Wall Street Defiant To Terror Plot

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

As market reached close Dow gained 40.74 points, Nasdaq was up 10.33, and S&P rose 5.30. Stocks fell in morning trading after a terror plot aimed at three airlines was foiled by local authorities. Motivated by falling oil prices and strong earnings, the market recovered slightly in the afternoon. Target announced better than expected Q2 earnings of 70 cents a share up from 61 cents a share in the year-earlier. Expedia reported Q2 earnings of 27 cents a share up from 22 cents a share a year ago.

[R]4:05PM Strong earnings lent support to markets despite terror plot against airlines.[/R]

-Yield on 10-year bond closed at 4.939% and 30-year bond closed at 5.059%.
-Crude oil lost $2.35 to close at $74.00.
-Gold lost $15.80 to close at $639.70.

-Asian Markets were mostly down, being led by Indonesia which closed lower at 2.00%. Japan lost 0.16%. Malaysia gained 0.18%.

-European Markets closed lower, led by Norway which declined 1.42%, and Germany which lost 1.26%.

-Latin American Markets were mixed, led by a 0.22% gain in Chile. Mexico lost 0.34%. Argentina declined 0.84%.


[R]12:30PM European markets closed sharply lower.[/R]
European markets ended deeply in the red as a terror plot targeting commercial airliners from Britain to U.S. built on recent market concerns about interest rates and oil. European airlines were hard hit, with British Airways falling 5.1%, EasyJet, down 2.1%, and Ryanair, down 1.5%. Travel company TUI dropped 4.1% and Air France-KLM fell 3%. Weakness in the telecom sector also contributed to the negative sentiment, with Deutsche Telekom down 7.5% after the telecommunications company said Q2 profit dropped 14% and cut its profit outlook for the next two years. The German DAX 30 was the biggest decliner, down 1.3%, followed by the French CAC 40, down 1%, and London FTSE 100, down 0.6%.

Oil prices dropped more than $1 after the British authorities reported they thwarted a terror plot to blow up aircraft from Britain to U.S. Light crude September delivery slipped $1.25 to $75.10 a barrel. London Brent lost 88 cents to $76.40. The dollar advanced versus major currencies. The euro traded at $1.2763, down from $1.2840. The dollar bought 115.51 yen, up from 115.13. The British pound stood at $1.8908, down from $1.9049. European gold prices declined. In London the precious metal traded at $640.70, down from $652.90 per ounce. In Zurich gold traded at $639.98, down from $651.95. Silver closed at $12.15 down from $12.52.


[R]11:30AM Averages moved slightly higher.[/R]
Despite the news of a terror plot targeting commercial airlines which added to recent concerns about inflation, interest rates and oil, investors didn’t turn to a heavy sell-off, but bid stocks slightly higher instead. On Thursday, airline stocks moved sharply lower, but strong earnings reports from Dow component American International Group Inc., Target Corp., Viacom and others lent support to U.S. stocks. A considerable decline by crude prices also supported sentiment. Gains by semiconductor stocks and healthcare providers also helped to lift the major averages into positive territory.

Among companies reporting earnings, AIG ((AIG)) gained 3% on profit beating estimates. Viacom Inc. ((VIA)) advanced 7.5%. Retailer Target Corp. ((TGT)) rose 4% on a 13% earnings rise. In late morning trading, the Dow Jones industrial average rose 19.29, or 0.17%. The Standard & Poor''s 500 index added 1.41, or 0.11%, and the Nasdaq composite index gained 3.33, or 0.16%.The yield on the benchmark 10-year Treasury note held steady at 4.94% from late Wednesday.


[R]10:30AM The Indian Sensex closes flat amid volatile trading.[/R]
The Sensex in India ended the trading almost flat today, up 4 points, 0.04%, at 11,149.17. It moved in a range of 161 points between the high and the low of the day. The market-breadth on BSE was strong, as1,543 shares rose, just 878 declined and a total of 81 stocks remained unchanged. The total turnover on BSE came to Rs 3,099 crore, higher than Wednesday''s Rs 2,899 crore. Among the Sensex constituents, 20 declined while 10 advanced.

Bajaj Auto led the decliners, down 2.60% to Rs 2615, together with Satyam Computers, 1.52% to Rs 753.50 and ITC declining 1.93% to Rs 175.30. Other decliners included Ranbaxy losing 1.76% to Rs 392.95 and ONGC giving up 1.30% to Rs 1,188.25. Index large-cap Reliance Industries) slipped 0.71% to Rs 979.40 on 12.62 lakh shares, traded on BSE.

HDFC led the gainers, adding up 2.88% to Rs 1,275, with Cipla also up 1.92% to Rs 236.50, Wipro rising 1.60% to Rs 514 and ICICI Bank gaining 1.20% to Rs 597.15. Aluminium large-cap, Hindalco, rose 2% to Rs 167.30 on 17.79 lakh shares. Reliance Industries was the top-traded stock on BSE with a total turnover of Rs 123.53 crore followed by Titan Industries, Rs 90.71 crore and ICICI Bank, Rs 90.18 crore.

Shares from the cement sector witnessed renewed buying. ACC was up 0.65% to Rs 872.95, India Cement gained 3.40% to Rs 190.80, UltraTech Cement advanced 0.74% to Rs 736 and Shree Cements moved up 1.60% to Rs 958.45. Tea plantation shares surged today, boosted by reports of a jump in tea exports in June 2006. Goodricke Group gained 20% to Rs 86.45, Bombay Burmah was up 10% to Rs 327.05, Dhunseri Tea added up 10% to Rs 71.65, Harrisons Malayalam surged 10% to Rs 82.65, Jayshree Tea moved up 10% to Rs 108) and Warren Tea gained 10% to Rs 78.45.

Other stocks also surged. Gujarat Flourochemicals soared 10% to Rs 468.30 on reports that it has agreed to sell carbon credits worth Rs 1,000 crore. The company will probably get Rs 1,000 crore over three years through its recent carbon credit deal with Noble Carbon Credits, Singapore, a part of Asia''s largest diversified commodities firm, Noble group. The deal will rake in Rs 350 crore for GFL in the first year itself.

Sunil Hitech jumped 6.30% to Rs 97.05 on reports that the company has secured a Rs 5.35 crore contract from Tata project for fabrication and erection of structural steel for its plant at Giral, Rajasthan. Micro Technologies surged 10%, to Rs 178.50 on striking an agreement with Girvan Institute of Technology to introduce various security products in the US. Girvan will customize products of the company to meet huge demand for homeland security products in the US.


[R]9:45AM Stocks opened in the negative.[/R]
Wall Street opened in the negative, following European markets decline after British officials said they had thwarted a terror plan to destroy numerous commercial airliners. Following the news, shares of airline stocks sharply dropped, while oil prices declined on expectations that reduced travel in the coming weeks and months would curtail demand for fuels. British Airways PLC ((BAB)) dropped 4.1%, while Continental Airlines Inc.((CAL)) fell 3.4%, United Airlines parent UAL Corp. ((UAUA)) slid 3.3%, and American Airlines parent AMR Corp. ((AMR)) lost 4.3%.
In earnings news, American International Group Inc. ((AIG)) rose 2.2% after the insurance company reported a 29% profit drop in Q2, still beating forecasts. Viacom Inc.''s ((VIA)) rose 6% after posting quarterly results above expectations, helped by the acquisition of the DreamWorks animation studio. Retailer Target Corp. ((TGT)) posted 13% rise in quarterly profits on sales growth, sending company’s shares up 2%.
The news of terrorist attacks overshadowed mixed economic data. The nation''s trade deficit slipped 0.3% in June due to strong sales of U.S. products abroad, while initial jobless claims moved slightly higher. In the first hour of trading, the Dow Jones industrial average fell 15.21, or 1.14%.The Standard & Poor''s 500 index lost 2.95, or 0.23%, and the Nasdaq composite index lost 10.58, or 0.51%.The yield on the benchmark 10-year Treasury note held steady at 4.94% late Wednesday.


[R]9:00AM Stock futures pointed to a lower start.[/R]
U.S. stock futures indicated a lower market opening Thursday after British authorities reported they thwarted a plot to blow up several aircraft mid-flight between Britain and the United States. Airlines canceled hundreds of flights in and out of London. The U.S. government raised its threat level for commercial flights to Britain to ‘severe’-its highest level. Britain''s national security threat level was raised to ‘critical’ from ‘severe.’

Before the opening bell, shares of Continental Airlines ((CAL)) fell 3.1% to $23.46 on the Inet; while in Europe major carriers'' shares dropped about 4%. In other trade before the bell, shares of ImClone Systems Inc. ((IMCL)) slipped 8.6% to $29.58 after the company said its board of directors completed a review of its strategic alternatives and the company decided to remain independent. Insurer American International Group ((AIG)) reported quarterly earnings declined 29% to $1.21 per share, down from $1.71 a year ago. Among retailers reporting today, JC Penney Co. Inc. ((JCP)) posted surging Q2 profit to 76 cents a share from 50 cents a year ago, helped by improving sales of jewelry, accessories and women''s apparel. Company’s quarterly results exceeded estimates of 73 cents a share. Standard & Poor''s 500 futures were down 7.1 points, below fair value. Dow Jones industrial average futures were down 47 points, and Nasdaq 100 futures were down 8 points.


[R]U.S. trade deficit narrowed in June.[/R]
Thursday morning, the Department of Commerce released its report on U.S. international trade in goods and services in the month of June. The report showed that the U.S. trade deficit narrowed compared to a revised reading for May. The report showed that the trade deficit narrowed to $64.8 billion in June from a revised $65.0 billion in May. Economists had expected the deficit to widen to $64.5 billion compared to the $63.8 billion originally reported for the previous month. The narrower deficit in June compared to the previous month came as an increase in exports outpaced an increase in imports. The Commerce Department said that the value of exports rose 1.9 percent to $120.7 billion in June from $118.4 billion in May, while the value of imports rose 1.1 percent to $185.5 billion from $183.4 billion in the previous month. The report also showed that the goods deficit narrowed to $70.4 billion in June from $71.0 billion in May, while the services surplus narrowed to $5.6 billion from $6.0 billion. Additionally, the Commerce Department said that the politically sensitive trade deficit with China widened to $19.7 billion in June from $17.7 billion in May.

[R]Initial jobless claims rose above estimates.[/R]
The Department of Labor released its report on initial jobless claims in the week ended August 5 on Thursday, showing that jobless claims came in above economist estimates. At the same time, the report showed a decrease by the less-volatile four-week moving average. The report showed that jobless claims rose to 319,000 from the previous week''s revised figure of 312,000. Economists had expected claims to come in unchanged compared to the 315,000 originally reported for the previous week. As mentioned above, the Labor Department also said that the four-week moving average fell to 308,750 from the previous week''s revised average of 312,500. The report also showed that continuing claims in the week ended July 29 rose to 2.480 million from the preceding week''s revised level of 2.432 million.


[R]8:00AM Airlines and travel companies dropped.[/R]
Airlines and travel companies steeply dropped Thursday after British authorities reported they held 21 people in custody after a terrorist plot to blow up several aircraft in flight between the U.S. and Britain. The plot had targeted United Airlines ((UAUA)), American Airlines ((AMR)) and Continental Airlines Inc. ((CAL)), according to the Associated Press, citing two U.S. counterterrorism officials. Britain''s national security threat level was raised to ‘critical’ from ‘severe.’ The U.S. government raised its threat level for commercial flights to Britain to its highest level.

Shares of U.S. airlines trading in Europe tumbled. American Airlines parent AMR Corp.''s shares fell 12.8% to 17.68 euros ($22.73). Shares of UAL Corp., the parent of United Airlines, fell more than 4% to 18.32 euros ($23.55). Shares of British Airways PLC ((BAB)) made the steepest decline among European airlines because of its heavy exposure to the trans-Atlantic route. Its shares fell 3.9% to 374.50 pence ($7.15) on the LSE. BA said it was experiencing severe operational delays Thursday and it was likely some flights would be canceled. Budget airline EasyJet PLC fell 2.6% to 411.75 pence ($7.84), while low-cost carrier Ryanair Holdings PLC lost 2.8% to 7.32 euros ($9.41). Among other airlines, Air France-KLM was down 2.8% to 19.19 euros ($24.68), while Lufthansa was down 3.2% at 14.16 euros ($18.21).


[R]7:30AM Asian markets slip, Japan lower as Sony and Sharp plunge.[/R]
Asian markets were lower in Thursday trading. The Nikkei finished the day down 0.16% at 15,630.91. Trading was cautious as investors awaited quarterly GDP data, which will be released Friday. Electronics exporters Sony Corp. and Sharp Corp. both declined about 1%. Mobile service provider NTT DoCoMo advanced 1.8% on hopes the company will gain subscribers after number portability regulations go into effect in October.

Suzuki Motor moved up 1.6% after saying Wednesday it was lifting its full-year sales outlook to 3 trillion yen from 2.8 trillion yen. The company also said it would build a new plant in Japan to help satisfy strong demand for small cars. It will be Suzuki''s first new Japanese factory in more than three decades. Nissan Motor advanced 0.5%. Banks also gained, after better-than-expected machinery-order data released Wednesday suggested a strong market for corporate loans. Mizuho Financial Group was up 1.5%.

Hong Kong''s Hang Seng Index fell 0.72% to 17,222.14 as investors took profit on blue chips including China Mobile and Henderson Land. China Mobile, gaining 4.5% Wednesday, shed 1.1%, while Henderson Land sank by 1.7%. South Korea''s Kospi index slipped 0.81% after the country''s central bank raised interest rates at mid-morning, increasing the call-rate target by 0.25 percentage point to 4.5%.

Australia''s benchmark S&P/ASX 200 slid 0.52% after Telstra Corp reported disappointing earnings before the market opened Thursday. Miners BHP Billiton and Rio Tinto slipped as a strike continued at their Escondida copper mine in Chile. Elsewhere, China''s volatile Shanghai Composite index rose 1.74% after Air China''s Shanghai IPO, recently downsized following a weak response from institutional investors, met with healthy retail demand.


[R]6:30AM European stocks fell Thursday morning on security issues.[/R]
European markets were lower Thursday morning. The FTSE 100 in London dipped 1.4% to 5,781.2, the Xetra Dax sank 2.1% to 5,585.72, and the CAC-40 fell 1.5% to 4,952.28. British Airways shed 4%, Ryanair dropped 3.3% and Lufthansa fell 3.8% on security uncertainty and the impact on travel sentiment as UK airports have introduced a ban on all hand baggage on aircraft leaving the UK, on government advice. Ferrovial, owner of UK airports operator BAA, declined 3%.

Tui, the German tourism and shipping group, sank 6.5 per cent to €14.54 as it warned costs at its shipping division would hit this year’s earnings. Securitas, the security services group, fell 9.7 per cent to SKr120.50 after reporting second quarter earnings fell well below forecasts. Deutsche Telekom lost 8.2% after Europe’s biggest telecom group issued a profits warning and reduced its targets for 2006 and 2007. The telecom sector suffered a blow, falling 3.3 %, with Telecom Italia down 2.8%, France Telecom off 3.1% and BT down 2.6%.

Crude oil prices changed little Thursday as the market remained wary of factors influencing supply in the United States, Africa and the Middle East. Light, sweet crude for September delivery gained 9 cents to $76.44 a barrel in electronic trading on the NYME. September Brent crude futures on London''s ICE Futures rose 25 cents to $77.53 a barrel. Gold opened Thursday at a bid price of $653.10 a troy ounce, up from $652.90 late Wednesday.

The euro gained slightly against the U.S. dollar Thursday as traders absorbed a decision by the U.S. Fed to hold off on any interest rate increases. The euro bought $1.2889 in morning European trading, up from $1.2861 in New York late Wednesday. The British pound edged upward to $1.9074 from $1.9049. The dollar was marginally lower against the Japanese currency, slipping to 115.06 yen from 115.23 yen.