Dow and Nasdaq Advance

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

Market averages maintanied an upward bias on the earnings news from Morgan Stanley, FedEx and Darden Restaurants. Traders appeared less worried on economic weakness as companies reported a solid rise in revenue and earnings. Weekly petroleum report showed a strong gain in inventory but crude oil managed to gain 1.3%. Gold advanced $10. Google gained $15. Brokers Goldman sachs, Bear Stearns and Merrill Lynch advanced. Home builders, tech stocks and transportation stocks gained.

[R]4:00PM Market averages bounce on earnings from FedEx and Morgan Stanley.[/R]

-Dow closed up 104.62 points, Nasdaq up 34.13 and S&P 500 12.08.
-Yield on 10-year bond closed at 5.16% and 30-year bond at 5.19%.
-Crude oil rose $0.99 to $70.33 per barrel.
-Gold closed up $10.50 to $591 per ounce.

-Asian markets closed higher led by 2.2% rise in India, 1.1% gain in Australia and 0.5% advance in Thailand.
-European markets closed higher supported a by a strong rise in the U.S. Spain led the advance with 0.5% gain. South Africa rose 2% and Russia closed unchanged.
-Latin American markets advanced led by gain of 2.7% in Brazil and 2.1% in Mexico.

Market averages in the New York maintained an upward bias on positive earnings report from Morgan Stanley and FedEx. FedEx ((FDX)) reported earnings gain of 27% on 10% rise in revenue. FedEx stock gained 4.5%. Morgan Stanley ((MS)) reported earnings gain of more than 100% on 48% rise in revenue. Morgan Stanley stock gained 5%. Restaurant chain operator Darden Restaurants ((DRI)) reported earnings gain of 10%. Darden gained 5%.

Asian markets closed higher but index in Tokyo fell. Large companies in Japan reported to have lowered expectations for the economic growth and consumer spending in the quarter ending in June than in the previous quarter. Chinese telecom stocks were in demand. Trading in PCCW was suspended on the news that Australian Macquarie Bank and private equity company Texas Pacific Group are competing to acquire the fixed-line telecom company.

Mexican market managed to rebound, but on lighter trading volume, after losing close to 25% since May 10th. Brazil, India and several other smaller emerging markets advanced. South Africa gained as gold price jumped more than $10. Brazil reported current account surplus gain of 100% in May to $475 million from $241 million in April. Foreign direct investment jumped to $1.6 billion, up 100% from April. Mining company stock CVRD ((RIO)) gained 5% after the news that Chinese companies have agreed to 19% rise in iron ore prices in addition to 70% rise in 2005.

[R]12:30PM European markets finished up on Wall Street rally.[/R]
European markets finished slightly higher, supported by strong rally on Wall Street and well-received corporate news from Phillips Electronics and Hennes & Mauritz. Electronics giant Phillips climbed 4.7% in Amsterdam, while clothing chain Hennes & Mauritz rose 4% after reporting 12% profit growth in the second quarter. Mining stocks also provided a boost to the market, led by BHP Billiton, Rio Tinto, and Mittal Steel. The German DAX 30 added 0.2%, the French CAC 40 gained 0.1%, and London FTSE 100 edged up 0.1%.

Oil prices advanced after a weekly petroleum report showed that gasoline inventories rose less than expected. Light crude July delivery rose 11 cents to $69.45 a barrel. Heating oil added 1 cent to $1.9150 a gallon. Gasoline futures rose 4 cents to $2.05 a gallon. Natural gas futures gained 6 cents to $6.57 per 1,000 cubic feet. The dollar was mixed versus major currencies. The euro traded at $1.2640, up from $1.2584. The dollar bought 114.93 yen, up from 114.85. The British pound stood at $1.8432, up from $1.8425. European gold prices moved lower. In London the precious metal traded at $574.90, up from $568.70 per ounce. In Zurich gold traded at $574.80, up from $567.80. Silver closed at $10.22, up from $10.01.


[R]11:30AM Stocks rallied on strong earnings.[/R]
U.S. stocks rallied on Wednesday, with major indexes rising more than 1%, as strong corporate earnings reassured investors that profits would grow despite rising interest rates. In late morning trading, the Dow Jones industrial average rose 86.69, or 0.79%. Morgan Stanley ((MS)) rose $2.95, or 5.2%, to $59.97 after its Q2 profits jumped on record revenue, exceeding analyst expectations. FedEx Corp. ((FDX)) rose $4.33, or 4%, to $112.65, after it reported a 27% jump in Q4 earnings, citing solid economic growth. Darden Restaurants rose $1.98 to $37.54 after reporting strong Q4 profit and same-store sales. Brokerage and housing stocks posted notable gains. The technology sector also showed a strong upward move, helping to drive the tech-heavy Nasdaq higher. At the same time, energy stocks fell sharply in recent trading, giving back some ground after they initially responded positively to the weekly report on U.S. oil inventories. The report showed an unexpected increase in crude oil inventories but a smaller-than-expected increase in gasoline inventories. The Standard & Poor's 500 index rose 9.53, or 0.77%, and the Nasdaq composite index rose 26.74, or 1.27%. Bonds were flat, with the yield on the 10-year Treasury note at 5.15%.

[R]Crude oil and gasoline inventories advanced.[/R]
Crude oil inventories advanced during the most recent week, according to government statistics released Wednesday. This resumed an advance following a decline in the previous week. 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 advanced by 1.4 million barrels for the week ended June 16. Specifically, the measure climbed to 347.1 million barrels from the previous week's level of 345.7 million barrels. This followed a slide of 900,000 barrels in the previous week, which snapped a streak of gains. Oil inventories for the week were 4.9% higher than last year. Meanwhile, gasoline inventories showed a week-over-week increase of 300,000 barrels. This built on its recent gains, including an advance of 2.8 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 1.7 million barrels during the week. This followed an advance of 2.1 million barrels posted in the previous period.


[R]10:30AM Indian Sensex gains in a broad-based rally amid high volatility.[/R]
The Sensex in India finished the day with a gain of 217.62 points, or 2.22%, at 10,040.14. The Sensex hit a high of 10,054.05 in latter part of the trading session as investors were eager to buy stocks. The Sensex struck a low at 9,757.54, in the opening session. The benchmark was traded in this range of 296 points. Turnover on BSE was $627 million or Rs 2,807 crore, much lower than Tuesday’s, which amounted to $712 million or Rs 3,202 crore. The market breadth was strong as 2,064 shares gained, against 386 that declined and 41 stocks remaining unchanged.

Dr Reddy’s Lab led the gainers, surging 7.91%, to Rs 1,359.70 folowing the company launch of a generic version of Merck & Company’s Proscar drug for enlarged prostrates in the United States following expiry of its patent. Reliance Industries soared 4.12%, to Rs 962 on a volume of 26.41 lakh shares. Hindalco also gained, adding 2.5% to Rs 162.90 on 3.3 million shares. On a consolidated basis, the group posted a net profit (after minority interests) 1,579.6 crore for the year ended 31 March 2006, higher than Rs 1,284.8 crore for the year ended 31 March 2005.

ONGC was down for the most part of the day, having hit a low of Rs 998, before soaring in closing trade to hit a high of Rs 1,037.80. It ended 2% higher, at Rs 1,035. It has fallen on reports that it has lost oil assets of Russia’s TNK-BP to China''s Sinopec. Grasim declined 1.20% to Rs 1782, BHEL closed down 0.80% to Rs 1,844 and Bajaj Auto edged 0.12% down, to Rs 2,615. State Bank of India traded in high volatility, hitting a high of Rs 865, while its low was at Rs 727. It closed 0.62% higher at Rs 741.10 on a volume of 1.2 million shares. Small-cap and mid-cap stocks also gained. Rei Agro was up 20% to Rs 88, Infomedia India also surged 20% to Rs 162, Shivalik Global reached Rs 28.50, or 20% up, India Infoline jumped 20% to close at Rs 111.

[R]9:45AM Stocks opened in the positive on strong earnings.[/R]
Stocks opened in the positive as stronger-than-expected earnings from FedEx Corp. ((FED)) and Morgan Stanley Inc. ((MS)) offset concerns about economic slowdown. Morgan Stanley rose 4% after reporting that Q2 profit more than doubled from a year earlier on record revenue, driven by stronger underwriting, merger and acquisition, and trading results. FedEx rose 3% after it posted a 27% jump in its Q4 earnings, citing solid economic growth in U.S. and international markets. The market has also benefited from early strength in the brokerage, housing, and networking sectors. Tellabs ((TLAB)) helped to lead the networking sector higher after Merrill Lynch said that the company would be a good acquisition target for Motorola ((MOT)). The gold sector was one of the market's best performances in early trading as the price of the precious metal moved well off its low for the session. The Amex Gold Bugs Index rose 2%. Significant strength was also visible in the airline sector, as reflected by the 1.8% gain shown by the Amex Airline Index. In the first hour of trading, the Dow Jones industrial average rose 63.87, or 0.58%. The Standard & Poor's 500 index rose 6.12, or 0.49%, and the Nasdaq composite index rose 13.47, or 0.64%. Bonds rose, with the yield on the 10-year Treasury note falling to 5.14% from 5.15% late Tuesday.


[R]9:00AM Stock futures pointed to a lower opening.[/R]
U.S. stock market futures traded lower, with market awaiting clues on interest-rate policy. In corporate news, shares of Morgan Stanley ((MS)) advanced 2.6% in pre-market trading after the broker reported Q2 earnings that rose sharply year-over-year, beating analyst estimates. The company reported net income for the quarter of $1.96 billion or $1.86 per share on 48% revenue growth to $8.94 billion. Also in the banking sector, J.P. Morgan Chase & Co. ((JPM)) declined after Prudential Equity Group cut its rating on the company to neutral weight from overweight and lowered its price target to $45 from $51, citing recent capital market weakness. Meanwhile, Merrill Lynch upgraded mobile-phone and networks maker Motorola Inc ((MOT)) to buy from neutral, citing attractive valuation and expectations for margin recovery in the Q2. Dow Jones futures recently fell 11 points, S&P 500 futures eased 2 points, and Nasdaq futures were down 1.5 points.

Lindsay Manufacturing Co, ((LNN)), irrigation systems maker, reported that Q3 income advanced to 55 cents a share, from 32 cents in the year-ago period on revenue growth. The company attributed the good performance to demand for irrigation equipment which continued to rebound from last year in North America and most its international markets.

FedEx Corp., ((FDX)), package delivery company, reported that Q4 net income advanced 27% to $1.82 a share, from $1.46 a share in the year-ago period on 10% revenue growth, beating analysts’ forecasts for earnings of $1.77 a share. FedEx forecast earnings of $1.45 to $1.60 a share in its Q1 of 2007 and $6.45 to $6.80 a share for the year.

Morgan Stanley Inc., ((MS)), securities firm, reported that Q2 profit more than doubled to $1.86 per share, from 86 cents per share in the year-ago period as the company posted record revenue driven by stronger underwriting, merger and acquisition, and trading results. Earnings from continuing operations were $1.85 per share in Q2. Revenue after interest expense and provision for consumer loan losses advanced 48%. The company topped the projected earnings of $1.45 per share.

Darden Restaurants Inc., ((DRI)), restaurant-chain operator, reported that Q4 profit advanced 10% to 60 cents per share, up from 52 cents per share in the year-earlier period, driven by stronger sales at its Red Lobster and Olive Garden restaurants. Sales rose to $1.51 billion from $1.39 billion. The company matched analysts’ expectations for a profit of 60 cents per share.


[R]8:00AM Japan lifted its ban on U.S. beef meat import.[/R]
Japan, which had imposed a ban on U.S. beef meat over concerns about mad cow disease, agreed Wednesday to lift its ban on U.S. beef imports. The decision came as a result of long-running trade dispute between the two countries, giving U.S. ranchers access to their most lucrative export market. Japan's market was worth $1.4 billion annually when it banned American beef in response to the first U.S. case of mad cow disease in 2003. American officials had been impatient for trade to resume, with several U.S. senators saying Tuesday they are introducing a bill that would impose trade sanctions if Japan does not reopen its market to U.S. beef by Aug. 31.

Japan agreed to resume U.S. beef imports on the condition that no further problems during onsite inspections would occur. American beef shipments to Japan were halted in January after Japanese officials found a veal shipment that contained backbone, which according to the strict Japanese rules is considered risk for mad cow disease. Officials from Japan's health and agriculture ministries will inspect 35 meatpacking plants certified to ship beef to Japan to see if they are complying with export requirements. Only facilities whose safeguards meet Japanese standards will be authorized to export to Japan.


[R]7:15AM Japanese stocks fall on business sentiment, HK moves slightly up.[/R]
Asian markets ended mixed. The Nikkei 225 closed virtually flat, advancing 0.03% to close the day at 14,644.26. Among leading exporters, Sony Corp. shed 1.45%, while Toyota Motor declined 0.35%. Japanese miners and steelmakers advanced early on China's iron price concession, but later gave back their profits. Sumitomo Metal Industries ended down 0.91% while Nippon Steel finished flat. Hong Kong's Hang Seng Index ended the day 0.32% higher to 15,659.36. The China Enterprises Index of shares in mainland companies edged up 1.25% on strength in commodities and telecoms. China Unicom advanced 2.24% on news that South Korea's SK Telecom intended to buy up to $1 billion of its convertible bonds. Shares of telecom firm PCCW Ltd were suspended due to reports of a brewing bidding war for Hong Kong's leading fixed-line operator between Australia's Macquarie Bank and U.S. private-equity company Texas Pacific Group. South Korea's Kospi advanced 0.11%. Taiwan's Weighted lost 1.01% and closed at a six-month low as the country's political opposition made an effort to recall the scandal-plagued president. Australia's S&P/ASX 200 advanced 1.18%. Miners gained on news that Chinese steelmakers had accepted a 19% hike in iron ore prices after months of deadlocked negotiations.


[R]6:15AM European stocks decline in mid-morning trade.[/R]
European markets traded lower in mid-morning. The U.K. FTSE 100 index lost 0.3% at 5,642, the German DAX Xetra 30 index shed 0.5% at 5,467, while the French CAC-40 index lost 0.5% at 4,747. Early attention focused on Ahold, the Dutch retailor, reporting better than expected quarterly results. However, there were no details about the strategic future of the company or possible restructuring. Ahold’s stock lost 0.5%. Philips added 2.2% in Amsterdam following reports that is preparing to list its chips division during the second half of the year. Stocks in steelmakers Arcelor and Mittal Steel both advanced on Wednesday after Severstal announced late Tuesday that it was willing to cut his proposed stake buy of Arcelor to 25% from 32%, and won't take his stake above 33% without a full tender offer. Swedish clothing chain Hennes & Mauritz advanced 3.5%, following reports that its second-quarter pretax profit advanced 8.2%.

Light sweet crude oil for August delivery dropped 18 cents to $69.16 a barrel In London, August Brent crude futures on the ICE Futures exchange shed 17 cents to $67.91 a barrel. The euro strengthened Wednesday against the U.S. dollar. European 12-nation currency purchase $1.2615 on Wednesday, up from $1.2584 in New York overnight. The British pound also advanced on the dollar, up to $1.8454 from US$1.8425 on Tuesday. The dollar fell against the yen, down to 114.73 from 114.85 in New York late Tuesday.