Dow and Nasdaq, Week of Gains

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

Market averages settled near unchaged level with no clear direction in trading. Gold and oil rose at close. Carnival, Media General, Winnebago and Benihana rose on earnings news. Benihana rose 6.5% and Carnival advanced 5.3%. Markets in Europe closed lower but in Asia and Latin America closed higher. South Africa jumped 5% and Brazil gained nearly 4%. In Paris, Aeroport de Paris IPO rose 8%.

[R]4:00PM Market averages rest after a sharp two-day rise.[/R]

-Dow up 0.64 points, Nasdaq down 14.21 and S&P 500 down 4.6.
-Yield on 10-year bond closed at 5.10% and 30-year bond at 5.14%.
-Crude oil price closed 38 cents higher to $69.88 per barrel.
-Gold up $11.40 to close at $581.70 per ounce.

-Asian markets rallied across the region led by 5.5% rise in Indonesia and more than 3% rise in India, Singapore and South Korea. Japan, Hong Kong and Thailand closed up near 3%.
-European markets closed lower led by a decline of 0.9% in Germany. Norway and Russia lost more than 1%. South Africa bucked the trend and closed 5% higher.
-Latin American markets closed higher led by a near 4% rise in Brazil after Thursday holiday.

Volatile week saw a two-day rise in global markets led by a near 3% rise in major averages in the U.S. European, Asian and emerging markets rose in sympathy. Market is showing a growing consensus that short term rates in the U.S. will be raised by at least 25 basis points at the end of the month. Interest rate jitters took averages in the U.S. market down between 7% and 9% and emerging markets plunged between 8% and 20%.

Department of Commerce reported that the current account deficit in the first quarter of 2006 dropped to 6.4% from 7% in the last quarter in 2005. Roughly 90% of current account deficit is driven by trade deficit and is not likely to shrink in the coming months.

Emerging markets and Asian markets closed higher on the back of the rise in the averages in the U.S. in the last two days. But, averages in Europe closed lower. Aeroports de Paris launched its $1.8 billion IPO in France with the shares rising 8% at close. The institutional tranche of the deal was oversubscribed by nearly four times. The Paris airport Charles de Gaulle, second in passenger volume in Europe after London Heathrow airport, handles close to 80 million passengers a year. French government will retain 67% stake in the company after the offering.

[R]1:45PM Current account deficit declines. Carnival Corp and Media General rise on earnings.[/R]
Market averages are near unchanged level in the early afternoon trading. Market digested current account deficit report. Current account deficit was reported by Commerce Department this morning at $208.7 billion in the first quarter of 2006 representing 6.4% of GDP. The deficit was reported to be 7% of GDP in the fourth quarter 2005. The deficit, even though lower, is still near elevated level and appears to become more and more rigid in its structure. Any hope of sharp or gentle decline in deficit is not likely to materialize till trade deficit is brought under control. Deficit in trade and service accounts for 90% of current account deficit.

Carnival Corp ((CCL)) reported second quarter profit of 46 cents vs. 47 cents a year ago on revenue rise of 5.8% to $2.66 billion. The company forecasted fiscal 2006 earnings between $2.65 and $2.75 per share. Media General ((MEG)) reported May revenue rise of 6% to $77 million and forecasted that the second quarter earnings will exceed 80 cents a share earnings a year ago. The company reported 32% revenue growth in interactive media division and revenue rose 7.3% in the publishing division.


[R]12:30PM European markets closed finished lower.[/R]
European markets failed to sustain solid gains posted yesterday and Friday closed in the negative territory. In a day when a lot of options and futures contracts expired, market sentiment was hurt by renewed interest rate concerns and weaker start on Wall Street. However, some technology stocks advanced after chip-maker Oracle lifted its earnings guidance. Germany’s SAP gained 1.1%, while Business Objects rose 3.7%. The German DAX 30 tumbled 0.9%, the French CAC 40 dropped 0.6%, and London FTSE 100 fell 0.4%.

Oil prices declined on positive supply news. Light crude July delivery fell 40 cents to $69.10 a barrel. London Brent crude lost 37 cents to $68.08. Gasoline fell 4 cents to $1.9975 a gallon, while heating oil traded down at $1.92. Natural gas lost 9 cents to $7.12 per 1,000 cubic feet. The dollar declined versus major currencies. The euro traded at $1.2658, up from $1.2609. The dollar bought 114.91 yen, down from 115. The British pound stood at $1.8533, up from $1.8472. European gold prices traded higher. In London the precious metal traded at $581.50, up from $574.10 per ounce. In Zurich gold traded at $581.10, up from $572.85. Silver closed at $10.31, up from $11.15.


[R]11:30AM The Nasdaq and S&P 500 traded lower.[/R]
Stocks traded mostly lower in late morning, with the Nasdaq and the S&P 500 moving firmly into negative territory, while the Dow bounced back and forth across the unchanged line. Blue-chip Microsoft Corp. ((MSFT)) fell nearly 1% on news that Chairman Bill Gates will give up his day-to-day role in the company in 2008. At the same time, software maker Oracle ((ORCL)) jumped 5% after the company raised its Q4 earnings guidance. Notable weakness in some disk drive, networking, and biotechnology stocks also helped to drag the Nasdaq lower. Among networking stocks high-speed Internet equipment maker Adtran ((ADTN)), dragged the sector down falling 5.5%. Semiconductor stocks moved considerably lower, sending the Philadelphia Semiconductor Index down 1.7%.

Semiconductor company OmniVision Technologies ((OVTI)) dropped 16.3% after the company reported strong Q4 results but provided disappointing Q1 outlook. Energy and metals stocks posted significant weakness, following a decrease in commodities prices and news that China''s central bank will raise bank reserve requirements by half a percentage point effective July 5. Shares of integrated oil firm Exxon Mobil Corp. ((XOM)) were down 0.8% to $58.68. Aluminum maker Alcoa Inc. ((AA)) also lost 0.8% to $30.02. Gold stocks declined, despite an increase by the price of the precious metal. The Amex Gold Bugs Index dropped 1.9%. Meanwhile, airline stocks moved to the upside, with Continental ((CAL)), AMR ((AMR)), and SkyWest ((SKYW)) turning in some of the sector''s best performances. The Amex Airline Index rose 1.1%.


[R]10:30AM Sensex gains for a second day running.[/R]
The Sensex in India finished the day with a gain of 339.45 points, or 3.5%, at 9,884.51. The Sensex pulled back from the higher level in late trading after soaring 573.22 points, to a high of 10,118.28 at mid-day trading. The turnover on BSE was Rs 4,122 crore today, much higher than Thursday’s Rs 3,012 crore. The market breadth was strong, although it had weakened in the afternoon trading, when the Sensex had pared gains. On the exchange 1,990 stocks advanced, 451 declined and 39 were unchanged. Wholesale price index, for the week ending June 3rd, was reported at 4.72% and rose from 4.68% from the previous week. Food and energy prices have kept the inflation on the rise.

Metal shares, IT, auto and banking stocks were the most traded. Metal shares soared, following a recovery in metal prices on LME. Sterlite Industries surged 21.7% to Rs 357, Hindustan Zinc advanced 5% to Rs 531 and Hindal rose 4.3% to Rs 159. Large-cap Tata Steel surged 14% to Rs 472 on 4 million shares trading volume. IT shares soared as well. TCS surged 9% to Rs 1,698, Satyam Computer advanced 9.5% to Rs 675 and Wipro gained 5% to Rs 442. Infosys advanced 3% to Rs 2,812, off the session’s high of Rs 2,914. Index large-cap, Reliance Industries, advanced 3.8% to Rs 929, off a session’s high of Rs 944, on 2.8 million shares trading. Auto stocks staged a comeback for a second day in a row. Hero Honda surged 6.8% to Rs 751, Bajaj Auto advanced 5.8% to Rs 2,651, Tata Motors gained 5% to Rs 730.55, and Ashok Leyland rose 5% to Rs 35.10.

Bank shares were traded intensely. HDFC Bank advanced 6% to Rs 739.50 and ICICI Bank gained 5.2% to Rs 510.50. State-run banks rose too, as Indian Overseas Bank surged 9% to Rs 81.40, Union Bank of India advanced 5.5% to Rs 93.55 and Punjab National Bank gained 5.5% to Rs 332.95. Glenmark Pharma also soared 8.9% to Rs 260, following reports that its South African subsidiary had acquired a portfolio of pharma products. Internation companies stocks rose for a second consecutive day due to strong outlook for the sector. Large-cap Hindustan Lever advanced 8.7% to Rs 219.90, Nestle jumped 13% to Rs 995, ITC surged 5.7% to Rs 164.50, Glaxosmithkline Consumer Healthcare added up 7% to Rs 462, Britannia rose 7% to Rs 1295, and Tata Tea gained 5.5% to Rs 668.


[R]9:45AM Stocks opened in the negative.[/R]
Stocks opened in the negative as market steadied after the sharp rebound in the previous session. Stocks markets declined on worries that China''s move to curb credit could slow corporate earnings growth. A decline in Microsoft Corp.’s ((MSFT)) shares also weighed on the market sentiment. Microsoft shares fell 1.1% $21.82 on the Nasdaq. Commodity stocks, which rallied Thursday, came under pressure in the early going. The energy group was dragged by a 1.3% slide in the oil service sector. The gold sector dropped less than 1%. The semiconductor sector reversed from yesterday’s gains to slide nearly 1%. The airline sector stood out as one of the best performers, extending gains from the previous session. The advance was contributable to positive comments as Bear Stearns raised its rating on UAL Corp. ((UAUA)) to Outperform from Peer Perform. The sector climbed 2%, testing its 50-day moving average and was on track for its highest close since mid-May. In the first hour of trading, the Dow Jones industrial average gained 4.24 points, or 0.04%. The Standard & Poor''s 500 index was down 1.04, or 0.08%, and the Nasdaq composite index fell 3.36, or 0.16%. Bonds rose, with the yield on the 10-year Treasury note falling to 5.08% from 5.10% late Wednesday.

[R]The U.S. current-account deficit in Q1 narrowed more than anticipated.[/R]
Friday morning, the Department of Commerce released its report on the U.S. current-account deficit in the first quarter. The report showed that the deficit narrowed more than economists had expected. The report said that the deficit narrowed to $208.7 billion in the first quarter from a revised $223.1 billion in the fourth quarter. Economists had expected the deficit to narrow to $222.0 billion from the $224.9 billion reported in the fourth quarter. The narrower deficit was partly due to a decrease in net unilateral current transfers, with net outflows falling to $19.9 billion in the first quarter from $26.2 billion in the fourth quarter. The decrease reflected drops in U.S. government grants, private remittances, and other transfers. The decrease by the current account deficit also came as the deficit on goods narrowed to $208.0 billion in the first quarter from $212.5 billion in the fourth quarter. The report showed that goods exports rose to $244.5 billion while goods imports rose to $452.5 billion. The Commerce Department also said that the narrower deficit reflected a shift to a surplus from a deficit on income, although it noted that the changes were partly offset by a decrease in the surplus on services. The report showed that the surplus on services narrowed to $17.2 billion in the first quarter from $17.7 billion in the fourth quarter.


[R]9:00AM Stock futures indicated a flat start on mixed news from Oracle and Microsoft.[/R]
U.S. stock futures retreated from yesterday’s high levels, pointing to a flat market opening, as two major software companies announced news of mixed nature, taking the market to different directions. Software maker Oracle Corp. ((ORCL)) jumped more than 6% after the closing bell Thursday, saying that the company’s Q4 earnings would come above earlier forecasts. Shares of Microsoft Corp. ((MSFT)) came under pressure on news that Chairman Bill Gates will give up his day-to-day role in the company in 2008 to devote more of his time to his philanthropic foundation. Shares of Microsoft slipped 0.5% to $21.95 on the Inet electronic network on Thursday. Shares of Adobe ((ADBE)) showed some pre-market weakness after the software company reported weaker-than-expected Q2 earnings and lowered its guidance for full year earnings and revenue. In other news, Indian drug maker Jubilant Organosys Ltd. is expected to bid more than $500 million for New Jersey-based drug firm Cambrex Corp. ((CBM)) according to a newspaper report. S&P 500 futures were down 1 point but slightly above fair value. Dow Jones industrial average futures fell 16 points, and Nasdaq 100 futures declined 2.25 points.

Winnebago Industries Inc, ((WGO)), manufacturer of motor homes, reported that Q3 net income dropped 25% to 40 cents a share, from 52 cents a share in the year-earlier period due to 13.6% revenue decline, beating analysts’ forecasts for earnings of 38 cents a share. The company attributed the decline to an industry slowdown and a shift toward lower-priced models for biting into net income.

Media General, ((MEG)), media company, reported that revenue advanced 6% to $76.9 million. The publishing division''s revenue advanced 7.3%, broadcast revenue edged up 2.9% and interactive media revenue gained 32.1%. The company forecast earnings in Q2 would exceed the 2005 Q2’s 80 cents a share, before a gain on the sale of the company''s interest in the Denver Post.


[R]7:30AM Asian shares continue their rally for a third straight day.[/R]
Asian markets finished higher. Japan''s benchmark Nikkei stock index climbed 2.82%, boosted by broad buying, following a jump on U.S. markets overnight. The Nikkei gained 408.58 points to close at 14879.34. Technology, banks and nonferrous metals shares led the gainers. Elpida Memory jumped 8.3% and Sharp reported a 3.6% gain. Matsushita Electric Industrial climbed 3.5% and Mizuho Financial Group advanced 4.9%. Nonferrous metals also rallied, with Sumitomo Metal Mining adding up 4.6% and Mitsubishi Materials gaining 6.3%. Hong Kong shares finished up, led by large-cap China Mobile, HSBC Holdings and Cnooc, following advances on U.S. markets overnight. The blue-chip Hang Seng Index advanced 407.57 points, or 2.64%, to 15842.65. HSBC advanced 1.7%, China Mobile surged 4.2%. Cnooc, offshore oil producer, jumped 6.3% on news it has the rights to a 51% stake in a deep-water natural gas discovery in the South China Sea. South Korea''s Composite Index, or Kopsi, closed up 3.5%. Taiwan''s leading index, the Taipex, finished up 2.3%.Chip makers were in focus after strong gains in the U.S semiconductor sub index. South Korea''s Samsung Electronics advanced 3.6%, while Hynix Semiconductor jumping 4.2%. In Taiwan, chip maker Taiwan Semiconductor advanced 4.4%.


[R]6:30AM European stocks continue to rebound.[/R]
European stocks traded higher in early session. The FTSE 100 in London advanced 0.6% at 5,654.1, the Xetra Dax in Frankfurt was up 0.8% to 5,464.45, the CAC 40 in Paris gained 0.9% at 4,765.45. On the corporate front, Philips Electronics, the Dutch consumer electronics company, agreed to buy Intermagnetics, a US maker of magnets and imaging tools for hospital imaging equipment, for $1.3 billion in cash. The stock advanced 1.8%. OMV, the Austrian oil and gas group, led the gainers, advancing 6.4%. The oil sector was strong as crude jumped above $70 a barrel, with Nestle up 2.3% and Repsol 1.3%. EADS shed 2.2% as the aerospace company’s troubles following the announcement of delays to its A380 superjumbo deepened.

Light, sweet crude oil for July delivery advanced 54 cents to $70.04 a barrel and August Brent crude on London''s ICE Futures exchange gained 45 cents to $68.90 per barrel. Gold bullion opened Friday at a bid price of $582.20 a troy ounce, higher than $574.10 late Thursday. The dollar weakened slightly against the euro. The European currency inched up 0.1% at $1.2655, the British pound added 0.1% against the dollar to $1.8531, while the greenback was trading at 114.72 yen in, down 0.28 yen from late Thursday in New York.