Nasdaq Down 0.4%

123jump.com Staff
23 Jun, 2001
New York City

Merger news on AB Ports, durable goods orders for the month of May and earnings failed to sway market to close higher. Market see-sawed for the most of the day but closed lower at close. European and Latin American markets closed higher but Asian markets closed lower. Gold and oil closed higher by a fraction. Solectron, Family Dollar, Gerber Scientific, Del Monte Foods and A G Edwards reported earnings. Nasdaq down 0.4%, S&P 500 lost 0.6% and Dow dropped 0.2% for the week.

[R]4:15PM Market averages traded higher but closed lower on earnings and merger news.[/R]

-Dow closed down 30.02 points, Nasdaq down 1.52 and S&P 500 1.09.
-Yield on 10-year bond closed at 5.23% and 30-year closed at 5.26%.
-Crude oil gained 3 cents to close at $70.87 per barrel.
-Gold rose $2.60 to close at $588 per ounce.

-Asian markets closed lower across the region led by a decline of 0.8% in Australia and Korea and 1% decline in Indonesia. India led gainers with a rise of 1.2%. Pakistan fell close to 4%.
-European stocks closed up but only a fraction. Norway rose 2.5% but South Africa and Russia fell 1% and 0.7% respectively.
-Latin American markets rose, led by a gain of 1.3% in Mexico and 0.8% rise in Brazil.

Market averages traded up and down for the most of the trading session with no clear direction. Earnings, merger news and durable order goods report drew investors’ attention. On the earnings front Solectron ((SLR)), A.G. Edwards ((AGE)), Ilse of Capri ((ISLE)), Del Monte Foods ((DLM)), Family Dollar ((FDO)), Gtech Holdings ((GTK)), Gerber Scientific ((GRB)) and Oracle ((ORCL)) dominated the news.

In the merger news Goldman Sachs led group agreed to acquire Associated British Ports Holdings for $5.1 billion topping an offer from Macquarie Bank of Australia. The port operates 21 ports in the U.K. and handles 25% of UK seaborne trade according to the company web site. Forty four year old company established under the British Transport Act has grown to manage ports, operate container services, logistics and warehousing services and holds vast amount of land around ports. Goldman consortium is made up of Prudential Group with 10% ownership, Canadian pension fund investment arm known as Borealis and Singapore government private equity arm GIC with 33% holding each. Goldman Sachs controls 23% of the group.

Durable goods orders in May fell 0.3% after falling 4.8% in April. Volatile data tracks orders in capital goods, transportation equipments and defense related purchases.


[R]2:45PM Quiet market trades higher.[/R]
Market averages were on the upswing at mid-day trading. Oil and gold were higher a fraction. Speculation on interest rate revision lifted dollar to a two-month high against euro and yen. In New York trading one euro fetched $1.2525 and one dollar traded at 116.16 yen.

Earnings driven stocks were in demand. Oracle ((ORCL)) rose 4.5% after reporting earnings rise of 27% on acquisition. Isle of Capri ((ISLE)) rose as much as 9% at the opening before settling at 6.5% gain after reporting earnings. Earnings for the fourth quarter jumped to 48 cents from 11 cents a year ago on revenue rise of 19%.

Contract manufacturer Solectorn Corp ((SLR)) reported fiscal third quarter earnings of 5 cents vs. a loss of 7 cents a year ago. The company reported revenue of $2.7 billion and earnings of $42.4 million compared to revenue of $2.6 billion and a loss of $66.7 million. The company guided earnings per share in the fourth quarter between 4 and 6 cents and revenue between $2.6 billion and $2.8 billion. Average analyst estimate for the earnings per share for the quarter is 4 cents.


[R]12:30PM European markets finished near the flat line.[/R]
European markets closed near the unchanged mark as rally in the energy sector partly offset concerns over economic growth and global interest rate increases. Energy stocks rallied on a series of U.S. merger deals, including Anadarko''s $21 billion of oil producer acquisitions. The French Total rose 2.4%, Royal Dutch Shell advanced 1.4% on upgrade from Deutsche Bank, and gas explorer BG Group climbed 2.7%. The German VAX 30 ended down 0.1%, the French CAC 40 rose 0.3%, and London FTSE added 0.1%.

Oil prices advanced for a third day in a row on strong global demand. Light crude July delivery rose 21 cents to $71.05 a barrel. Gasoline futures rose 1 cent to $2.129 a gallon. London Brent added 1 cent to $69.96. The dollar gained ground versus major currencies. The euro traded at $1.2519, down from $1.2582. The dollar bought 116.13 yen, up from 116.08. The British pound stood at $1.8202, down from $1.8281. European gold prices moved lower. In London the precious metal traded at $578.40, down from $586 per ounce. In Zurich gold traded at $578.05, down from $5684.80. Silver closed at $10.25, down from $10.34.


[R]11:30AM Energy stocks advanced on merger news.[/R]
Stocks turned to choppy trading in late Friday morning, following the release of disappointing economic data. Despite the lackluster performance of the broader markets, the energy sector showed significant strength on merger-and-acquisition news. The Amex Oil Index and the Amex Natural Gas Index rose more than 3 %. Kerr-McGee ((KMG)) and Western Gas Resources ((WGR)) climbed 36.7% and 45.5% respectively on news that Anadarko Petroleum ((APC)) agreed to acquire both companies in separate all-cash transactions totaling $21.1 billion. The health insurance sector also moved higher, lifted by gains for Cigna ((CI)) and Aetna ((AET)). The Morgan Stanley Healthcare Payor Index rose by 1.6%. Meanwhile, the bank sector came under pressure on concerns about the strength of the economy. Some telecommunications, semiconductor, and tobacco stocks also moved notably lower. Qualcomm ((QCOM)) dropped 5.4% after J.P. Morgan downgraded its rating on the mobile phone chipmaker to Neutral from Overweight. In late morning trading, the Dow Jones industrial average rose 6.86, or 0.06%. The Standard & Poor''s 500 index gained 1.11, or 0.09%, while the Nasdaq composite index dropped 0.13, or 0.01%. Bonds continued their selloff from the previous session, with the yield on the benchmark 10-year Treasury note rising to 5.21% from Thursday''s four-year high of 5.20%.


[R]9:45AM Stocks opened in the negative.[/R]
Stocks opened in the negative as a government report showed the first back-to-back decline in durable goods orders in two years. Factory orders dropped 0.3% in May after a sharper 4.7% plunge in April. In corporate news, software maker Oracle Corp. ((ORCL)) gained 38 cents to $14.71 after posting profit jump of 27%, beating forecasts by a penny. Revenues surged 25 % for the quarter, and the company''s forecast for the current quarter met analysts'' projections. Anadarko Petroleum Corp. dropped 5.1% after the company said it would acquire two rivals, Kerr-McGee Corp. and Western Gas Resources Inc., for a total of $2.1 billion. Kerr-McGee soared 36%, while Western Gas surged 46%. Amusement park operator Six Flags Inc. plunged 21% as the company said it may have problems meeting its credit obligations and was looking to sell six of its properties. The banking sector showed weakness in early trading, with Comerica ((CMA)) and Zions Bancorp ((ZION)) turning in two of the sector''s worst performances. The Amex Banking Index posted a 1.3%. Comerica fell 4% after Merrill Lynch downgraded its rating on the regional bank to Sell from Neutral, citing concerns about the company''s margins. Some telecommunications stocks also came under pressure, with Qualcomm ((QCOM)) extending recent decline on downgrade to Neutral by J.P. Morgan. In the first hour of trading, the Dow Jones industrial average fell 42.51, or 0.39%. The Standard & Poor''s 500 index lost 4.04, or 0.32%, and the Nasdaq composite index dropped 11.01, or 0.52%. Bonds continued their selloff from the previous session, with the yield on the benchmark 10-year Treasury note rising to 5.21% from Thursday''s four-year high of 5.20%.


[R]9:00AM Stock futures pointed to a lower start on durable goods data.[/R]
U.S. stock futures moved down Friday on key economic data. A weaker-than-expected durable goods reports in May offset news of proposed acquisitions in the energy sector totaling more than $22 billion. Anadarko Petroleum ((APC)) dropped in pre-market trading after the company agreed to acquire Kerr-McGee ((KMG)) and Western Gas Resources ((WGR)) in separate all-cash transactions totaling $23.3 billion. The decrease was mainly contributable to a steep decline in orders for transportation equipment, which fell 2.6%. In earnings news, Oracle ((ORCL)) reported Q4 earnings in line with the upwardly revised guidance that the software company provided last week. Oracle posted net income of 24 cents per share on revenue of $4.85 billion to 20 cents per share on $3.88 billion in revenue last year. Excluding special items, the company earned 29 cents per share, a penny above analyst estimates. S&P 500 futures fell 0.80 point, but stood slightly above fair value. Dow Jones industrial average futures dropped 8 points, and Nasdaq 100 futures slipped by 2 points.


[R]Durable goods orders unexpectedly declined.[/R]
Friday morning, the Department of Commerce released its report on durable goods orders in the month of May. The report showed that durable goods orders fell unexpectedly after a notable decrease in the previous month. The Commerce Department said that durable goods orders fell 0.3 percent in May following a revised 4.7 percent decrease in April. Economists had expected orders to increase 0.4 percent compared to the 4.4 percent decrease originally reported for April. The decrease was largely due to a notable decline in orders for transportation equipment, which fell 2.6 percent in May following a 12.7 percent decrease in April. Orders for commercial aircraft and parts fell sharply, dropping by 17.9 percent. Excluding orders for transportation equipment, orders for durable goods rose 0.7 percent in May compared to a 1.0 percent decrease in April. Orders for primary metals, machinery, and communications equipment saw notable growth.


[R]8:00AM Univision Communications remained cool to $10.7 billion offer.[/R]
Univision Communications Inc. remained cool to a proposal from a consortium of private investors, offering $10.7 billion to acquire the Spanish-language broadcaster on Wednesday. The consortium includes private equity firms Madison Dearborn Partners LLC, Thomas H. Lee Partners LP, Providence Equity Partners Inc., Texas Pacific Group Inc. and media mogul Haim Saban. Reportedly, Univision rejected the proposed bid, telling the group it needed to increase its offer. The group''''s offer was slightly more than $35 per share and below the $40 per share the company had reportedly been seeking. Wall Street analysts estimated the company could fetch between $11 billion and $12 billion. On Thursday, a second investor group was still trying to put together an offer after losing three of its private equity firms. The remaining investors in that group were Mexican media giant Grupo Televisa SA and Venezuelan broadcaster Venevision, which are two of Univision''''s largest shareholders and programming suppliers, as well as two private equity firms: Bain Capital Partners LLC and Cascade Investment LLC. After a more than 4% drop on Wednesday, shares of Los Angeles-based Univision slid another $1.04, or 3.1%, to close at $32.80 Thursday on the Nymex.


[R]7:10AM Asian shares finish broadly lower on overseas concerns.[/R]
Asian markets closed mostly lower. The Nikkei 225 in Tokyo inched down 0.08% to finish at 15,124.04. Japan''s automaker, Nissan Motor dropped 2.3%. Rival Honda Motor lost 1.2%. In the electronics sector, Sony Corp pulled back from morning losses to settle up 0.2%, while Fujitsu Ltd slipped 1.49%. Hong Kong''s Hang Seng Index declined 0.11% in a day of weak trading, closing at 15,808.81. In Hong Kong, local telecom company PCCW Ltd was off 4.35% in a developing takeover battle involving Australia''s Macquarie Bank and U.S. private-equity firm TPG Newbridge. Hong Kong''s Television Broadcasts Ltd surged 6.8% on local media reports that PCCW CEO Richard Li may acquire the TV company if he manages to sell his telecom firm. South Korea''s Kospi shed 0.82%, while Australia''s S&P/ASX 200 was down by 0.92%. Shanghai''s Composite Index advanced 0.6%. In Shanghai, Datong Coal Industry debuted on the exchange in the mainland''s second IPO since a one-year suspension on capital raising was boosted last month. Datong Coal shares advanced 63% in their first day of trading.


[R]6:30AM Europe edges higher in early trade on oil stocks.[/R]
European markets were higher in early trading Friday. The London FTSE 100 inched up 0.3% at 5,699, the German DAX 30 rose 0.2% to 5,545, the French CAC 40 advanced 0.4% to 4,821. Oil producers including France''s Total, 1.6% higher, led markets up after Deutsche Bank said the sector as a whole was undervalued and upgraded Royal Dutch Shell and Statoil. Shell advanced 1.5% and Statoil rose 1.2%. One company benefiting from the Merger and acquisition theme was Associated British Ports which agreed to be bought for 910 pence a share, or 2.8 billion pounds ($5.17 billion) from a consortium led by Goldman Sachs. AB Ports shares rallied 3.8%. Mittal Steel remained flat in Amsterdam due to increasing media speculation that Arcelor over the weekend will agree to another improved Mittal offer.

Crude oil futures slipped slightly but remained firm at $70 a barrel on Friday, anchored by strong fuel demand, refinery glitches and jitters about the unresolved tension between the U.S. and Iran. Gold bullion opened Friday at a bid price of $583.10 a troy ounce, lower than $586.00 late Thursday. The dollar was trading at 116.17 yen by midday in Europe, up from 116.08 late Thursday in New York. The euro purchased $1.2558, compared with $1.2582, while the British pound slipped to $1.8247 from $1.8281.