April Sales Disappoint

Elena
11 May, 2006
New York City

April retail sales rose slightly below expectations. The Commerce Department said that retail sales rose 0.5% in April against economist estimates of an increase of 0.7%. The report also showed that sales at motor vehicle and parts dealers fell 0.4% after increasing 1% in March.The weaker-than-expected sales added to speculation that the Fed Reserve will leave interest rates unchanged at its June meeting.

[R] 9:45AM Stocks opened lower on surging oil.[/R]
U.S. stock markets opened lower on worries that surging oil prices will hurt corporate profits and consumer spending. The three major averages moved to the downside, following a mixed performance yesterday when the Dow hit a six-year closing high. Technology stocks showed weakness in the early going, with the semiconductor and disk drive sectors down by about 1%. The slide added to recent weakness on cautious guidance from Dell ((DELL)) and Cisco ((CSCO)). The initial downward move was partly due to weakness among airline stocks. ExpressJet ((XJT)) was the worst performer in the group, dropping by nearly 7%. Continental ((CAL)) and AMR ((AMR)) showed losses of 3.3% and 2.3% respectively. The sector declined as a notable increase in the price of oil renewed concerns about the impact of higher fuel costs. At the same time, the surging price of oil, near $74 a barrel, contributed to some early strength among energy stocks. An upward move by gold stocks followed a higher price of the precious metal which extended recent gains to reach an over 25-year high of $724.50 per ounce.


[R]Initial jobless claims dropped less than analysts had expected.[/R]
The Department of Labor released its report on initial jobless claims in the week ended May 6 on Thursday, showing that jobless claims fell less than economists had been expecting. The report showed that jobless claims fell to 324,000 from the previous week's revised figure of 325,000. Economists expected claims to fall to 315,000 from the 322,000 originally reported in the previous week. At the same time, the four-week moving average rose to 317,250 from the previous week's revised average of 314,750. This marked the third consecutive increase by the less volatile moving average. The report also showed that continuing claims in the week ended April 29 fell to 2.392 million from the preceding week's revised level of 2.441 million.

[R]April sales rose below expectations.[/R]
Thursday morning, the Department of Commerce released its report on retail sales in the month of April, showing sales growth that came in slightly below economist estimates. The Commerce Department said that retail sales rose 0.5 percent in April following an unrevised increase of 0.6 percent in March. The sales growth came in below economist estimates of an increase of 0.7 percent. The increase in sales was partly due to higher sales at gas stations, which saw sales surge up 4.6 percent in April after coming in unchanged in March. Sporting goods, hobby, book and music stores also saw notable sales growth. The report also showed that sales at motor vehicle and parts dealers fell 0.4 percent in April after increasing 1.0 percent in March. Excluding the drop in auto sales, April sales rose 0.7 percent compared to a 0.5 percent increase in March. Economists had expected ex-auto sales to increase by 0.8 percent. While the weaker than expected sales growth may raise some concerns about the strength of consumer spending, it is likely to add to speculation that the Federal Reserve will leave interest rates unchanged at its June meeting.


[R]9:00 AM Stock futures indicated a positive market opening.[/R]
U.S. stock futures pointed to a positive opening, following a mixed close Wednesday after the Federal Reserve announced an interest rate increase for a 16th straight time, saying that it would keep raising rates if necessary to check inflation. Weakness in tech sector weighed sent the Nasdaq lower again, while a continued rally in GM ((GM)) and earnings-related strength in Disney ((DIS)) boosted the Dow. Dow component American International Group ((AIG)) reported after closing bell disappointing quarterly results as first-quarter profit declined on increased expenses. On Thursday, shares of oil and mining companies gained as oil prices rose toward $73 a barrel an copper, gold and platinum raced to new highs. Higher crude prices helped lift shares of energy companies in European trading, including Exxon Mobil Corp. ((XOM)) and ConocoPhillip ((COP)). Standard & Poor''s 500 futures were up 0.70 point, above fair value. Dow Jones industrial average futures were up 3 points, and Nasdaq 100 futures were up 3 points.

O''Charley''s Inc, ((CHUX)), full-service restaurant facilities operator, reported Q1 earnings of 31 cents a share, down from a profit of 44 cents a share a year-ago. Revenue advanced 5.5% and same-store revenue rose 0.6% at the company''s namesake restaurants in Q1, while its Ninety Nine Restaurant and Pub locations increased 1.1% and its Stoney River Legendary Steaks operations saw a 5.1% jump. The company topped analysts’ estimate for a profit of 27 cents a share. The company noted interest expense was up in Q1 due to the impact of raised rates on its variable debt.The company sees earnings of 15 to 20 cents a share for Q2.

Jacuzzi Brands Inc., ((JJZ)), bath and plumbing products, maker reported Q2 net income dropped to 5 cents a share, from 10 cents a share in the year-ago period. The company added that sales dropped 4% in Q1. If not for items, Jacuzzi Brands estimated 2006 earnings of 44 cents to 46 cents a share.

K&F Industries Holdings Inc, ((KFI)), aircraft parts maker, reported Q1 net income reversed to 26 cents a share, from a loss of 45 cents a share in the year-earlier period. Revenue advanced to $91 million from $89 million. The company topped analysts’ estimates for earnings of 24 cents a share.

Mac-Gray Corp, ((TUC)), appliance maker and laundry facility manager, reported Q1 net income advanced slightly to $1.75 million, from $1.70 million in the year-ago period, or flat on a per share basis. If not for items, adjusted net income was 11 cents a share, down from 14 cents a share in the year-earlier period. Revenue advanced 8.5%.

Biovail Corp, ((BVF)), drug company, reported Q1 earnings of 40 cents a share, up from a profit of 7 cents a share a year-ago. Q1 includes a loss of 3 cents a share, from discontinued operations that reveals the performance of the company''s Nutravail unit and a write-down of assets connected with the purchase-and-sale agreement for the division. Revenue advanced 27%. The company beat analysts’ estimate for a profit of 36 cents a share. Biovail also added that its selling, general and administrative expenses dropped 24% in the quarter.

RemedyTemp Inc, ((REMX)), staffing firm, reported that it reversed to Q2 net income of 6 cents a share, up from a loss of 15 cents a year-ago despite revenue decline. The company said that it agreed to be acquired by privately held Select Personnel Services for about $169 million, or $17 a share, in cash. That represents a premium of 39% to RemedyTemp''s Wednesday closing price.

J.C. Penney Co, ((JCP)), department store operator, reported Q1 earnings of 89 cents a share, up from a profit of 63 cents a share a year-ago. On a continuing operations basis, the company earned 90 cents a share in Q1. Total sales advanced 2.5% in Q1 and same-department store sales rose1.3% higher in the period. The company topped analysts’ estimate by a penny

Top Tankers Inc, ((TOP)), oil tanker operator, reported its Q1 net income advanced to $1.06 a share, from 69 cents a share in the year-ago period. The company added that special charges for stock expenses, bonuses and other items equal to 12 cents a share were included in the net results. The company announced its fleet average time charter equivalent, a measure of revenue, advanced 25%.

Crude oil prices rose as renewed supply concerns overshadowed an increase in gasoline supplies. Light sweet crude June delivery rose 49 cents to $72.62 a barrel. Gasoline marginally rose $2.1710 a gallon, while heating oil was up to $2.0741. Natural gas gained about 2 cents to $6.919 per 1,000 cubic feet. London Brent added 43 cents to $72.87. European gold advanced, trading near a 25-year high on weaker dollar and global tensions. In London the precious metal rose to $707 per troy ounce, up from $701. In Zurich gold gained to $706.10, up from $701.70. In Hong Kong gold jumped $6 to $708.50. The U.S. dollar traded mixed in European trading. The euro traded at $1.2715, down from $1.2789. The dollar bought 111.24 yen, down from 111.39. The British pound was quoted at $1.8645, up from $1.8644.

[R]8:15AM European markets gained ground on commodities.[/R]
European markets gained ground Thursday, following U.S. interest-rate increase overnight and strongly supported by commodity stocks. The biggest gainers were copper miner Xstrata and oil company BP which advanced along with the price of oil, up $72 a barrel and copper price, up $9.65 to $378.45 a pound. The euro declined 0.3% to trade at $1.2712. The German DAX 30 rose 0.5%, the French CAC 40 climbed 0.8%, and London FTSE 100 gained 0.3%.


[R]7:45AM Asia closed mixed. The Nikkei declined.[/R]
Asian-Pacific benchmarks finished mixed Thursday. The Nikkei dropped for a third session in a row, pressured by strengthening yen versus the dollar and possible slowdown in Japanese corporate earnings as a result. The index fell 0.5% to 16,862.10 reflecting weakness in foreign-sales-dependent auto stocks and mixed banking shares. Toyota Motor announced 39% quarterly profit growth, but automakers declined as weaker dollar weighed. Shares of Toyota dropped 2.1%, while Nissan Motor lost 0.3%. Banking stocks lost some ground, despite 1.2% increase in Japan’s lending in April. China Shanghai Composite reversed from recent strength and dropped 0.5% as profit-taking overshadowed fund flows. Hong Kong’s Hang Seng ended up 0.4%, led by HSBC and China Mobil which recovered from recent weakness to advance 0.3% and 0.6% respectively. South Korea’s Kospi advanced 0.9% reaching a record-high, supported by blue chips like Samsung Electronics and Posco.