Late Rally Supports Averages

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

Market averages staged a late rally as Fed decision held investors back. Investors appear reluctant to take a stand ahead of the rate hike decision. Yield on the 10-year bond has already moved close to 5.25%. Gold lost ground as dollar firmed up. Oil stocks advanced on rising oil prices. Merger news in Europe supported a mild rise in indexes however, markets in Asia lost ground.

[R]4:30PM Market staged a mild rally in the late hour.[/R]

-Dow closed up 48.82 points, Nasdaq up 11.59 and S&P 500 up 6.80.
-Yield on 10-year bond closed at 5.239% and 30-year bond at 5.27%.
-Crude oil gained 27 cents to close at $72.19 per barrel.
-Gold traded down $3.40 to close at $581 per ounce.

-Asian markets closed lower across the region ahead of the U.S. Fed rate decision. Japan led the decliners with a loss of 1.90%. Australia lost 1.00%.
-European stocks closed higher by a fraction but Norway lost 1.10%.
-Latin American markets closed higher led by rise of 2.1% in Argentina and 1.1% in Brazil.

Market averages for the most of the day traded near a flat line but managed to stage a late hour rally. Dow, Nasdaq and S&P 500 near jumped 0.5% at close. Energy stocks led the advancers on the back of higher oil prices and semiconductor stocks gained on the news of deal between Intel ((INTC)) and Marvell ((MRVL)).

Asian markets lost ground but European markets close near unchanged levels ahead of the Fed meeting. In Europe stocks moved higher on merger news. EMI Group rose 8.5% on the news that it has received a merger offer from its U.S. rival Warner Music Group which the company termed “wholly unacceptable’’. Corus was rumored to be a target of Russian steel maker Severstal. The Russian company appears to have lost its bid to merge with Arcelor.

Latin American stocks made a mild comeback after Mexico and Brazil suffered sharp gains in the first two days of the week. Home builders and retailers rebounded from sharp sell-off in Mexico. Mining and energy companies rose in Brazil.


[R]1:00PM Market averages trade near flat line.[/R]
A day before Fed meeting, market trading is quiet. Treasury-Secretary- appoint, Henry Paulson, was approved by the Senate Finance Committee. The committee sent the nomination for the full senate vote where approval is expected soon. The current Secretary Mr. Snow is leaving his post on July 3rd.

Apple Computer ((AAPL)) is trading $1.73 or 3% lower to $55.66 on the analyst comment that new version of iPod may be delayed. The stock has been under heavy selling pressure for the last six months, after reaching $86 in mid-January this year. The stock has now lost 35% from its peak this year. Wells Fargo ((WFC)) is up $1.22 and trades at $66.36 on the news that the company has hiked its dividend by eight percent, split its stock 2 for 1 and buyback up to 25 million shares. Unsubstantiated rumors also made rounds that the company has CEO succession plan in place.

[R]11:30 AM Indian market closes with a slight loss.[/R]
The Sensex in India finished 21.31 points lower, or 0.21%, to settle at 10,129.70. In early trade, the Sensex had declined 241 points, to a low of 9,909. The turnover on BSE was $800 million (Rs 3,592) crore a bit lower than Tuesday’s Rs 3,644 crore. The market-breadth was negative as1,487 stocks fell, 854 advanced and 77 were unchanged. IT stocks, auto shares and power sector related shares gained. Metal shares rebounded from their lows. Cement stocks finished mixed. Index large-cap Reliance Industries climbed. Oil shares and banking shares lost.

Reliance Industries gained 1.5% to Rs 1,001 as 4.4 million shares exchanged hands. As per reports, Reliance Industries minority partner, Niko Resources, has upgraded reserves of their massive D-6 gas field, off India's eastern coast. Reliance Industries announced on Tuesday it will spend $5 billion or Rs 25,000 crore during the next few years to create a retail network of shops to cash in on the consumption boom in big cities and the rural hinterland. Automotive large-cap Bajaj Auto advanced 4% to Rs 2,695 on 32,759 trading volume. Hero Honda was up nearly 1% to Rs 759, advancing for the second day after the company launched the Glamour FI 125-cc motorcycle. This is the first motorcycle in the Indian market to present the fuel injection technology.

IT shares and power-equipment makers also gained. TCS advanced 3%, to Rs 1,693, Wipro added 1.7% to Rs 483, and Infosys gained 0.8% to Rs 2,980. BHEL advanced 1.4% to Rs 1,825, local unit of Swiss company ABB Group was up 3.7% to Rs 2,425, Crompton Greaves put 3.5% up, to Rs 866, and Thermax advanced 1.8%, to Rs 256. Cigarette giant ITC gained 0.7%, to Rs 177.60 on a heavy volume and trading of a block of 2 million shares at Rs 176 per share. Oil shares declined. Oil exploration giant, ONGC slipped 2.6% to Rs 1,034.40. Among refiners, HPCL declined 4% to Rs 244, and Indian Oil Corporation lost nearly 1% to Rs 400. But BPCL gained 0.2% to Rs 332. Gas transmission firm GAIL India rose 2.3% to Rs 255.

Cement stocks finished mixed. Grasim advanced 1.9% to Rs 1,822 and UltraTech Cement gained 1.8% to Rs 700. But ACC lost 1.4% to Rs 743 and Gujarat Ambuja Cements slipped 1% to Rs 93.25 crore. Cement makers have cut prices in Mumbai between 2 to 4 rupees per 50 kg bag.


[R]10:15AM Market opens on a weak note.[/R]
Markets around the world appear in the holding pattern as Asian markets closed lower and European markets fall on fears of U.S. rate hikes. Gold fell in the early trading in New York. With weak opening in the New York traders focused on earnings report from Nike and J Crew initial public offering. Nike ((NKE)) reported weaker than expected fourth quarter earnings. The quarter’s earnings fell 5% to $332 million or $1.27 from $1.30 a year ago. Upscale apparel retailer J Crew Group ((JCG)) priced 18.8 million at $20 per share. The stock opened 20% higher with a trading volume of 12 million shares. The upscale retailer in the recent years has struggled and turned mildly profitable last year. Goldman Sachs and Bear Stearns are lead managers for the issue.


[R]7:15 Asian markets follow U.S. downtrend ahead of Fed’s meeting.[/R]
Asian markets closed lower on Wednesday. The Nikkei 225 declined 1.9% at 14,886.11. Technology shares tracked losses in their U.S. counterparts. Kyocera lost 3%, and Advantest Corp was off 1.6%. Automotive stocks also moved lower, led by Honda Motor shares of which dropped 2.5%, a day after undergoing a share split. Nissan Motors declined 2.3% while Toyota closed 1.9% down. Japanese tire makers finished lower, after Bridgestone warned Tuesday that its group net profit would be lower this year due to higher commodity prices. Hong Kong shares also closed lower, as property and banking companies retreated on expectations of another interest-rate rise in the U.S.

The Hang Seng Index shed 0.2% to 15742.66. HSBC Holdings lost 0.4% and Hang Seng Bank was down 0.3%. In the property sector, Hang Lung Properties declined 2.2%, Sino Land dropped 1.3% and New World Development ended 0.9% lower. In Seoul, the Korea Composite Stock Price Index shed 0.7% to 1238.71, though it recovered from an intra-day low of as much as 2%. Elsewhere in the region, Taipei's Weighted Price Index shed 0.5% to 6540.93 and Sydney's S&P/ASX200 index dropped 1.1% to 4946.8.

[R]6:30 AM European stocks in early trading fall due to rate fears.[/R]
European markets traded lower in early trading on Wednesday. London’s FTSE 100 bucked the downtrend, adding 0.2% to 5,661.6, while Frankfurt’s Xetra Dax lost 0.2% to 5,445.39, and the CAC 40 in Paris shed 0.2% to 4,760.25. On the corporate front, Renault, the French carmaker, shed 1.1%. Nissan, the Japanese manufacturer which is 44% owned by Renault, on Tuesday said it may miss its domestic full-year sales target.

Meanwhile, Dieter Zetsche, chairman of DaimlerChrysler said the company’s US Chrysler division was spending too much on incentives to clear unacceptable levels of vehicle inventory. DaimlerChrysler fell 0.9%. Shares in Adidas, the sportwear manufacturer, shed 0.8% after US rival Nike reported a 5% drop in fiscal fourth-quarter net profit. The US company announced that current-quarter profits would be hit by World Cup marketing spending. European rival Puma shed 1.5%.

Light, sweet crude oil for August delivery advanced 17 cents to $72.09 a barrel. In London, Brent crude futures on the ICE Futures exchange gained 44 cents to settle at $71.42 a barrel. Gold in London traded at $584.00 per troy ounce, down from $593.60 late Tuesday. The U.S. dollar advanced against other major currencies in European trading Wednesday. The euro traded at $1.2563, down from $1.2580 late Tuesday in New York. The dollar was up against the yen, buying 116.29 Japanese yen, up from 116.28. The British pound traded at $1.8186, down from $1.8230.

[R]5:00 AM Gold falls on selling pressure ahead of Fed meeting.[/R]
The benchmark August gold contract ended $3.30 lower at $584.40 a troy ounce. July silver futures hit a two-week high of $10.62 an ounce. But the contract faced selling to close at $10.195 an ounce, down 4.5 cents on the day. July platinum futures finished up $7 at $1,188.30 an ounce. Traders noted that most of the activity was seen in spread trading as the July contract rolls into October. September palladium settled down $6.35 at $314.20 an ounce. The most-traded September copper contract shed 14.70 cents to end at $3.0860 per pound.

Petroleum products futures maintained most of their gains. August crude-oil futures advanced 12 cents to $71.92 after rising as high as $72.50 a barrel. July gasoline settled up 2.12 cents at $2.20 a gallon. July heating oil rose 2.02 cents to $1.9587. On the New York Board of Trade, July Arabica coffee futures finished up 0.75 cent at 95.35 cents a pound, while September gained 0.75 cent to 96.70 cents. Futures on raw sugar in foreign ports for July finished down 0.12 cent at 15.64 cents a pound while October shed 0.12 cent to 16.19 cents a pound.