Will This Rally Survive ?

123jump.com Staff
30 Nov, -0001
New York City

Oil dipped in the morning only to be recevered in evening but added fire to the rally that was feeding on merger news from UPS buying Overnite and America West may merge with US Air. The Loew's 36% jump in earnings was viewed by traders as positive and home buider stocks rallied on the positive sentiment on tomorrow's reports of housing starts and buidling permits for April.

Falling oil prices lighted fire to market rally around 10:30 AM. Traders remained nervous in the morning hours as NY Fed released Empire State Manufacturing activity index showing slow down in the activity. But as oil prices started to decline and added to the 4.5% loss of the last week buyers did not waste any time.

Financials, health care, and retail sectors traded for the most part of the day in the positive territory. Loew’s reported 1Q profit of 74 cents vs. 55 cents a year ago and missed the estimates by 2 cents. Stock still closed higher by $2.09 and Home Depot added $1.08 in sympathy.

AIG shares added 71 cents on the news that six executives were asked to leave the company.

In the merger news UPS announced that it will buy trucking company Overnite Corp for $1.25 billion and America West and US Air possible union added more flight to the market rally.

Markets bullishness added to the positive sentient to the tomorrow’s report on April’s housing starts and Building permit numbers. Homebuilders including Ryan Homes, Toll Brothers, D R Horton, Lennar added more than 1% to the stocks.

Oil futures remained under pressure throughout the day after OPEC’s yet another promise of adding production. Market, at least for today, forgot that refineries may not have the capacities to process additional crude.



S&P - 1.01% UP
DOW - 1.11% UP
Nasdaq - 0.89% UP


In Other News

Parmalat reported 1Q operating profit of $78 million vs. $63 million a year ago on flat revenue of $1.1 billion. The company is run by court appointed administrator.

In mid-day trading in London U.S. dollar continued its rise against euro and pound by 0.1% and 0.4% respectively.

In mid-morning European shares are trading lower as oil declines below $49 and pharma stocks fell as Schering’s recent trial for cancer drug did not achieve the intended results.

The UK private equity group 3i said that it has agreed to sell its 44% stake in Yellow Brick Road to investment group led by Macquarie Capital Alliance Group for euro 1.8 billion.

The Telefonica Group, Madrid based Telecom for Spain and Latin America, reported 1Q profit of 912 million euros, 36% increase from a year ago, and operating income grew by 16%. Total subscriber base stood at 131 million with 3.5 million ADSL subscribers, which grew at 54% of which 1.5 million are in Latin America. The CapEx grew by 20% for the quarter due to higher investments in Cellular business.

Nikon Corp, Japanese camera and chip equipment maker forecasted, for the year that started on April 1st, operating profit grew 8% to $307 million. The imaging division forecasted profit growth of 19% and chip equipment making division forecasted flat sales and earnings growth. For the year ending March 31, Nikon profit came in at 30.5 billion yen and group sales jumped to 639 billion yen.

Finnish paper industry came to a stop as thousands of workers carried out national strike on pay disputes.

Benetton Group reported said that 1Q profit declined to $29 million from $35 million a year ago on revenue decline of 0.8%. The company plans to cut prices to fuel sales growth.

Asian markets end lower, Australia, Japan, Hong Kong fall close to 1% but Mumbai was up 0.9%. April auto sales in India were up 13% compared to a year ago.

Australian stock market fell 1.2% on U.S. economic slow down worries and lower prices for metals and energy resources. BHP Billiton fell 2.5% and Rio Tinto lost 1.8%.

In early trading in Tokyo dollar rallied against euro to seven-month high and one-month high against yen.


Earnings Headlines

Loew’s Corp reported 1Q profit of 74 cents vs. 56 cents a year ago on 14% revenue growth and 3.8% same-store sales growth but missed 76 cents estimates. Company forecasted 2Q profit of $1.00-$1.02 and for the year 2005 $3.25-$3.34.

Limited Brands reported 1Q profit declined to 6 cents vs. 19 cents a year ago on flat sales and same-store sales decline of 5%. The company forecasted 2Q profit of 23-25 cents vs. estimates of 29 cents and lowered the guidance for the full year to $1.41 from $1.51.

Valspar, industrial coating and paint maker, reported 2Q profit of 75 cents vs. 74 cents a year ago including 7 cents gains related to legal settlement and tax benefit. The company has raised prices in the 1Q to compensate for the rising material costs.

PanAmSat reported 1Q profit of one cents vs. loss of 7 cents a year ago on 1.3% revenue growth and missed estimates of 3 cents.

FreightCar America reported 1Q profit of 22 cents vs. 62 cents a year ago. After adjusting for the shares issuance related to recent IPO pro forma earnings would have been profit of 38 cents vs. loss of 13 cents on a fully diluted basis.

PFSweb, outsourcing company, reported 1Q loss of one cent vs. 8 cents a year ago on 6% revenue growth.