Techs Sell-off,Treasury Yield jumps to 4%

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

Then there is trade deficit. In a long running U.S. trade deficit, April deficit of $57 billion was the fourth largest deficit on record on jump in oil imports and 14% rise in imports from China. U.S. registered deficit with China, Japan, Mexico, Canada and EU. Americans love to import more and more as April import jumped 4.1% and export rose 3%. Separately China released $9 billion trade surplus, last night and crossed Japan as the third largest exporter in the world.

Today’s session was dominated by trade report and volatility in oil price. April trade deficit was 12% up from March deficit due to rise in energy price. Oil import constitutes 1/3rd of the April deficit and 2/3rd of the U.S. oil consumption. At the current rate the annual deficit will reach $700 billion by the end of the year 2005.

Bond market yield reached 4% on the back of trade deficit number which market was expecting at $58 billion. The dollar rose and bond market fell on the news.

Commerce Department reported 12% jump in April trade deficit of $56.96 billion compared to deficit in March. The import rose 4.1% in April and export rose 3%. The year-to-date trade deficit is running ahead by 11% to the year 2004. The commerce department report is summarized below. The oil and energy related import rose to $19.6 billion roughly 33% of total deficit. Oil prices for the month of April were $44.76 per barrel.

Oil and metals markets diverged in different directions. Oil traders worried of the rain storm in the gulf coast and its impact on the refineries output. The oil traded down 74 cents at $53.54 per barrel. Gold rose $3.20, copper rose 1.55 cents, silver rose 1.8 cents.

Shares in the automotive sector traded higher on the strength in GM stock. GM closed up 8.5% after trading as high as 10% to $35 lifting shares of Ford, Visteon, Delphi, Lear, and Johnson control.

Shares of Cascade Corp jumped $8 to $41.63, top percentage gainer on NYSE after it reported 48% jump in 1Q earnings on last night. The fork lift and attachment maker is benefiting from lower dollar and strong demand for its products in the domestic and export markets reported 95 cents against estimates of 55 cents on 22% rise in revenue.

Shares of Retail Ventures declined more than 8%, largest percentage decliner on NYSE on earnings report. The company reported 1Q loss of 32 cents vs. 6 cents a year ago. Same-store sales at its Value City retail store declined by 7.9%, at Filene’s Basement increased by 2% and at DSW stores increased by 4.4%.

Intel shares fell this morning by 63 cents. Last night Intel tightened its revenue forecast for the 2Q between $9.1 and $9.3 billion and raised gross margin expectations on the strength in demand for notebook computers. Intel shares have jumped 20% since mid-May.

Shares of Harris Corp, maker of war zone radio and communication equipment maker, jumped 12%. The company reported that its earnings for the fiscal 2006 will be higher than originally estimated on strong demand for Falcon brand radio. The company raised estimates to $1.73/78 from $1.63/68 for the fiscal year 2006 and revenue to grow at least by 10% rather than 8% - 10%.

President and COO of Nortel Networks resigned after citing differences with current CEO’s direction and management style.

Citigroup agreed to pay $2 billion to settle class action law suit stemming from sales of Enron stocks and bonds during Sept 9, 97 and Dec 2, 01. Citigroup stated that it did not commit to any violation of law and has agreed to the payment only to avoid protracted lawsuit related to this matter.

For the month of May China posted $9 billion trade surplus. For the five months ending May 2005 with jump of 30% in exports and 15% in imports. EU, U.S. and Japan are three largest trading partners respectively of China.

Asian markets finished up on favorable news from the chip sector. Chip maker Intel boosted its second quarter guidance and National Semiconductor reported fourth quarter 40% income increase. This raised Japanese stocks by 1.3% South Korea index rose 0.3%, and in the Philippines advanced 2.05%. China failed to gain on the good news and fell 2.0%.

European stocks closed up on strong chip sector after Intel lifted its second- quarter sales outlook. France's index added 0.7% and that of Germany finished 0.5% up and that of U.K. gained 0.4%. In currency markets the euro was slightly down against the U.S. dollar at $1.2127, the pound also traded down at $1.8119. Crude oil futures in NY have been volatile during the day's trading.

Polo Ralph Lauren, apparel designer, posted strong 4Q earnings dropped to 22 cents vs. 75 cents per share a year ago on legal and restructuring charges missing estimates of 80 cents a share. Same-store sales were 4.2% down, but grew 4.1% after accounting for an extra selling week in the prior- year same quarter. The stock is up $1.95 to $42.51.

LSI Logic, chip maker, lifted its 2Q revenue outlook on strong storage component growth. According to the company’s forecast 2Q earnings will be in the range of 5 and 7 cents a share meeting analysts’ estimates of 7 cents a share. In the morning trading stock rose 3.3 % to $7.86.


APRIL TRADE REPROT

The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that total April exports of $106.4 billion and imports of $163.4 billion resulted in a goods and services deficit of $57.0 billion, $3.4 billion more than the $53.6 billion in March, revised. April exports were $3.1 billion more than March exports of $103.4 billion. April imports were $6.5 billion more than March imports of $156.9 billion.

In April, the goods deficit increased $3.3 billion from March to $62.2 billion, and the services surplus was virtually unchanged at $5.3 billion. Exports of goods increased $3.0 billion to $74.5 billion, and imports of goods increased $6.3 billion to $136.7 billion. Exports of services increased $0.1 billion to $31.9 billion, and imports of services increased $0.1 billion to $26.6 billion.

In April, the goods and services deficit was up $8.6 billion from April 2004. Exports were up $12.0 billion, or 12.7 percent, and imports were up $20.5 billion, or 14.4 percent.

The April (and March) figures showed surpluses, in billions of dollars, with Hong Kong $0.9 (for March $0.9), Australia $0.7 ($0.8), Singapore $0.3 ($0.9), and Egypt $0.1 ($0.1).

The April (and March) deficits were recorded, in billions of dollars, with China $14.7 ($12.9), Europe $11.8 ($10.9), the European Union $9.3 ($9.3), Japan $7.2 ($7.8), OPEC $7.1 ($6.6), Canada $5.4 ($5.0), Mexico $4.4 ($4.3), Korea $1.3 ($1.3), Brazil $0.8 ($0.7), and Taiwan $0.7 ($0.7).