Nasdaq and Dow Rebound

123jump.com Staff
14 Jun, 2006
New York City

Market maintained a positive bias in the morning and accelerated its advance in the final hour. May CPI advanced at 0.4% and core CPI prices, excluding energy and food, rose 0.3%. Several traders believe that the CPI understates the true inflation in the economy and the Fed will increase interest rates in the next meeting. Boeing surged 6.5% on the news that Airbus is to delay launch of its latest jumbo jet. VeraSun, ethanol maker, IPO priced 18.2 million shares at $23 and closed up 30%.

[R]4:45PM Averages gained in the last hour of trading.[/R]

-Dow closed up 110 points, Nasdaq gained 13.54 and S&P 500 added 6.36.
-Yields on 10-year bonds closed at 5.06% and 30-year bond at 5.09%.
-Crude oil closed up 58 cents to $69.14 per barrel.
-Gold recovered $20 loss to close at $566.50 down 30 cents only and silver closed at $9.73.

-European markets closed fractionally higher, led by 0.5% rise in Spain and 0.3% in Germany. France and U.K. dropped a fraction.
-Asian markets closed lower led by a decline of 3.5% in Thailand and 2.5% in Philippines. Japan rose 0.6%, South Korea added 1.5% and Taiwan advanced 2.1%.
-Latin American markets gains tracked the rise in the U.S. Mexico gained 0.9%, Argentina added 0.83% and Brazil rose 0.3%.

Release of CPI data and ‘Beige Book’ in the afternoon set the tone for traders in the morning and in the last hour of trading. Labor Department reported May month Consumer Price Index rise at 0.4% after rising 0.6% in April and 0.4% in March. Overall consumer prices were 4.2% higher than a year ago. Core rate of inflation, after excluding energy and food price rise, rose 0.3% for the May month and gained 2.4% from a year ago. Traders drove the stock prices higher with the belief that the interest rates will be raised at least 25 basis points at the next Fed meeting on June 28th/29th. Several economists have said that Fed may raise interest rate by 50 basis points and may raise rates even after the meeting at the end of June. Market sentiment remains divided on the direction and level of interest rate hike.

Fed’s release of ‘Beige Book’ in the afternoon showed that the manufacturing activity continues to advance but signs of weakness also emerged in consumer spending as housing markets cooled. Economic activity measured in the twelve-districts showed strong gain in the manufacturing activities.

Apple ((AAPL)) and Google ((GOOG)) declined in a volatile trading. Boeing ((BA)) rose on the news that the European rival Airbus reported more delays in its recently touted A380 super-jumbo long haul jets. European Aeronautics Defense & Space fell 25% in Paris, France trading. Boeing also benefited from broker recommendation and gained 6.5%.


[R]3:30PM Apple and Google drive Internet driven stocks lower.[/R]
Apple ((AAPL)) has sold-off close to 40% in the last three months of trading. The stock reached its peak in the third week of December 2005. Since then the stock has tracked down to $57 once before in March 2006. Today’s decline in stock has retraced the loss from the recent high of $73 in May 2006. Google lost $7 at its worst trading and rose $5 at its peak in today’s trading to settle at $385. The stock has traded as high as $452 in April 2006. Internet stocks are trading lower. Yahoo ((YHOO)) and eBay ((EBAY)) have trade lower a fraction. eBay stated that its recently acquired Skype voice service will be integrated with seventeen sales categories on its site.

[R]12:30PM European markets closed near the flat line.[/R]
European markets finished near the flat line, despite merger-and-acquisition related gains for Bayer, Vinci, and Credit Suisse Group. A rebound on Wall Street also failed to lift sentiment as markets were in the grip of inflation worries, which further increased after the release of U.S. inflation data. Declines in the aerospace sector also weighed. EADS shares tumbled 26% after it warned that operating profit would be cut by about 500 million euros ($625 million) each year between 2007 and 2010. The German DAX 30 added 0.3%, while the French CAC 40 lost 0.1%, and London FTSE 100 declined 0.2%.

Oil prices rebounded from recent decline, following a petroleum report, which showed a decrease in crude oil inventories. Light crude July delivery rose 14 cents to $68.70 a barrel. London Brent crude declined 2 cents to $66.90. Gasoline fell 3 cents to $2.250 a gallon, while heating oil traded down at $1.9270. Natural gas climbed 35 cents to $6.510 per 1,000 cubic feet. The dollar declined versus major currencies. The euro traded at $1.2617, up from $1.2541. The dollar bought 114.77 yen, down from 115.27. The British pound stood at $1.8470, up from $1.8335. European gold prices were mixed. In London the precious metal traded at $576.60, up from $676.30 per ounce. In Zurich gold traded at $566.55, down from $606.95. Silver closed at $11.15, down from $11.30.


[R]11:30AM Stocks traded in the positive.[/R]
Stocks have been trading higher since opening on bargain hunting and rebound by commodity stocks, which moved back to the upside after seeing recent weakness. Gold stocks showed considerable strength, benefiting from a notable increase by the price of the precious metal, up $4.70 at $571.50 an ounce. The Amex Gold Bugs Index climbed 2.5%. Energy stocks turned to the upside alongside with the price of oil. The increase by the price of oil followed a government report that showed that crude oil inventories fell by 900,000 barrels in the week ended June 9. At the same time, gasoline inventories increased by 2.8 million barrels, marking the seventh consecutive increase. The semiconductor sector stood out as one of the market''s best performances, as upgrades by Goldman Sachs ((GS)) contributed to the strength, sending the Philadelphia Semiconductor Index up 1.3%. Airline stocks also moved higher, contributing to a 1.4% gain by the Amex Airline Index. Alaska Air ((ALK)) helped to lead the sector higher, currently up 3.3%. At the same time, banking stocks came under pressure in morning trading, followed by the utilities. The losses by interest rate-sensitive banking and utilities stocks came after data showed a bigger-than-expected increase in May core consumer prices.

[R]Crude oil inventories declined, while gasoline stockpiles increased.[/R]
Crude oil inventories dipped during the most recent week, according to government statistics released Wednesday. This reversed part of a recent advance. However, gasoline and distillate fuel oil experienced further inventory builds in the latest week. The Department of Energy''s Energy Information Administration said that crude oil inventories fell by 900,000 barrels for the week ended June 9. Specifically, the measure slipped to 345.7 million barrels from the previous week''s level of 346.6 million barrels. This followed an advance of 1.1 million barrels in the previous week and a gain of 1.6 million barrels in the week before that. Oil inventories for the week were 4.2% higher than last year. Meanwhile, gasoline inventories showed a week-over-week increase of 2.8 million barrels. This built on an advance of 1 million barrels in the previous week. The level of gasoline inventories was 1.2% below last year. Distillate fuel oil had an inventory build of 2.1 million barrels during the week. This followed an advance of 1.8 million barrels posted in each of the previous 2 periods.

[R]10:30AM Sensex plunges below 9,000 in high volatile trading.[/R]
Sensex in India ended 133 points down, on 8,929.44, and traded in the range of 790 points. The turnover on BSE was $681 million or Rs 3,000 crore, up from Tuesday’s $ 611 or Rs 2,692 crore. The market breadth was negative as 1,900 stocks declined, 480 stocks advanced and 49 stocks were unchanged. Refinery shares soared today as crude oil price fell to a 2-week low of below $70 a barrel. HPCL surged 10% to Rs 235, BPCL advanced 7% to Rs 321 and Indian Oil Corporation gained 1.5% to Rs 319. Oil giant ONGC advanced 1.5% to Rs 999. Tata Power also surged 7% to Rs 425 and power utility Reliance Energy added up 4.4% to Rs 435. Mobile services firm Bharti Airtel climbed 3% to Rs 332, following reports that it had made a deal with Ericsson to enhance its capacity by 60 million mobile lines over the next three years. ICICI Bank edged up 1% to Rs 465 in volatile trade. The stock recouped from the lower level after shedding 4% to Rs 441.55 in the late afternoon trading. Previously in the trading, the stock had gained 4.2% to a high of Rs 479.80.

Hindustan Lever gained 1.1% to Rs 190.25 and ITC gained 2.3% to Rs 149. Hindustan Zinc advanced 4.6% to Rs 486 even as the company reduced zinc prices by Rs 13,400 a tonne. Large-cap Reliance Industries advanced 0.2% to Rs 861.15, after the stock recovered from the lower level, having dropped first 2.7% to Rs 842.65 at about 14:00 IST. In early trade, the stock had advanced 3.9% to a high of Rs 893. Auto shares declined led by 3% fall in Tata Motors to Rs 672, Maruti Udyog declined 2.3% to Rs 685 and Hero Honda shed 1.7% to Rs 646. Bajaj Auto soared 4% to Rs 2,320 in volatile trade. Infosys declined 5% to Rs 2,502 and TCS declined 4.8% to Rs 1,495. Power-equipment providers fell sharply. ABB declined 6.6% to Rs 2,000, Thermax was off 5.5% to Rs 207, Bharat Bijlee lost 5% to Rs 789.30 and Crompton Greaves was down 4.7% to Rs 780.


[R]9:45AM Stocks opened in the positive, helped by semiconductors.[/R]
Stocks moved slightly higher at the start of trading on Wednesday, with the major averages climbing to the upside after ending the previous session at multi-month lows. The early strength followed a report from the Labor Department, which showed a bigger-than-expected increase in core consumer prices. Various sectors advanced in early trading as investors turned to bargain hunting. Commodities stocks posted strong gains, following a rebound by metals prices. The gold sector turned in one of the market''s best performances, recovering from significant weakness in the previous sessions. The Amex Gold Bugs Index rose 3.9% after ending Tuesday at its worst closing level of 2006. The energy sector also advanced along with the price of oil which moved back to the upside after closing sharply lower in the two previous sessions. The market got a lift from early gains by semiconductor stocks, with Intel ((INTC)), Advanced Micro Devices ((AMD)), SanDisk ((SNDK)), and Applied Materials ((AMAT)) upgraded by Goldman Sachs. The Philadelphia Semiconductor Index climbed 1.8%.


[R]Consumer price index rose 0.4%, in line with estimates.[/R]
The Department of Labor released its report on consumer prices in the month of May before the start of trading on Wednesday, showing that prices rose in line with economist estimates while core prices rose slightly more than expected. The Labor Department said that its consumer price index rose 0.4 percent in May following an unrevised increase of 0.6 percent in April. The increase in consumer prices came in line with what economists had been expecting. The price growth was partly due to a notable increase in energy prices, which rose 2.4 percent in May after a 3.9 percent increase in April. Higher energy prices also contributed to a 1.5 percent increase in transportation costs. The report also showed that the core consumer price index, which excludes food and energy prices, rose by 0.3 percent for the third consecutive month. Economists had been expecting a slightly more modest increase of about 0.2 percent. With the increase in May, the core prices rose at an annual rate of 2.4 percent, a slight acceleration compared to the 2.3 percent annual rate of growth seen in April. Overall prices rose 4.2 percent year-over-year.


[R]9:00AM Stock futures indicated a higher opening ahead of economic data.[/R] U.S. stock futures advanced in pre-market trading, recovering from the steep decline Tuesday when inflation concerns seriously hurt market sentiment. On Wednesday investors awaited government report on inflation in May, expected to give a clue about the extent of further interest rate increases. The Labor Department''''s Consumer Price Index is expected to show a 0.4% rise in May, compared with a 0.6% gain in April. Among industry sectors, semiconductors received a boost after Goldman Sachs ((GS)) upgraded its rating on four companies. The investment bank raised Intel Corp. ((INTC)). Advanced Micro Devices ((AMD)), SanDisk Corp. ((SNDK)) and Applied Materials Inc. ((AMAT)). Goldman Sachs Group Inc. is also part of a consortium that agreed to buy Associated British Ports, Britain''s largest ports group, for $4.6 billion. In other company news, Boeing Co. ((BA)) may rise on news that rival EADS was hit by delays in the delivery of the A380 superjumbo, prompting brokerage downgrades on the European aerospace group. Casey''s General Stores Inc. ((CASY)) rose 4.4% after the closing bell on Tuesday after the convenience store operator reported higher-than-expected quarterly earnings. Standard & Poor''''s 500 futures were up 6.10 points, above fair value. Dow Jones industrial average futures were up 43 points, and Nasdaq 100 futures were up 7.75 points.

Teleflex Inc, ((TFX)), manufacturer for automotive, medical, and other markets, cut down its estimate for the year''s earnings due to a slower-than-expected recovery in its Medical Segment performance and non-recurring charges. Teleflex now guides Q2 earnings from continuing operations to fall substantially from those of the year-agp period and to advance modestly from Q1. For the year, the company reduced its expected range for earnings from continuing operations to $3.65 to $3.80 from a previous estimate of $3.91 to $4.12. The company added it would consolidate more operations in several businesses and expects the restructuring to cost $12 million to $15 million in 2006. It will also take a charge of $3.8 million on the carrying value of a minority-held investment. Q2 will also reflect $2 million of legal and accounting costs tied to a proposed acquisition with which the company determined not to proceed.

National City Corp, ((NCC)), banking and financial-services company, reported that based on April and May results, its Q2 net interest margin and net interest income will be slightly below those of Q1. In a Securities and Exchange Commission Form 8-K, NCC announced that commercial and commercial real estate loans have grown. The bank added that core deposits, excluding escrow balances, continue to show steady growth. The bank saw no unusual trends in fee income or non-interest expense in April and May. Commercial- and consumer-credit-quality trends were stable.

SkyWest Inc, ((SKYW)), airline, announced that its May load factor was 76.9%, 6.2 points higher. The company reported a 117.6% rise in revenue passenger miles for May, when available seat miles more than doubled from the same period last year.


[R]8:00AM Goldman Sachs Group agreed to acquire AB Ports.[/R]
On Wednesday Goldman Sachs Group Inc. announced that its consortium had reached an agreement to acquire Associated British Ports Holdings PLC. The deal is valued at 2.5 billion pounds which equals euro3.7 billion, or US$4.6 billion. The announcement came after Goldman Sachs raised its bid to 810 pence (euro11.85 US$14.90) a share, following a bid rejection of 730 pence a share from AB Ports in March. Goldman Sachs'' consortium, Admiral Acquisitions UK Ltd., also includes Borealis Infrastructure Management Inc., a part of Canada''s Ontario Municipal Employees Retirement System; and Singapore government fund GIC Special Investments Ptd. Ltd. AB Ports owns 21 ports across Britain, and holds a 49% stake in the Southampton container port. Shares in AB Ports were up 7.2% at 833 pence (euro2.19 US$15.33) in morning trading on the LSE.


[R]7:15AM Asian stocks closed mostly higher despite interest rate concerns.[/R]
Asian markets closed mostly higher. The benchmark Nikkei 225 Index rose 0.64% to 14309.56. Among the gainers was supermarket chain operator, Aeon, advancing 3.7%, and insurance company T&D Holdings, soaring 6.13%. Nippon Steel gained 3.18%, while trading company Mitsubishi surged 3.22% and Internet-services company Softbank jumped 7.10%increase. The dollar''s recent strength versus the yen also boosted export, making it possible for companies such as Toyota Motor to advance 1.08%. Hong Kong shares closed slightly up due to bargain-hunting following a sharp fall in the previous session, but U.S. rate-increase worries kept to pressing down market sentiment. The Hang Seng Index advanced 0.09% to 15247.92 after losing 2.5% Tuesday. The Weighted Price Index of the Taiwan Stock Exchange advanced 131.8 points, or 2.1%, to 6469.01. China Airlines increased 6.9%. Its rival EVA Airways added 6.7%. South Korea''s Kospi Index also recovered, advancing 1.48% at 1227.61 after ending at seven-month low Tuesday. The index bounced back on banks and technology shares, with Kookmin Bank, surging 5.4%, and Samsung Electronics, gaining 1.5%, leading the gainers.


[R]6:15AM European stocks traded mixed in early session.[/R]
European shares were mixed in early trading. In London, the FTSE 100 dropped 9.5 points or 0.2% at 5,510.10, while the German Xetra Dax put up 3.1 points or 0.1% at 5,292.98. The French CAC 40 lost 5.2 points or 0.1% at 4,612.41. On the corporate front, EADS plummeted 29% after it announced delivery delays for the Airbus A380 superjumbo would cost €2bn in 2007. Singapore Airlines expressed disappointment at the delays and added it was talking to EADS about possible compensation. BAE Systems plunged 5.7% on concerns that EADS might try to renegotiate the price it has agreed to pay the UK company to buy its interest in the project. The fight for control of Schering is about to reach a climax today with German rivals Bayer and Merck vying for control of the German healthcare group. The battle has become more hostile after Bayer sued Merck in a US court late on Tuesday, stating that it had not properly disclosed a purchase of 2.1 million shares, taking it stake to 21.8 million shares. Schering traded 1.3% higher.

Light, sweet crude oil for July delivery advanced 34 cents to $68.90 a barrel. The contract dropped $1.80 to end at $68.56 a barrel on Tuesday. In London, July Brent crude futures advanced 29 cents to $67.21 per barrel on the ICE Futures exchange. Gold bullion opened Wednesday at a bid price of $576.60 a troy ounce, higher than $576.30 late Tuesday. The dollar lost slightly against the euro. The European currency bought $1.2588 in morning European trading, up a little from $1.2541 in New York late Tuesday. The British pound also gained to $1.8422 from $1.8335. The dollar slipped against the Japanese currency, dropping to 114.87 yen from 115.27 yen.