Chairman's Rally and Intel Revises Revenue Up

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

Fed Chairman's optimistic view on the economy and possiblity of measeured rate increase led markets to a mild rally. Investors viewed National Semi earnins in a positive manner leading a broad rally in the semi conductor sotcks. Luby's Richemont, H&R Block, Navistar were up in the session. The shares of copper and other mining stocks were lower. Oil rallied 3%.

Chairman says everything is OK. But is it ?

Market however found enough reasons in the Chairman’s words at the Senate Banking committee testimony. Earnings from semiconductor sector, strength in oil price, and stronger dollar were the factors influencing the market. Oil closed up $1.74 to $54.28 per barrel.

Fed Chairman Greenspan said that he believes that economy is on a sound footing and interest rates can be raised at a measured pace. The Chairman repeated his comments that housing market is not in a bubble stage but there may local “frothiness” in some markets. Investors took this note in a positive way and rallied the stocks.

Bond market yields were on the rise and 10-year bond rallied to 3.965%, up 3 ticks. Stocks in energy sector were on the rise with jump in oil price but the network storage, semiconductors were trading lower. The semis recovered and rallied on National Semiconductor earnings of 36 cents vs. 24 cents a year ago and optimism related to Intel revenue forecast for the year in the after-market hours.

National Semiconductor reported fiscal fourth quarter earnings of 36 cents vs. 24 cents a year ago on 18% revenue decline. The current report includes tax benefit of $55.9 million tax benefit. The company expects for the current quarter revenue to be flat to down 2% on gross margins similar to the 4th quarter. The stock rallied 8%.

Shares of Boeing Co. are trading near all-time high of $69. Several investors expect the Year-to-date rally of 25% to continue for the rest of the year.

Euro traded this morning at a near nine-month low on comments from Fed Chairman that the U.S. economy is on a sound footing and interest rates can be raised at a measured pace. Dollar gained after a choppy trading in the session against Euro and other European and Asian currencies.

President of Newmont Mining, largest gold producer, sees Gold prices climbing to $525 per ounce by Jan 2006. The decline in dollar value, Central bankers allocating more assets to metal investing, and falling production level will help the price to rise from the current level of $424 per ounce.

Markets in Latin America remain under pressure. Averages in Sao Paulo are down 7% since Monday were down again on the worries that the recent corruption inquiry could lead to more revelation that will damage investors confidence. Mexico City was trading higher with interest in Telmex and airline group Cintra. Averages in Sao Paulo and BsAs are down 0.96% and 2.79% but in Santiago and Mexico City were up by 0.19% and 1.22%.

UPS is trading lower by $1.50 on the downgrade from Morgan Stanley.

In the energy market in the morning trading Crude oil, heating oil and gasoline are trading higher. Crude oil is trading up $1.16 cents to $53.70 per barrel. In metals market gold, silver, copper and platinum are trading lower on the strength in dollar.

Maurice Greenberg, late Wednesday, resigned from the board of AIG, the company which he led for 40 years as CEO and built it into an insurance giant.

Starbucks, coffee shop operator, said that it has raised its stake from 5% to 51% in its Chinese operation. Company currently has 120 stores in China and expects it to be the second largest market after the U.S.

Navistar, truck & specialty vehicle maker, reported 2Q profit rise of 2%, or 70 cents a share vs. 68 cents a year ago on favorable market conditions. Analysts had expected 71 cents a share. Stocks jumped 5.7% to $34.03 in pre-market activity. The company raised its 2005 guidance.

ITT Industries sees earnings higher than previously expected, or $1.28/1.32 per share compared with $1.17 last year. Shares remained unchanged at $93.57 on NYSE.

European averages closed flat as Greenspan comments lifted shares in late evening trading. Chip sector stocks were slightly up on National Semiconductor earnings and optimistic outlook related to Intel announcement. Shares of luxury retailer closed higher on earnings from Richemont.

Richemont, Cartier jewelry maker, posted 1Q sales increase of 15% on higher luxury goods demand. Net income rose 33% to 881 million euro, operating earnings climbed 71% to 505 million euro.

Most Asian markets closed down on cautious trading, technology shares declined as markets in the region waited on the economy briefing from Fed Chairman. Japanese stocks ended 1.1% down, followed by Thailand 1.0% and India 0.37%. However South Korea’s average edged up 1.2% on lower interest rates, shares in China gained 1.1%.