Oil, Home Sales, and Lack of Earnings

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

Unexpected fall in crude inventory last week drove oil passed $52 and put market on the defensive. The mixed report on consumer durables order, up 1.9%, and new home sales up 13% failed to cheer market. earnings releases from few companies including Medtronics, Blyth and Network Appliance did not help averages and investors mood.

It was economy, oil, home sales, and earnings.

Investors discounted mixed report on April durable orders but paid a closer attention to the dip in oil inventory. Commerce department report on new home sales also did not inspire buyers and negative earnings from Medtronic, Network Appliance and Blyth put investors on the defense.

New orders for manufactured durable goods in April increased $3.7 billion or 1.9 percent to $200.3 billion, the U.S. Census Bureau announced today. This followed a 1.6 percent March decrease.

Excluding transportation, new orders decreased 0.2 percent. Excluding defense, new orders increased 2.3 percent. Transportation equipment, up following four consecutive monthly decreases, had the largest increase, $4.0 billion or 8.2 percent to $53.1 billion. This was led by non-defense aircraft and parts, which increased $1.5 billion.

Energy department said that crude oil inventories for the last week dipped by 1.6 million barrels to 332.4 million of barrel still higher by 33 millions of barrels a year ago. Gasoline inventory was up 0.6 million of barrels to 215 millions of barrel up by 12 Mb from a year ago. Distillate inventories were up 1.9 Mb to 105.7 Mb lower by 3 Mb compared to a year ago.

Crude oil surged during trading session to $51.60 but settled lower to $50.98 per barrel up $1.31.

The Energy department also noted that while the increase in U.S. crude oil stocks of 41 million barrels over the first four months of 2005 is somewhat larger than usual, it is by no means unprecedented – stocks rose by 45 million barrels during the comparable period in 2001.

So, while some people, including some OPEC oil ministers, express concern about the build in U.S. crude oil inventories, it may simply reflect, among other things, prudent preparation on behalf of refiners.

Sales of new one-family houses in April 2005 were at a seasonally adjusted annual rate of 1,316,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 0.2 percent above the revised March rate of 1,313,000 and is 13.3 percent above the revised April 2004 estimate of 1,162,000.

The median sales price of new houses sold in April 2005 was $230,800; the average sales price was $283,500. The seasonally adjusted estimate of new houses for sale at the end of April was 440,000. This represents a supply of 4.1 months at the current sales rate.

On the Earnings front Medtronics, Network Appliance and Blyth disappointed investors. Investors also sold stocks in semi-conductor stocks. Shares in Maxim, Novelus, Xilinx, and Broadcom were down at least 1%.

Medtronics, medical devices maker, reported 4Q profit of 16 cents vs. 47 cents a year ago on charges related to legal settlement of $630 million. Excluding the charges, 4Q earnings would be 53 cents meeting the estimates.

Network Appliance, network storage company, reported 4Q profit of 16 cents vs. 10 cents a year ago. The company forecasted 1Q profit of 16 to 17 cents vs. estimates 18 cents. Stocks sold-off 4.5%.

Brown-Forman, liquor company, posted 4Q 7% profit rise, or 49 cents per share vs. 46 cents the previous year on strong spirits demand, foreign exchange benefits and lower expenses. The company expects 2.70/.80 earnings a share for 2006. The class A stock fell 56 cents to $58.83 cents.

Dollar Tree, deep discount merchandiser, reported 1Q profit of 26 cents vs. 31 cents a year ago. The company blamed the shortfall to the strong winter in parts of the U.S. and high gasoline prices. The company forecasted for the 2Q between 25 and 27 cents and for the full-year between $1.61 and $1.72 per share. Stock closed up 20 cents.

Mitsubishi Tokyo Financial Group reported 40% profit drop of $3.15 billion. The group is scheduled to merge with UFJ Holdings in October.

Docucorp, information solutions provider, reported 3Q 7 % increase in revenue and net income of 4 cents per share vs. 6 cents a year ago due to lower profit margin, increased costs and expenses. Analysts expected 8 cents per share.

Boston Scientific cut its annual earning outlook to $1.85/$2 from $2/$2.20 per share on declining sales of Taxus stent system, systems and acquisition related costs. The company also lowered its growth outlook for cardiology business to 11%-16% from 16%-20%.

AutoZone reported 3Q net income of $1.86 per share vs. $1.68 last year. Net sales fell 2% to $1.34 billion on same-store decline of 5%. Stock closed down 47 cents to $86.80.

Blyth, largest candle maker, reported 1Q profit of 24 cents vs. 38 cents a year ago and missed the estimates of 33 cents. The company blamed the fall to weakness in direct sales unit. Stock declined $1.83 to $28.03.

At the close markets in Chile and Brazil declined by a fraction. Protesters in Bolivia staged to prevent country’s natural gas reserves from exporting.

Societe General, French Bank reported 1Q net income of euro 1.22 billion, Dutch-Belgian financial giant, Fortis, reported 1Q net profit up 6% to euro 1.5 billion.

U.K. National Statistics Office, as anticipated revised the 1Q GDP to 0.5% from 0.6% on lower manufacturing output.

European markets were trading mixed with averages in Paris, Madrid, Frankfurt and London down a fraction. With lack of any corporate or economic news market is waiting for the US GDP read on tomorrow.

Capital Title Group, real estate & mortgage services provider, declared a quarterly payable cash dividend of 2 cents.

Asian markets fell in sympathy with sharp declines in Tokyo averages. Tokyo fell 1.07%, followed by declines in HK of 1.15%, Bangkok 0.52%, Seoul 1.08% but Markets in Mumbai and Jakarta were up slightly.

Textile shares in HK and Shanghai were up after China clarified that garment originating in HK but shipped from and processed in China will be exempt from new tariffs.

Steel company shares in Tokyo fell sharply after Tokyo steel said it will cut prices on steel sheets starting next month.