Stocks Decline On Oil Rise

123jump.com Staff
07 Aug, 2006
New York City

As market reached close Dow lost 20.49 points, Nasdaq was down 13.14, and S&P declined 3.31. Inflation worries due to record level oil prices prompted moderate declines in the market. El Paso Corp reported Q2 earnings of 21 cents a share after paying dividends compared to a year ago loss of 38 cents a share. AES Corp posted Q2 earnings of 25 cents a share compared to year ago earnings of 13 cents a share. Oil gained $2.22 to close at $76.98.

[R]4:00PM BP announces it will shut down its Prudhoe Bay oil field in Alaska.[/R]

-Yield on 10-year bond closed at 4.92% and 30-year bond closed at 5.01%.
-Crude oil gained $2.22 to close at $76.98.
-Gold gained $3.50 to close at $653.10.

-Asian Markets were mixed, being led by Indonesia which closed ahead at 1.02%. Japan declined 2.23%. S. Korea lost 1.15%.

-European Markets closed lower today, led by France which lost 1.68%, and Germany which declined 1.68%. Norway gained 0.32%.

-Latin American Markets traded lower, led by a 1.49% decline in Argentina. Mexico lost 0.25%.


[R]12:30PM European markets closed sharply lower on higher oil.[/R]
European markets finished steeply lower Monday as a spike in oil prices and concerns over the U.S. Fed Reserve’s decision on interest rates generated negative sentiment. Crude oil jumped over $1 after oil giant BP said it''s shutting down its Prudhoe Bay oil field in Alaska due to a corroded pipeline and a small leak. Shares of the company slipped 2.1% in London. The German DAX 30 tumbled 1.7%, followed by the French CAC 40, also down 1.7%, while London FTSE 100 lost only 0.9%.

Oil prices jumped $2 Monday on key oilfield shutdown in Alaska and Middle East concerns. Light crude September delivery climbed 2.8% to $76.85 a barrel. London Brent surged $1.77 to $77.94. The dollar traded mixed versus major currencies. The euro traded at $1.2861, down from $1.2875. The dollar bought 114.98 yen, up from 114.39. The British pound stood at $1.9095, up from $1.9082. European gold prices were mixed. In London the precious metal traded at $650.50, up from $648.50 per ounce. In Zurich gold traded at $650.38, down from $651.25. Silver closed at $12.40, up from $12.36.


[R]11:30AM Commodities stocks helped limit losses.[/R]
Surging oil has kept stocks under pressure since opening hours, but selling pressure remained subdued on cautiousness ahead of the Fed Reserve''s decision on interest rates on Tuesday. In late morning trading, the Dow Jones industrial average fell 37.14, or 0.33%. The Standard & Poor''s 500 index lost 4.24, or 0.33%, and the Nasdaq composite index shed 13.95, or 0.67%. Bonds lost ground as well in advance of the Fed meeting, with the yield on the benchmark 10-year Treasury note rising to 4.91% from 4.9% late Friday.

Airline and other transportation stocks stood out as the biggest decliners amid concerns about rising fuel costs. Notable losses by some biotechnology, disk drive, and defense stocks also helped to lead the major averages lower. Celgene ((CELG)) dragged the biotech sector lower, falling down 4.4%. At the same time, commodities stocks posted gains, helping to limit the downside move. Shares of BP ((BP)) lost 1.8% on the Prudhoe Bay shutdown, which would take away 2.5% of the company''s total daily production. However, rival oil producers gained on hopes to benefit from the higher prices. Hess Corp. ((HES)) rose 0.6%, while Chevron Corp. ((CVX)) climbed 0.65%.



[R]10:30AM The Sensex falls in a volatile trade due to oil prices hike and U.S. rates.[/R]
The Indian Sensex fell Monday 53.87 points, or 0.50%, to finish at 10,812.64. It had opened slightly lower at 10,863.28 and traded in a range of 100 points. The turnover on BSE was Rs 1,883 crore much lower than Friday''s Rs 2,551 crore. The market-breadth was negative as 1,233 shares declined and 1,151 advanced and 96 shares were unchanged. Among the Sensex constituents, 21 declined while only 9 advanced.

ICICI Bank led the gainers, moving up 4.15% to Rs 570 on 4.60 lakh shares. on expectations that the U.S. Federal Reserve may pause its rate hiking campaign gave the stock a lift. BHEL rose 1.52% to Rs 2,182.50 on 1.86 lakh shares before its board meeting on August 8th, 2006 to consider a bonus issue and a stock-split proposal. Cipla also gained 0.94% to Rs 230, as well as NTPC notched up 0.80% to Rs 120.50 and State Bank of India edged up 0.63% to Rs 813.

Hero Honda led the decliners, plunging 3.10% to Rs 667.20 on 1.07 lakh shares, due to concerns of rising oil prices. Other auto stocks als o sank, like Maruti Udyog declining 2.30% to Rs 765.90 , Tata Motors losing 1.80% to Rs 746 and Bajaj Auto falling 1.21% to Rs 2582. Index large-cap Reliance Industries slipped 1.40% to Rs 954 on 12.98 lakh shares. ONGC declined 1.69% too. Reliance was the most active stock on BSE with a total turnover of Rs 124.25 crore followed by SBI with Rs 73.01 crore and HDFC bank with Rs 64.69 crore.

IT shares lost ground too. Satyam Computers was down 2.71% to Rs 734, Wipro lost 2.63% to Rs 494 and TCS shed 1.26% to Rs 938.

Among other stocks, Unity Infraprojects soared 19.30% to Rs 415.65 on 4.74 lakh shares and Godawari Power jumped 7% to Rs 73.40. Aban Loyd Chiles Offshore gained 2.64% to Rs 1,026 after its off-shore oil rig Aban VII was hired by ONGC Videsh for development at Offshore Qatar for approximately four months.

Jet Airways edged up 0.43% to Rs 517 following reports that it has hiked fuel surcharge by Rs 150 for domestic travel, in business as well as economy class. Era Construction India added up 3.50%, to Rs 230 on being awarded a construction deal worth Rs 55 crore by Pratappur Sugar & Industries.

Panacea Biotec sank 4% to Rs 300 despite being granted a patent by the Indian Government. The stock witnessed a block deal of 1.68 lakh shares at Rs 309.50 per share by 11:11 IST.


[R]9:45AM Stocks opened in the negative.[/R]
Stock markets opened in the negative Monday as a sharp increase by the price of oil generated negative sentiment, adding to investors’ concerns about another rate hike from the Fed as rising energy prices could lead to broader inflation or a halt to economic growth.

The oil prices jump contributed to a significant weakness in the oil-sensitive airline sector, with the Amex Airline Index currently down 2.5%. At the same time, oil service stocks benefited from the price increase, sending the Philadelphia Oil Service Index up 1%. The biotechnology sector posted some weakness, dragged by Vertex ((VRTX)), Celgene ((CELG)), and Myogen ((MYOG)).

AES Corp. ((AES)), power company, jumped 9.4% after reporting Q2 net income almost doubled to 25 cents a share from 13 cents a share a year ago on 15% revenue growth, beating estimates. El Paso Corp. ((EP)) fell 5%, despite posting a profit after a year-ago loss. Shares of BP ((BP)) dropped 2% on the Prudhoe Bay shutdown. In midmorning trading, the Dow Jones industrial average fell 21.37, or, 0.19%. The Standard & Poor''s 500 index lost 2.38, or 0.19%, and the Nasdaq composite index dropped 7.80, or 0.37%. Bonds lost ground as well in advance of the Fed meeting, with the yield on the benchmark 10-year Treasury note rising to 4.92% from 4.9% late Friday.


[R]9:00AM Stock futures dropped on surging oil.[/R]
U.S. equity futures moved lower on fears consumer spending could be hurt by a spike in energy prices following a shutdown of a major oil field in Alaska. Crude oil September delivery jumped 2% to $76.25 a barrel after British oil company BP PLC discovered a damaged pipeline at Alaska''s Prudhoe Bay and began shutting down the biggest oil field in the US. As well as on the impact of surging oil prices, investors will also focus on the economy, awaiting Tuesday''s Federal Reserve meeting. The Fed is widely expected to pause its two-year monetary tightening campaign.

Shares of energy drink maker Hansen Natural Corp. ((HANS)) tumbled 16% on the Inet as the company''s earnings missed analysts'' average estimate. Energy company El Paso Corp. ((EP)) may draw attention after it posted a quarterly profit versus a year-earlier loss, supported by gains from a hedging program. Apple Computer Inc. ((AAPL)) shares are seen in focus again on news that several options grants to top executives at Apple were dated just before sharp increases in its stock between 1997 and 2001. In news of deals, AmerisourceBergen Corp ((ABC)) and Kindred Healthcare Inc. (KND)) agreed to form a new public company by combining their institutional pharmacy businesses. Standard & Poor''s 500 futures were down 5.8 points, below fair value. Dow Jones industrial average futures were down 46 points, and Nasdaq 100 futures were down 7.75 points.

Southern Union, ((SUG)), natural gas provider, reported Q2 earnings of 8 cents a share, down from a profit of 10 cents a share a year-ago, after the payment of preferred dividends in each period. On a continuing operations basis, the company earned 10 cents a share, down from a profit of 12 cents a share last year. Operating revenue advanced to $552.4 million from $195.2 million a year ago. The company missed analysts’ estimate for a profit of 22 cents a share. The company also affirmed its outlook for earnings of $1.70 to $1.90 a share for 2006, excluding charges related to the sale of its PG Energy unit and the Rhode Island operations of New England Gas Co.

Performance Food Group Co., ((PFGC)), food distributor, reported a Q2 decline, hurt by a year-ago gain from the sale of its fresh-cut business. The company''s net income fell to 35 cents a share, from $4.28 a share. On a continuing operations basis, it earned 26 cents a share in Q2 of 2005. Net sales from continuing operations slipped to $1.45 billion from $1.46 billion. The company matched analysts’ views for it to earn 35 cents a share. The company said it expects Q3 earnings per share to be in the range of 32 cents to 36 cents.

El Paso Corp, ((EP)), energy provider, reported Q2 earnings of $150 million, swinging from a loss of $238 million a year-ago. After payment of preferred dividends, the company posted net income of 21 cents a share, up from a equivalent loss 38 cents a share a year-ago. The latest results include a 2 cents a share gain on derivatives used to hedge the price risk of natural gas and oil production. Operating revenue reached $1.21 billion, up from a total of $1.17 billion in the year-ago period. The company topped analysts’ estimates for a profit of 18 cents a share.

McDermott International Inc., ((MDR)), heavy construction company, reported Q2 net income fell to 40 cents a share, from 75 cents a year ago. If not for costs for the early retirement of debt and income from discontinued operations, earnings would have been 71 cents a share. Income from continuing operations came to 28 cents a share. Revenue increased to $1.05 billion from $509.7 million. The company missed analysts’ forecasts for earnings of 53 cents a share.

AES Corp., ((AES)), power company, reported Q2 net income about doubled to 25 cents a share, from 13 cents a share in the year-earlier period. Revenue at the company rose 15% to $3.04 billion from $2.65 billion. The company beat analysts’ forecasts for earnings of 17 cents a share.


[R]8:00AM BP shut down Prudhoe Bay.[/R]
Crude for September delivery jumped 2% to $76.69 a barrel after oil company BP ((BP)) shut down the nation''s biggest oilfield Prudhoe Bay in Alaska, taking 400,000 barrels a day of crude oil off the world market. The reduction represents almost half the total daily production from the North Slope, and about 8% of daily U.S. output, or about 2.6% of U.S. supply including imports, according to data from the U.S. Energy Information Administration. BP officials said they didn''t know how long the Prudhoe Bay field would be shut down, but BP America Chairman and President Bob Malone said Prudhoe Bay will not resume operating until the company and government regulators are satisfied it can run safely without threatening the environment. BP has a 26% stake in the Prudhoe Bay field, meaning its own production would be cut by 100,000 barrels a day, or around 2.5% of the company''s worldwide production. BP''s shares dropped 2% on the LSE.


[R]8:00AM BP shut down Prudhoe Bay.[/R]
Crude for September delivery jumped 2% to $76.69 a barrel after oil company BP ((BP)) shut down the nation''s biggest oilfield Prudhoe Bay in Alaska, taking 400,000 barrels a day of crude oil off the world market. The reduction represents almost half the total daily production from the North Slope, and about 8% of daily U.S. output, or about 2.6% of U.S. supply including imports, according to data from the U.S. Energy Information Administration. BP officials said they didn''t know how long the Prudhoe Bay field would be shut down, but BP America Chairman and President Bob Malone said Prudhoe Bay will not resume operating until the company and government regulators are satisfied it can run safely without threatening the environment. BP has a 26% stake in the Prudhoe Bay field, meaning its own production would be cut by 100,000 barrels a day, or around 2.5% of the company''s worldwide production. BP''s shares dropped 2% on the LSE.


[R]7:30AM Japan falls due to slump in tech stocks and higher oil prices.[/R]
Asian markets finished mostly lower on Monday. Japan''s Nikkei 225 Average ended the day down 2.23% to 15,154.06. Sony Corp. lost 1.74%, Toshiba Corp. sank 1.79%, NEC Corp was off 2.75% and Hitachi Ltd fell 1.85%. Auto makers performed better. Toyota Motor which reported a record quarterly profit on Friday, advanced 0.99% and Honda Motor was up 0.26%.

In Hong Kong, the Hang Seng Index advanced 0.39% to close at 16,953.55. Clothing retailer Giordano International Ltd surged 17.94% after the company confirmed over the weekend that Japan''s Fast Retailing was interested in acquiring a stake. CNOOC Ltd, offshore oil firm, gained 1.35%. Refiner and service-station operator Sinopec Corp. was up 1.16%.

South Korea''s Kospi index lost 1.15%. Samsung Electronics, the country''s largest exporter, fell 1.46%. Hyundai Motor, reporting Monday morning that second-quarter net profit fell 37%, dropped 0.52%.China''s Shanghai Composite settled down 1.45% due to weak demand for the institutional tranche of Air China''s $1 billion IPO suggesting that a wave of enthusiasm over new issues might be easing. Singapore''s Straits Times Index declined 0.17%, while Australia''s S&P/ASX 200 added up a 0.12% gain as commodity-related stocks including Rio Tinto and Woodside Petroleum gained


[R]6:30AM European markets were lower in morning trade due to oil prices rise.[/R]
European markets traded lower in morning sessions on Monday. The FTSE 100 declined 1% at 5,832.1, the Xetra Dax in Frankfurt slipped 1.5% to 5,635.12 and the CAC-40 in Paris was off 1.5% to 4,962.57. BP’s Alaskan closure cut output down by 400,000 barrels a day, 8% of US production, and pushed the price of crude oil back up above $76 a barrel. But despite the surging oil price, the sector was weaker. BP fell 1.8%.

Other oil producers also fell. OMV of Austria shed 0.8% and ENI of Italy sank 0.6%, Statoil of Norway bucked the downward trend gaining 0.6% as well as Neste Oil of Finland adding 0.3%. Low-cost airline EasyJet announced full-year revenues and costs would be slightly higher than expected but maintained its guidance for a 40-50 per cent rise in annual earnings. The company fell 1.2%.

Among insurance companies, Swiss Re was reported to be considering a bid for Scottish Widows, the insurance arm of Lloyds TSB. Swiss Re said it had no comment on the report. Lloyds TSB also declined to comment. LTSB fell 0.8% and Swiss Re shed 0.8%.

Light, sweet crude oil for September delivery was up $1.23 to $75.99 a barrel, while gold dealers in London fixed a recommended price of $647.25 bid per troy ounce at midmorning, down from $648.50 on Friday. The U.S. dollar was higher against most other major currencies in European trading Monday. The euro was quoted at $1.2856, down from $1.2875 late Friday in New York. The British pound bought $1.9058, down from $1.9082, while the greenback purchased 114.94 Japanese yen, up from 114.39.