Dow and Nasdaq Close Lower

123jump.com Staff
31 Jul, 2006
New York City

Natural gas and crude oil futures jumped more than one dollar. The heat wave in the Midwest and uncertainty driven by Israel and U.N. Security Council resolution asking Iran to suspend nuclear enrichment by the end of August kept oil rebounding. Crude oil closed at $74.40 per barrel and natural gas at $8.21 per mBTU. Tyson reported wider than expected loss. Valero LP reported lower earnings and forecasted similar profit in the current quarter.

[R]4:00PM Dow and Nasdaq drop in afternoon trading.[/R]

-Yield on 10 -year closed at 5.002% and 30-year closed at 5.079%.
-Crude oil closed at $74.35.
-Gold closed down at $634.20.

-Asian Markets closed higher led by Philippines to close ahead at 2.63%. Japan traded higher at 0.74%. Taiwan was down 0.39%.

-European Markets mostly closed lower led by 0.78% decline in the U.K. and 0.58% loss in Spain. S. Africa, the only market to gain, was up 0.74%.

-At close Latin American Markets were mixed, with 0.51% gain in Argentina and 0.71% loss in Mexico.

[R]12:30PM European markets closed lower.[/R]
European markets closed lower, pulling back from last-week highs, despite well-received earnings reports from major companies. Weakness on Wall Street also contributed to the negative sentiment. Among decliners, Dutch banking group ABN Amro Holdings dropped 2.3% after it said Q2 provisions for bad loans jumped to 430 million euros. Advancers included media and publishing group Pearson which rose 1% on 57% operating profit growth for the first half. Dutch delivery-services group TNT jumped 3.5% after it raised its margin forecast for 2006. ASM International climbed 6.5% Q2 net profit and sales increase. The German DAX 30 fell 0.4%, the French CAC 40 lost 00.4%, while London FTSE 100 dropped 0.8%.

Oil prices advanced on concerns about Mideast supply disruptions. Light crude September delivery rose 51 cents to $73.75 a barrel. London Brent gained 66 cents to $74.05. The dollar further declined versus major currencies. The euro traded at $1.2755, up from $1.2753. The dollar bought 114.35 yen, down from 114.70. The British pound stood at $1.8662, up from $1.8634. European gold prices declined. In London the precious metal traded at $632.58, down from $636.05 per ounce. In Zurich gold traded at $631.78, down from $635.35. Silver closed at $11.27, down from $11.32.


[R]11:30AM The Nasdaq gained on strong disk drive sector.[/R]
Stocks traded mixed to lower late Monday morning as investors locked in recent gains. The major averages subsequently moved well off their worst levels of the day. Blue chips dropped due to the conflict in the Middle East and disappointing profit reports. Boeing ((BA)) shares dropped 1.1% on the Nymex, while GE ((GE)) shares fell 0.7%. The tech-heavy Nasdaq benefited from strength in the disk drive sector, contributed by news that M-Systems agreed to be acquired by SanDisk ((SNDK)) for $1.35 billion in stock. A brokerage upgrade of Apple Computer Inc. ((AAPL)), which rose 4%, also boosted the Nasdaq. The brokerage also upgraded National Semiconductor Corp. ((NSM)) to ‘outperform’ from ‘market perform,’ sending the stock up 1.3%.

The increase by the price of oil generated selling pressure among oil-sensitive airline stocks. Some biotechnology and housing stocks also moved sharply lower. However, the energy sector helped to limit the downside for the major averages. The health insurance sector also moved to the upside on bargain hunting. The stock of M-Systems surged 13.2%. Among other stocks, shares of copper miner Phelps Dodge Corp. ((PD)) jumped 6.3% after Canada''s Teck Cominco Ltd. sweetened its offer for base metals producer Inco Ltd. In late morning, the Dow Jones industrial average fell 18.41, or 0.16%. The Standard & Poor''s 500 index lost 1.14, or 0.09%, and the Nasdaq composite index rose 1.78, or 0.09%. Bonds were little changed, with the yield on the benchmark 10-year Treasury steady at 4.99% from late Friday.


[R]10:30AM The Indian Sensex ends with a moderate gains on selling pressure.[/R]
The Sensex in India finished with a gain of 63.65 points, or 0.60%, to 10,743.88. The market-breadth on BSE was positive led by broad rally from large to small caps and mid-caps. In the session 1,490 shares advanced, 945 declined and 64 stocks were unchanged. The daily turnover on Mumbai Stock Exchange was at $503 million or Rs 2,264 crore.

The top gainers BHEL advanced 3.83% to Rs 2,043.00. The company posted 85% surge in net profit to Rs 236.7 crore for Q1 June 2006 compared to Rs 127.9 crore a year ago. Largest auto maker, Maruti gained 2.55% to Rs 788.00 on decline in global crude oil price. Software exporters were on the gainers list. Satyam advanced 2.07% at Rs 752.50, Wipro gained 1.80% to Rs 491.00 and Infosys Technologies was up 1.35% to Rs 1,651.

ICICI Bank advanced 1.35% to Rs 550. The stock recovered from an early low of Rs 544.90 on bottom fishing. Reliance Industries slid marginally to Rs 979.50 on 1.3 million shares. It traded in a range of Rs 997.50 and Rs 977.15.

On the list of leading decliners, Hindustan Lever, lost 4.89% to Rs 230.40, despite reporting 35% growth in Q2 June 2006 net profit to Rs 381 crore compared to Rs 282 crore a year ago. Grasim shed 2.01% to Rs 2,075, in spite of reporting 24% growth in Q1 June 2006 net profit to Rs 311.90 crore, surpassing market expectations. ACC dipped 1.37% to Rs 837, Hindalco shed 1.11% at Rs 160.65 and ONGC sank 0.94% to Rs 1,170.


[R]9:45AM Stocks opened in the negative.[/R]
Stocks opened lower Monday, reflecting investor cautiousness due to the intensifying violent Mideast conflict, higher oil prices and several disappointing earnings reports. Tyson Foods and Valero LP released disappointing earnings forecasts adding to the market''s concerns. Traders were inclined to take profits after the last-week rally and wait for Labor Department’s job creation report on Friday.

Tyson ((TSN)), the world''s largest meat processor, reported Q3 profit loss of 15 cents per share, compared with a profit of 36 cents per share last year due to 5% revenue decline and legal charges. Tyson also lowered its future profit forecasts, and dropped 8.4%. Valero ((VLI)) fell $1.16 to $50.78 after the energy company reported profits below analysts'' estimates despite a more than fourfold increase in revenues, as well as disappointing guidance for the second half of the year. Dow component Wal-Mart Stores ((WMT)) added 40 cents to $44.86 after the retailer reported July same-store sales, increased 2.4%.

The airline sector turned in one of the market''s worst performances, partly due to an increase by the price of oil. AMR ((AMR)) and Continental ((CAL)) posted significant losses. Meanwhile, bargain hunting contributed to some strength in the health insurance sector, with Humana ((HUM)) up 4.9%, helping to lead the health insurance sector higher after reporting better-than-expected Q2 earnings. Some disk drive stocks also advanced, with shares of M-Systems ((FLSH)) up 13.2% after the company agreed to be acquired by SanDisk ((SNDK)) for $1.35 billion in stock. In the first hour of trading, the Dow Jones industrial average fell 35.54, or 0.32%. The Standard & Poor''s 500 index lost 3.01, or 0.24%, and the Nasdaq composite index dropped 9.95, or 0.48%. Bonds edged lower after Friday''s rally, with the yield on the benchmark 10-year Treasury note rising to 5% from 4.99% late Friday.


[R]9:00AM Stock futures pointed to a lower opening due to the Mideast conflict.[/R]
U.S. stock futures declined early Monday as investors closely watching the developments in the Middle East were disappointed there is still no ceasefire agreement. However, U.S. Secretary of State Condoleezza Rice said such an agreement could be reached this week.
Mining stocks are expected to trade actively today as Copper miner Phelps Dodge Corp.''s ((PD)) jumped more than 4% after Canada''s Teck Cominco Ltd. sweetened its offer for base metals producer Inco Ltd. The rival bid for Inco increases the prospect that Phelps'' offer for the miner could fall through.

On the earnings front, health insurer Humana Inc. ((HUM)) reported a stronger-than-expected quarterly profit, but Avon Products Inc. ((AVP)), the world''s largest direct seller of cosmetics, posted a profit below forecasts, citing restructuring charges. Shares of SanDisk Corp.''s ((SNDK)) slipped by 0.3% to $47, a day after the maker of flash memory said it would buy Israel-based Msystems Ltd. ((FLSH)) for $1.55 billion in stock. Shares of Apple Computer Inc. ((AAPL)) rose 1.7% on Inet after Banc of America raised its rating on the stock. In other ratings news, Prudential raised its rating on Phelps Dodge. S&P 500 futures were down 2.10 points, below fair value. Dow Jones industrial average futures fell 21 points, and Nasdaq 100 futures dropped 1.5 points.


Gehl Co, ((GEHL)), maker of agricultural and construction compact equipment, reported Q2 earnings of 75 cents a share, up from a profit of $5.6 million, or 53 cents a share a year-ago. On a continuing operations basis, the company posted a profit of 75 cents a share for Q2. Sales advanced to $139.5 million from $128.3 million in the same period a year earlier. The analysts’ estimate was for a profit of 73 cents a share. Gehl reaffirmed a forecast for earnings from continuing operations of $2.20 to $2.30 a share in fiscal 2006 on sales of between $485 million and $495 million. This outlook includes an estimated 6 cents a share in stock option expensing.

Cal-Maine Foods, ((CALM)), egg producer, reported Q4 loss of a penny per share, narrower than a loss of 28 cents a share a year-ago. Sales advanced to $129.4 million from $81.5 million in the same period a year earlier. During the last year, the company said that egg supply has been greater than demand for most of the time. This has resulted in low egg prices. The company was pleased with its net results in light of market conditions.

Humana Inc, ((HUM)), health-benefits provider, said Q2 net income advanced to $ 53 cents a share, from 49 cents a share a year earlier on a better-than-expected performance from the group''s Medicare advantage plan. The company topped analysts’ forecast for earnings of 35 cents a share. Revenue climbed 53% to $5.4 billion.

HSBC Holdings, ((HBC)), banking services company, reported that first-half net profit advanced 15% to $8.73 billion as total operating income jumped 15% to $34.33 billion. Pretax profit soars 18% to $12.52 billion, topping analyst forecast of $11.47 billion. HSBC posted a rise in pretax profit across all its major regions, with North American pretax profit rising 15.1% to $4.27 billion and European pretax profit up 24.7% at $3.6 billion. In Hong Kong, pretax profit gained 9.7% to $2.65 billion. The bank added it saw strong momentum from its corporate and investment banking division, where pretax profit rose 37%.

Statoil ASA, ((STO)), Norwegian oil company, reported Q2 net profit surged 44% to NOK9.7 billion ($1.56 billion), powered by a 33% improvement in oil prices, a 34% rise in natural gas prices and improved downstream results. The company missed analysts’ forecasts of NOK10.32 billion. Production slid 5% to 1.08 million barrels of oil equivalent a day on an expected decline from mature fields and an unplanned shutdown at Visund.

ABN Amro Holdings NV, ((ABN)), Dutch banking group, reported that Q2 net profit jumped 23.2% to 1.22 billion euros ($1.55 billion) as total operating income gained 20.9% to 5.84 billion euros. The company beat analysts’ forecasts for net profit in a range of 1.09 billion euros to 1.18 billion euros. The bank also added it has agreed to sell its Bouwfonds division to Rabobank and SNS Reaal NV for a total of 1.69 billion euros, which will result in a net gain of at least 350 million euros.


[R]8:00AM Japanese automakers produced more vehicles abroad than in Japan.[/R]
The Japan Automobile Manufacturers Association said that for the first time the Japanese automakers produced more vehicles overseas than they did at home during a fiscal year. Japanese automakers produced 10.93 million vehicles abroad in fiscal year 2005, while they made 10.89 million vehicles in Japan. The overseas production data by Japanese automakers, including Toyota Motor Corp., Nissan Motor Co., Honda Motor Co. and other manufacturers, was up 10.6% from 9.88 million vehicles in fiscal 2004.

For June, the production of cars, trucks and buses in Japan climbed 7.2%, compared to last-year same period, marking the eighth straight month of rises, the association reported. Vehicle output increased to 1.02 million vehicles in June from 951,206 vehicles a year earlier, it said. Domestic vehicle demand in June totaled 509,924, down 1.5% from a year earlier. Japan''s exports of cars, trucks and buses rose 14.6% in June, rising for the 11th straight month.

Japanese automakers have been boosting market share in the U.S. and other key global regions as surging oil prices make their fuel-efficient models more attractive to consumers. Profit at Honda Motor Co. for the second quarter soared 30% as its global vehicle sales jumped 6.7%. Nissan Motor Co. reported a 4.2% rise in quarterly profit but acknowledged it was selling fewer vehicles around the world because of a dearth of new models.


[R]7:30AM Asian stocks finish higher on a positive earnings results note.[/R]
Asian markets ended higher on Monday. The Nikkei 225 Average closed up 0.74% to 15,456.81, the Japanese benchmark''s third straight gain. The Japanese government announced Monday morning that June industrial production gained a stronger-than-expected 1.9% on month. On the corporate front, Toshiba was up 1.64%. It was to announce earnings Monday after markets close. NEC advanced 2.9%.

Toyota Motor advanced 1.16%. The car maker reports earnings on Friday. Last week, Honda Motor reported a record profit for the April-June quarter. Hitachi was up as much as 1.24%. The company was due to announce earnings today.

Hong Kong stocks also advanced, boosted by U.S. markets and as easing interest-rate fears prompted buying. The benchmark Hang Seng Index added 0.1% to close at 16,971.34, stretching the index''s winning streak to six. South Korea''s Kospi index advanced 0.96% to a two-month high. Australia''s S&P/ASX 200 gained 1.11%. Samsung Electronics, the largest exporter in Korea, gained 2.17%.


[R]6:30AM Europe falls slightly on mixed earnings results.[/R]
European markets fell slightly by mid morning. London’s FTSE 100 slipped 0.3% to 5,958.9, while Frankfurt’s Xetra Dax shed 0.2% to 5,694.92 and in Paris, the CAC 40 fell 0.2% to 5,020.58. On the corporate front, Dutch banking group ABN Amro Holdings dropped 2.8% after saying that provisions for bad loans soared to 430 million euros in the second-quarter, from 62 million euros a year ago, largely due to rising provisions for consumer loans. Profit climbed 23.2% to 1.22 billion euros ($1.55 billion).

U.K. media and publishing group Pearson advanced 1.9% after its adjusted operating profit gained 57% to 73 million pounds, helped by its Penguin book publishing arm and the FT Group. Spanish infrastructure firm Ferrovial, haiving recently won a bid battle to buy British airports operator BAA, announced Monday that it advanced 2.1% after reporting first-half net profit rise of 19.8% to 237.4 million euros ($302.8 million).

Dutch delivery services group TNT gained 3.4% after raising its margin guidance for 2006 and saying it expects to sign an agreement to sell its Logistics division before the end of the third quarter.

Oil prices gained 10 cents in electronic trading to $73.34 a barrel as unrest continued over the weekend in the Middle East. Gold gained London where the precious metal for immediate delivery advanced $2.13, or 0.3%, to $636.88 an ounce.

The euro was flat against the dollar Monday, holding gains it made at the end of last week after data showed a sharp slowdown in U.S. economic growth. The European currency bought $1.2753 in early European trading, unchanged from its level in New York late Friday. The British pound edged down to $1.8629 from $1.8634. The dollar dipped against the Japanese currency, falling to 114.34 yen from 114.70 yen.