Markets Gain Despite Dollar and Gold

123jump.com Staff
02 May, 2006
Metals

Market averages continued to climb in the face of falling dollar and rising crude oil and commodities prices. The borader averages gains were led by large industrial companies. Verizon reported stronger than expected earnings. After the close Dream Works, Pacer International, platronics, Thor Industries and Allied Waste reported earnings. European markets closesd higher. India closed at a record level.

[R]4:30PM After the close earnings shine for most companies.[/R]

- Dow up 73.16, Nasdaq up 5.05 and S&P up 8.02 points.
-Crude oil up 91 cents $74.61 per barrel.
-Gold up $7.20 to close at $667.40, silver up 25 to $14.11 and copper closed at $3.41.
-Yields on 10-year bond 5.12% and 30-year bond 5.193%

Market averages maintained the upward bias in the trading session despite weaker dollar, rising oil and metals prices. Gold and silver rose to a record high. Gold rose 1%. International tensions related to Iran, U.S. budget and trade deficit and U.S. hawkish stance to start third war kept dollar on defensive, gold and oil on the rise.

Metals traders are now looking for gold to rise above $700 and silver to cross $15.50 per ounce. Crude oil can spike in the coming months if Hurricane season plays havoc as it did in 2005. U.S. gasoline demand sees no sign of decline and so far for the year the annual consumption is set to rise more than 1%. Gasoline prices are 32% from a year ago and yet there is no sign of the consumption slow down.

Market averages continued to climb on solid earnings from Verizon. Auto sales for April month were lower than anticipated and housing stocks declined on earnings warnings from Hovnanian Enterprise. After the close Plantronics ((PLT)) reported earnings of 43 cents vs. 51 cents a year ago. Pacer International ((PACR)) reported earnings of 36 cents vs. 30 cents a year ago and EDS ((EDS)) reported revenue rise of 7% but earnings rose to 5 cents vs. 1 cent a year ago. DreamWorks ((DWA)) reported a decline in earnings to 12 cents vs. 44 cents a year ago on 60% decline in revenue. Allied Waste ((AW)) reported earnings of 8 cents vs. 5 cents on revenue rise of 7%.


[R]3:30PM April Auto sales decline.[/R]
Market averages continued to rally in the final hour of trading led by large industrial companies including Honeywell, Rockwell Automation, Caterpillar, Deere & Co and Boeing. Auto stocks were on the decline on the lower sales for the April month.

Auto sales for the April month declined led by General Motors sales. GM ((GM)) sales for the month declined 11%, Chrysler Group’s domestic U.S. sales fell 8% and that for Ford ((F)) dropped 6.6%. Toyota Motors ((TM)) saw its sales in April rise 4.5%, Honda Motors rose 2.5% but sales at Nissan were off 5.3% for the month. Annualized sales for the month came in at 16.6 million lower from 17.2 million a year ago and up a fraction from the sales in month of March.

Home builders came under renewed pressure after Hovnanian Enterprise lowered its earnings outlook for the quarter and for the year. The company lowered its second quarter earnings to a range of $1.40 to $1.50 from $1.55 to $1.80 a share. Hovnanian ((HOV)) lost 7% dragging other home builders down with it including Toll Brothers ((TOL)), Beazer Homes ((BZH)) and K B Homes ((KBH)).

[R]12:30PM European markets closed sharply higher.[/R]
European markets closed higher on strong resource stocks and corporate news. Commodities, oil and gas stocks advanced with Cairn Energy and Xstrata standing out among gainers. However, Spain’s Repsol declined 1% after Bolivia nationalized its natural gas sector. Oil prices hovered over $74 a barrel, while gold futures traded about $667 per ounce. In corporate news, Credit Suisse Group rose 1.5% after reporting Q1 net income growth of 36%. French Lafarge gained 1.1% on 28% sales increase in the first quarter. Telecoms group Alcatel and beer maker Heineken gained on brokerage upgrade, rising 1% and 2.3% respectively. The German DAX 30 climbed 0.7%, the French CAC 40 rose 1%, and London FTSE 100 climbed 1%.

Crude oil prices jumped above $74 on continued supply disruption concerns and strong fund buying. Light sweet crude June delivery gained 50 cents to $74.20 a barrel. London Brent rose 21 cents to $74.10. European gold futures surged. In London the precious metal rose to $663.60 per troy ounce, up from $657.50. In Zurich gold traded at $665.25. In Hong Kong gold climbed $19.20 to close at $657.80. Silver rose to $14.10 from $13.92. The U.S. dollar dropped in European trading. The euro traded at $1.2640, up from $1.2585. The dollar bought 113.28, down from 113.48 yen. The British pound was quoted at $1.8381, up from $1.8245.


[R]11:30AM Stocks were positive in late morning.[/R]
Stocks traded in the positive with the three major averages posting strength after the late-afternoon weakness Monday when market turned to heavy sell-off as CNBC reported that Federal Reserve Chairman Ben Bernanke said that his comments on interest rates last week had been misinterpreted by the markets. On Tuesday rate-sensitive utilities stocks showed a strong move back to the upside after falling sharply on Monday. Oil service stocks moved notably higher, sending the Philadelphia Oil Service Index up 1.3%. Natural gas and oil stocks also extended yesterday’s gains. Gold stocks were other conspicuous gainers, benefiting from a continued increase in the price of the precious metal, contributing to a 1.3% gain by the Amex Gold Bugs Index. Some networking and computer hardware stocks showed notable gains, leading the tech-heavy Nasdaq modestly up. At the same time, weakness in the biotechnology sector helped to limit the upside for the Nasdaq. The Amex Biotechnology Index fell 1.9%, reflecting notable losses by Vertex ((VRTX)) and Genentech ((DNA)). In late morning trading, the Dow Jones industrial average rose 45.62, or 0.4%. The Standard & Poor's 500 index was up 4.25, or 0.33%, and the Nasdaq composite index added 0.85, or 0.04%.


[R]10:30AM Sensex hits an all-time high.[/R]
Sensex in India closed 176.22 points up, at 12,218.78. BSE’s turnover was Rs 4,897 crore for the day, up from Friday's Rs 4,823 crore. HDFC Bank reported strong quarterly results to become yet another fast-growing company in the booming Indian economy. ICICI Bank closed up 5% to Rs. 620 on 28% rise in net income in the fourth quarter. Indus Bank, UTI Bank and United Western Bank close up 5% or better in strong rally in banking stocks. Other companies posted robust results, such as Gujarat Ambuja Cement, Satyam Computer, TCS, Wipro, Cipla, Grasim Industries and Maruti Udyog. Reliance Industries posted surprisingly good earnings on strong refining margins. Infosys also joined in, announcing growth expectations of 26% to 28% for fiscal 2007.

Dr Reddy’s Lab soared 17% on a probable gain from a U.S. court ruling, while shares of Ranbaxy advanced on a high volume. Top bank gainers were Bank of India, up 8% to Rs 134.60, Andhra Bank, up 6% to Rs 85, and Vijaja Bank, up 6% to Rs 56.20. Cement companies were down in late trading after the government announced that Cement Manufacturers’ Association will be asked about the surging prices. ACC lost 3.3% to Rs. 979, Gujarat Ambuja declined 2.5% to Rs. 121 and Grasim dropped 2.4% to close at Rs. 2,455. In automotive stocks, Maruti Udyog advanced 1.7% to Rs 940 on positive sales news. Zee Telefilms jumped 8.5% to close at Rs. 287 on strong trading volume of 3.3 million shares.


[R] 9:45AM Stocks opened higher on strong quarterly earnings.[/R]
Stocks moved into the positive, lifted by upbeat earnings news. Strong quarterly earnings from Verizon ((VZ)) sent the stock up 1%, helping lift market sentiment as the company posted 7% drop in quarterly profit, but its results before special items beat analyst estimates. St. Paul Travelers Cos. ((STA)) gained 4.6% and Sirius Satellite Radio Inc. ((SIRI)) rose 7%, helping to offset worries about interest rate increases. Gains by networking stocks contributed to the early market strength. Energy stocks extended yesterday’s advance, moving higher on a continued increase by the price of oil, currently trading over $74 a barrel. Shares of Exxon Mobil ((XOM)) were up 1.1% and ConocoPhillips ((COP)) shares were up 1.6%.

Among declining stocks, Clayton Holdings ((CLAY)) dropped 19%, followed by Steven Madden ((SHOO)), down 8% on lower same-store sales and cautious Q2 profit outlook. Natus Medical ((BABY)) was another notable decliner, falling 12%. Market also awaited the release of monthly auto sales figures, with General Motors ((GM)) expected to lead an industry decline. The overall sales rate, known as the SAAR, is expected to come in at 16.6 million vehicles, down from 17.2 million a year ago. In early trading, the Dow Jones industrial average is up 32 points at 11,375, the Nasdaq Composite index gained 7 points to 2,312, and the S&P 500 rose 4 points to 1,309. Bonds recovered slightly from a steep sell-off the day before, with the yield on the 10-year Treasury note down to 5.12% from 5.14% late Monday.


[R]9:00 AM Stock futures indicated a positive market opening.[/R]
U.S. stock futures indicated a positive market opening as robust quarterly earnings offset worries about interest rate increases. Fears about further interest-rate hikes were reignited on Monday after Fed Reserve Chairman Ben Bernanke’s claim that he had been misinterpreted about the outlook for interest rates. As a result, stock markets turned to sell-off of rate-sensitive financial and utility stocks. On Tuesday upbeat earnings reports from companies, including insurer St. Paul Travelers Cos. ((STA)) and Sirius Satellite Radio Inc. ((SIRI)) counteracted concerns about rising interest rates. St Paul Travelers posted better than expected Q1 earnings growth and raised its 2006 outlook, while Sirius rose 5.8% as the company posted a narrower-than-expected quarterly loss.

Shares of Verizon Communications ((VZ)), one of the world's largest telephone companies, rose nearly 1% on the Inet electronic brokerage after the company posted earnings slightly above estimates, excluding items. However, shares of Hovnanian Enterprises ((HOV)) fell in pre-market trading after the homebuilder lowered its Q2 and 2006 earnings guidance. Standard & Poor's 500 futures were up 4.9 points, above fair value. Dow Jones industrial average futures were up 35 points, and Nasdaq 100 futures were up 7 points.

Crude oil prices jumped above $74 on fears that the international pressure on Iran may lead to disruptions in the global oil exports. Light sweet crude June delivery gained 35 cents to $74.05 a barrel. Heating oil added almost a cent to $2.0670 a gallon, while gasoline was marginally up to $2.1560. Natural gas futures rose 10 cents to $6.798 per 1,000 cubic feet. London Brent rose 36 cents to $74.25. European gold futures surged to 25-year highs. In London the precious metal rose to $657.70 per troy ounce, up from $644. The U.S. dollar traded mixed in European trading. The euro traded at $1.2620, up from $1.2583. The dollar bought 113.59, up from 113.32 yen. The British pound was quoted at $1.8340, up from $1.8252.

Genesee & Wyoming Inc., ((GWR)), railroad operator, reported Q1 net income advanced to 33 cents a share, up from 26 cents a share in the year-earlier period. Sales advanced 34% in Q1 to $112.9 million from $84.1 million.

Pinnacle Entertainment, ((PNK)), casino operator, reported Q1 earnings of 28 cents a share, swinging from a loss of 6 cents a share a year-ago. The company added that Q1 includes pre-opening and development costs, an impairment charge related to its Biloxi property and $1.4 million in non-cash charges from stock option expensing. On an adjusted basis, the company gained 39 cents a share in Q1 up from a profit of 7 cents a share a year-earlier. Revenue soared nearly 70% in Q1. The company topped analysts’ estimates for a profit of 24 cents a share. The company attributed the higher revenue to the performance of its L'Auberge du Lac property, which opening in May of last year, and continued strong results at its Boomtown New Orleans property.

Charter Communications Inc, ((CHTR)), cable TV firm, reported that its Q1 net loss grew to $1.45 a share, from $1.16 a share in the year-earlier period despite 8% revenue increase. Adjusted earnings were flat at $471 million. The firm cited greater operating expenses associated with higher customer counts, investments in customer service enhancements, increased marketing spending, and annual programming rate increases. The company missed analysts’ forecasts for a loss of 83 cents a share.

Noble Energy, ((NBL)), oil and gas company, reported Q1 earnings of $1.26 a share, up from 92 cents a share in the year-ago period on revenue growth, following 77% sales volume increase to 186,453 barrels of oil equivalent per day. The company topped analysts’ forecasts for earnings of $1.17 a share.

Hearst-Argyle Television Inc, ((HTV)), owner of television stations, reported Q1 net income of 14 cents a share, unchanged from the year-earlier period. The company announced that current earnings include a one cent charge for stock-option expensing. Revenue advanced 7% on a rise in advertising sales, cable retransmission revenue and digital media revenue, which was partially offset by a fall in network compensation. The company missed analyst estimate by a penny.

Steve Madden Ltd, ((SHOO)), footwear company, reported that Q1 income advanced to 74 cents a share, from 7 cents, a year earlier on sales growth, beating analysts’ forecasts for earnings of 52 cents a share.

Verizon Communications, ((VZ)), communications company, reported Q1 earnings of 56 cents a share, down from a profit of 63 cents a share a year-ago. If not for the influence of certain items, such as employee relocation and merger costs, the early extinguishment of debt and an accounting change, the company reported adjusted earnings of 60 cents a share in Q1. Revenue advanced 25.1% in Q1. The company missed analysts views for a profit of 59 cents a share. The company added its Verizon Wireless operations put on 1.7 million net new customers in the first quarter, bringing its total to 53 million customers nationwide, a 16.7% increase from a year earlier.

Arch Chemicals Inc., ((ARJ)), specialty chemicals manufacturer, reported net income advanced to 24 cents a share, up from 15 cents a share a year ago. Earnings from continuing operations totaled at 25 cents a share on the company’s plan to improve profit margins at its HTH water products business. The company beat analyst estimate for earnings of 14 cents a share. Arch Chemicals added it anticipates Q2 earnings from continuing operations in the range of $1.20 to $1.30 a share.


[R]8:15AM European markets advanced at mid-day on resource stocks.[/R]
European markets resumed trading Tuesday after the long holiday weekend, posting gains on strong resource stocks and corporate news. Commodities, oil and gas stocks advanced with BP and Xstrata standing out among gainers. However, Spain’s Repsol declined 2.1% after Bolivia nationalized its natural gas sector. Oil prices hovered over $74 a barrel, while gold futures traded about $657 per ounce. In corporate news, Credit Suisse Group rose 2.2% after reporting Q1 net income growth of 36%. French Lafarge gained 1.7% on 28% sales increase in the first quarter. Telecoms group Alcatel and beer maker Heineken gained on brokerage upgrade, rising 0.8% and 2.4% respectively. The German DAX 30 added 0.4%, the French CAC 40 rose 0.6%, and London FTSE 100 climbed 0.7%.


[R]7:30AM Strong Nikkei boosts Asian markets.[/R]
In Japan the Nikkei 225 advanced 228.06 points, or 1.4%, to 17153.77 on Bridgestone’s results and gains in commodity issues, led by oil and metal prices in the U.S. South Korean Kospi ended up 1.1%, or 15.17 points up, at 1434.90 on robust earnings news and optimistic outlooks despite Hyundai Motors displayed weakness. Hong Kong’s blue-chip Hang Seng closed also higher 206.74 points, or 1.24%, to 16868.04, after fears about interest rates alleviated.

In automotive stocks, Bridgestone soared 4.9% as the tire maker profits advanced despite higher raw material costs. Other gainers were Mitsui & Co ending 1.7% up on strong mining and energy stocks, as well as Nippon Oil, gaining 1.2%, Sumitomo Metal Mining, producer of gold by volume, which put up 2.3% on gold prices. The dollar was trading at 113.82 yen late Tuesday in Tokyo, up 0.49 yen against Monday levels in New York.