. In London gold rose to $630.75 per troy ounce from $629.60. In Zurich the precious metal rose to $630.95 from $629.65. In Hong Kong gold rose $5 to close at $631.60. Silver opened unchanged at $12.40. The U.S. dollar advanced vs. major currencies. The euro traded at $1.2416, down from $1.2424. The dollar bought 115.11 yen, up from 114.78. The British pound was quoted at $1.7836, down from $1.7881.

American Tower Corp, ((AMT)), owner, operator and developer of broadcast-and-wireless-communications, reported that it narrowed Q1 loss to 1 cent a share, up from a loss of 14 cents a share in the year-ago period on 74% higher revenue. The company expects Q2 profit from continuing operations of $1 million to $3 million on revenue of $317 million to $322 million.

Engelhard Corp, ((EC)), chemicals firm, reported Q1 net income advanced 19% to 55 cents a share on 43% revenue growth, beating analysts’ forecasts for earnings of 52 cents a share.

Potash Corp, ((POT)), fertilizer company, reported Q1 net income fell to $125.5 million from $131.3 million a year ago, while earnings per share advanced to $1.19 from $1.15, as a result of the value of a reduced share base following the repurchase of 9.5 million shares in 2005. Sales dropped 7% to $861 million on lower volumes. Offshore volumes declined 48%.

Harleysville Group Inc, ((HGIC)), property and casualty insurer, reported Q1 net income of 70 cents a share, up from 39 cents in the year-ago period. The cumulative effect of an accounting change for share-based payments added 3 cents to per-share net earnings for Q1, and operating earnings came to 62 cents a share. Quarterly revenue amounted to $239.5 million from $232.7 million. The company beat analysts’ expectations for earnings of 55 cents a share.

Monster Worldwide, ((MNST)), online recruitment company, reported Q1 net income more than doubled to 32 cents a share on 28% revenue growth.The company earned 29 cents a share from continuing operations, beating analyst forecasts of 27 cents a share.


[R]8:15AM European averages traded higher at mid-day.[/R]
European markets posted gains at mid-day, boosted by strength in the tech sector. The leading gainers were chipmakers Infineon Technologies and STMicroelectronics. Infineon Technologies rose 2.3% after it reported narrower Q2 loss to 26 million euros from 114 million euros last year on 24% revenue growth. Automotive shares like Renault and Peugeot also provided support to the market sentiment. The German DAX 30 added 0.2%, the French CAC 40 rose 0.3%, and London FTSE 100 climbed 0.4%.


[R]7:45AM Asia finished in the positive.[/R]
Asian-Pacific benchmarks advanced across the region, lifted by improved global consumption outlook, following a rebound in oil prices and strong U.S. consumer confidence report. The Nikkei crossed the 17,000-key level for the first time in three days to rise 0.5% to 17055.30. The Japanese index was boosted by industrial and consumer-oriented stocks. Tech shares also gained on improved earnings estimates. Nikon jumped 8.5% on news that it would exceed its 2005 profit by 25%. Among other gainers, Canon rose 1.2% and Advantest gained 0.7%. South Korea’s Kospi surged to 1.4%, strongly supported by financial stocks, led by Kookmin Bank, up 2.8%. Australia’s All Ordinaries reached a historic high of 1.1%. Hong Kong’s Hang Seng added 0.6% on strong blue chips. Taiwan Weighted index climbed 0.5% to a five-year peak on blue-chip shares.