Wal-Mart up 2.7% on Sales

Elena
01 May, 2006
New York City

In late morning trading stocks gave back some ground with averages coming off intraday highs. Brokerage stocks posted losses, with shares of Legg Mason falling down 6%. Stocks of Lehman Brothers and Bear Stearns also moved lower. Commodity stocks moved notably higher helping the indexes remain in the positive. Wal-Mart rose 2.7% after reporting April same-store sales growth of 6.8%, beating forecasts.

[R]11:30AM Stocks gave back some ground in late morning.[/R]
Following the initial strength, stocks have given back some ground with the three major averages falling off intraday highs and the Nasdaq going briefly in the negative territory. Continued strength among commodity stocks provided a solid help to the major equity indices. Gold stocks continued to post significant gains, as the precious metal price hit another 25-year high. Rising oil prices also contributed to a significant strength among energy stocks with the Philadelphia Oil Services Index currently up 2.1% while the Amex Oil Index was up 1.8%. Shares of Wal-Mart ((WMT)) climbed 2.8% on sales growth. Wal-Mart reported its April same store sales rose 6.8%, up from the expected same store sales growth of 4% to 6%. The gain by Wal-Mart boosted the retail sector, helping to keep the Dow in positive territory.

At the same time, brokerage stocks came under pressure over the course of the trading session, dragging the Amex Securities Broker/Dealer Index down by 1.4%. The weakness in the brokerage sector reflected losses by shares of Legg Mason ((LM)), Lehman Brothers ((LEH)), and Bear Stearns ((BSC)). Disk drive, biotechnology, and airline sectors also showed considerable weakness. The losses by airline stocks resulted from renewed concerns about fuel costs. In morning trading, the Dow Jones industrial average rose 27.85, or 0.3%. The Standard & Poor''s 500 index advanced 1.72, or 0.1%, while the Nasdaq composite index was up 0.15%.


[R]10:30AM Wal-Mart sales supported stock markets.[/R]
U.S. stocks advanced Monday morning, boosted by a strong April sales estimate from Wal-Mart Stores Inc. and a government report on personal spending in March as market shrugged off signs of inflation. Commodity stocks stood out as the best performers in early trading, with the gold sector rising 1.6%. The coal and aluminum sectors also showed notable gains. The energy group also showed significant strength. The oil sector climbed about 1%, while the natural gas sector showed a gain of slightly below 1%. Retail stocks also moved to the upside. Technology posted an advance, including a modest rise in networking and computer hardware stocks.

The airline sector ticked modestly lower, following a rebound in oil prices. Following the strong rally of last week, bank stocks moved to the downside with Franklin Resources ((BEN)) falling 2.8%, Legg Mason ((LM)), down 2.9%, and BlackRock ((BLK)), down 2.03%. Stocks of exchanges were also weak. CBOT Holdings ((BOT)) dropped 5% after one of the world’s leading derivative exchanges posted 4% increase in average daily volume for April. Chicago Mercantile Exchange ((CME)) lost 1.4% on 10% trading volume rise in April from a year ago. In morning trading, the Dow Jones industrial average rose 34.90, or 0.31%. The Standard & Poor''s 500 index was up 4.03, or 0.31%, and the Nasdaq composite index rose 4.56, or 0.2%. Bonds trickled lower, with the yield on the 10-year Treasury note rising to 5.09% from 5.07%late Friday.

[R]March construction spending rose unexpectedly by 0.9%.[/R]
Government data released Monday showed that construction spending rose during March, helped by a rise in residential spending. The pace of growth in the month was slightly slower than in February. The Commerce Department revealed that construction spending climbed by 0.9% in March to a seasonally adjusted annual rate of $1.199 trillion. The advance followed a gain for February that was revised up to 1%. Previously, the government had reported a 0.8% rise for February. Residential construction spending increased by 1.6% in March. This followed a 1.3% gain for February. Meanwhile, non-residential construction spending was flat during March. Private construction spending increased by 1.1%, while government spending ticked up by 0.2%.

[R]April manufacturing index rose to a stronger-than-expected 57.3.[/R]
The Institute for Supply Management released its report on business activity in the manufacturing sector in the month of April on Monday, showing that the pace of growth in the sector improved unexpectedly. The reported showed that the ISM''s purchasing managers’ index rose to 57.3 in April from 55.2 in March. A reading above 50 indicates growth in the sector. Economists had been expecting the index to show a modest decline to a reading of 55.0. The unexpected increase was partly due to a faster pace of production growth, with the production index rising to 60.4 in April from 57.5 in March. New orders growth also remained strong, although the new orders index slipped to 57.6 from 58.4. The report also showed an acceleration in the pace of employment growth, as the employment index rose to 55.8 in April from 52.5 in March. At the same time, the report showed a significant increase in the pace of price growth, with the prices index surging up to 71.5 in April from 66.5 in March.

[R] 9:45AM Stocks opened higher on consumer spending data.[/R]
U.S. stocks opened higher, following a government report on strong personal spending data. On the one hand, the report showed robust consumer activity bolstering the economy, but on the other hand, the stronger-than-expected data suggested higher inflation. Positive sentiment was also generated by an upbeat sales report from Wal-Mart Stores Inc. and billion-dollar acquisitions by Boeing Co. and Level 3 Communications Inc. Wal-Mart ((WMT)), discount retailer, posted April same-store sales grew 6.8%, above the 4% to 6% it had predicted. In merger news, Boeing ((BA)) agreed to buy aircraft parts supplier Aviall Inc. ((AVL)) for $1.7 billion in cash, or $48 per share, which is a 27% to Aviall''s Friday closing price. Boeing lost 21 cents to $83.24, and Aviall surged $9.42 to $47.12. Internet service provider Level 3 ((LVLT)) agreed to acquire regional telecommunications company TelCove Inc. for about $1.08 billion in cash and stock, assuming $155.5 million of TelCove''s debt.

Gold stocks stood out the most notable gainers in early trading, benefiting from a continued increase in the price of the precious metal. Gold for June delivery was traded at $661.80 an ounce. Oil stocks moved higher along with the price of oil. Crude for June delivery was last traded at $72.28 a barrel. In the first hour of trading, the Dow Jones industrial average rose 45.86, or 0.4%. The Standard & Poor''s 500 index was up 5.01, or 0.38%, and the Nasdaq composite index rose 8.70, or 0.37%. Bonds stayed flat, with the yield on the 10-year Treasury note steady at 5.07% from late Friday.

[R]Higher-than-expected consumer spending and income growth.[/R]
Monday morning, the Department of Commerce released its report on personal income and spending in the month of March. The report showed strong growth in both income and spending. The Commerce Department said that personal spending rose 0.6 percent in March after an upwardly revised 0.2 percent increase in February. Economists had expected spending to increase by 0.4 percent compared to the 0.1 percent increase originally reported for February. Personal income also saw a significant increase, rising 0.8 percent in March following an unrevised 0.3 percent increase in February. The increase came in well above economist estimates of a 0.4 percent increase. The report also showed that consumer prices, excluding food and energy, rose 0.3 percent in March, the fastest pace of growth since October of 2005. Core prices rose at an annual rate of 2.0 percent in March.


[R]9:00 AM Stock futures indicated a positive market opening.[/R]
U.S. stock futures were poised to a higher start of Monday session, awaiting government report on consumer spending and clues on the impact of high energy prices on the key economic index. Last week stocks closed generally weak as disappointing earnings from Microsoft hurt tech stocks and oil prices climbed back again on growing tensions over Iran’s nuclear program. However, stock markets received some support on hope that the fed Reserve will stop raising interest rates. On Monday investors may also focus on the outlook for interest rates as Federal Reserve Bank of Chicago President Michael Moskow, and the Federal Reserve Bank of Atlanta President Jack Guynn are both due to speak.

In corporate news, Boeing Co. ((BA)) may be in focus on report that the company is in advanced discussions to buy aviation parts supplier Aviall Inc. ((AVL)). Microsoft Corp. ((MSFT)) shares are also expected to be in focus after the sharp 11.5%-drop on Friday. Shares of Xerox Corp. ((XRX)) may draw attention on speculation that its stock may be undervalued compared to its peers. On the economic news front, the Commerce Department is due to release March personal income and consumption data at 8:30 a.m. as well as March construction spending at 10 a.m. The Institute for Supply Management will release its April manufacturing index at 10 a.m. Standard & Poor''s 500 futures were up 2.3 points, above fair value. Dow Jones industrial average futures were not yet active, and Nasdaq 100 futures were up 4.5 points.

Crude oil prices jumped nearly $1 after a refinery fire in Italy added to global supply concerns. Light sweet crude June delivery gained 59 cents to $72.47 a barrel. London Brent rose 66 cents to $72.68. Gold futures surged to 25-year highs, as weaker dollar and worries about Iran’s nuclear program helped increase the appeal of the precious metal. Gold for June delivery rose $5.50 to $660 per troy ounce. Silver July delivery gained 3 cents to $13.92, following a rally Friday as the first silver exchange-traded fund was launched. Copper added about 10 cents to trade at $3.434 a pound. The U.S. dollar traded mixed in light European trading. The euro traded at $1.2614, down from $1.2636. The dollar bought 113.26, down from 113.83 yen. The British pound was quoted at $1.8250, up from $1.8239.

Lubrizol Corp, ((LZ)), specialty chemical company, reported that it reversed to a Q1 loss of 22 cents a share, down from a net income of 72 cents a share a year-ago on 16% sales growth. Lubrizol added that after adjustments, its earnings were 68 cents a share, topping the 64 cents a share predicted by analysts.

Agco Corp, ((AG)), maker of agricultural equipment, reported its Q1 net income dropped to 19 cents a share, down from 23 cents a share in the year-ago period, beating analysts’ forecasts for earnings of 11 cents a share.

Tyson Foods Inc, ((TSN)), chicken and beef producer, reported a Q2 loss of 37 cents a share, reversing from a year-ago profit of $ 21 cents a share on sales decline, missing analyst expectations for company to post a loss, of 25 cents a share.

Gevity HR Inc., ((GVHR)), provider of employment management software, ported Q1 earnings of 30 cents a share, up from a profit of $7.5 million, or 26 cents a share a year-earlier on 10.3% revenue growth. Q1 includes 2 cents a share in stock option expensing. The company added that its total number of client employees totaled 136,200, an rise of 8.6% from the end of last year''s Q1. The company missed analysts’ estimate for a profit by a penny.

Sysco Corp, ((SYY)), food distributor, reported that Q3 income dropped to 30 cents a share, from 34 cents a year earlier. If not for stock-option expense, earnings would have been 34 cents a share, the company said. Sales for Q3 advanced to $8.14 billion from $7.44 billion in Q3 last year. The company missed analysts’ forecasts for earnings of 32 cents a share.

Par Pharmaceutical Cos, ((PRX)), manufacturer of generic drugs, reported Q1 net income of 24 cents a share, up from 6 cents, earned in the same period a year ago on revenue growth. The company met analysts’ forecasts for earnings of 24 cents a share. Par Pharma''s growth came even as it continued to make investments in building an organization around its first branded product, Megace ES.

[R]8:15AM European markets are closed Monday for the May Day holiday.[/R]

[R]7:30AM Nikkei closes a notch up, bullion prices cross the $660.00 an ounce level.[/R]
In Japan the Nikkei 225 Average closed at 16,921.51, 15.29 points higher. Investors denied the yen impulse to breach the level of 113.84 yen to dollar. Australia''s S&P/ASX 200 Index went up 1% in intraday, putting up 50.4 points to 5,309.20, as mining and natural resource issues added up gains in bullion prices that reached above the $660.00 an ounce level. Shares in New Zealand fell slightly. Elsewhere, leading stocks around the region were closed for a public holiday. Sony Corp. went down 5.14%, while Toshiba Corp reversed the trend to gain as much as 2.9% after posting a 16% jump in profit to 41.69 billion yen last week. Both Toyota motor and Honda Motor went slightly up in automotive stocks. Mazda Motor advanced 1.2% after Friday''s announcement that profits hit a record high in fiscal 2005 on strong vehicle sales worldwide.