July Retail Sales Jump 1.4%

Elena
11 Aug, 2006
New York City

Stock futures indicated flat to a higher opening Friday as disappointing news from semiconductor companies offset upbeat news from Kohl''s Corp. The specialty department store operator posted Q2 earnings jump of 27.8% to 69 cents per share, up from 54 cents last year on higher revenues, beating estimates. Comparable store sales for the quarter grew 5.5%.

[R]9:00AM Stock futures pointed to a flat opening.[/R]
U.S. stock futures indicated flat to a slightly higher opening of Friday session as disappointing news from semiconductor companies offset upbeat news from Kohl's Corp. Investor optimism on consumer spending was boosted by stronger-than-expected July retail sales which rose 1.4% on higher auto and gasoline sales, beating estimates of 0.8% increase.

Analog Devices Inc. ((ADI)) dropped 10% after the bell Thursday as the chip maker posted weaker-than-expected sales growth. Shares of graphics chip maker Nvidia Corp. ((NVDA)) fell 8% after the company said dates of some stock option grants were incorrect, according to preliminary results of a review.

Shares of Kohl's ((KSS)) rose 4% after the bell Thursday after the department store operator posted a better-than-expected quarterly profit and raised its earnings outlook. Kohl's posted Q2 earnings jump of 27.8% to 69 cents per share, up from 54 cents last year on higher revenues, beating estimates. Comparable store sales for the quarter grew 5.5%. Standard & Poor's 500 futures were up 0.3 point, barely above fair value.Dow Jones industrial average futures were up 2 points, and Nasdaq 100 futures were up 3 points.


[R]Retail sales jumped 1.4% in July, well above expectations.[/R]
Retail sales rose much more than expected in the month of July, according to a report released by the Department of Commerce on Friday. The sales growth was partly due to strong auto and gas station sales. The report showed that retail sales rose 1.4 percent in July following a revised 0.4 percent decrease in June. Economists had expected sales to increase by 0.8 percent compared to the 0.1 percent decrease originally reported for the previous month. A significant increase in auto sales contributed to sales growth, with sales by motor vehicle and parts dealers rising 3.1 percent in July after falling 2.5 percent in June. Auto sales were still down 9.4 percent year-over-year. Excluding auto sales, retail sales still rose by 1.0 percent in July after a revised 0.1 percent increase in June. Ex-auto sales had been expected to increase by 0.5 percent compared to the 0.3 percent increase originally reported for June. The increase in ex-auto sales was partly due to strong growth in sales at gas stations, which rose 2.5 percent in July following a 0.8 percent increase in June. The sales growth at gas stations was partly due to higher gas prices. Strong growth was also shown by electronics and appliance stores, building material and garden supplies dealers, and non-store retailers.


[R]8:00AM Airlines and travel companies rebounded.[/R]
Airlines and travel companies rallied Friday, recovering from sharp losses Thursday when they were hard hit by the discovery of a terrorist plot aimed at trans-Atlantic flights. However, experts repeatedly warned that airlines would likely be hit with higher security costs as airports tighten passenger checks in the long term.

Shares in British Airways PLC ((BAB)), rebounded from yesterday’s declines to gain 0.9% at 373.5 pence (US$7.09; euro5.51) on the LSE. On Thursday BA canceled around 400 flights from Heathrow and Gatwick after the authorities revealed they had thwarted a large-scale terror attack. BA said it expected the majority of its flights to operate on Friday, but warned of delays because of the new security regulations.

Among other European airlines, budget airline EasyJet rose 0.9%, Lufthansa was up 0.8%, while Air France-KLM climbed 1.4 %. Shares of travel companies also gained ground. Package tour operator MyTravel added 0.7%, while cruise line Carnival lifted 0.8%. In contrast, Ryanair Holdings PLC lost 0.5% due to the ban on hand baggage as from the beginning of 2006 the budget airline began charging customers for each bag they checked.


[R]7:30AM Japanese stocks fall as GDP disappoints, wile HK advances.[/R]
Asian markets were mixed on Friday. The Nikkei 225 Average ended the day down 0.42% to 15,565.02. Most Japanese exporters lost, with Honda Motor edging down 1.53% and electronics conglomerate Hitachi Ltd. declining 0.57%. Some telecoms gained, with Japan''''s largest phone company, Nippon Telegraph and Telephone Corp up 1.24%. Internet provider Softbank Corp advanced 1.49%. Financial stocks were lower, with Mitsubishi UFJ Financial Group shedding 1.86%.

In Hong Kong, the Hang Seng Index pulled out a 0.16% gain to close at 17,249.95. New World Development and Henderson Land led the gainers. Cathay Pacific Airways moved up 1.87% on speculation it may gain passengers who shy away from U.S. and European carriers. Earlier in the week, Cathay reported better-than-expected earnings on strong passenger numbers. Consumer goods exporter Li & Fung led advancing Hang Seng Index components, adding 4.72% after reporting stronger-than-expected earnings.

Elsewhere around the region, South Korea''''s Kospi index was down 0.94% as major exporters Hyundai Motor and Samsung Electronics lost ground. Australia''''s benchmark S&P/ASX 200 dropped 0.08%, as telecom giant Telstra fell more than 1% a day after reporting disappointing full-year results. China''''s benchmark Shanghai Composite closed down 0.01% and Taiwan''''s Weighted index lost 0.11%.


[R]6:30AM European markets ignore bomb scare to open in positive territory.[/R]
European markets were higher on Friday morning. The FTSE 100 in London added 0.2% at 5,835.2, the Xetra Dax in Frankfurt was up 0.55 to 5,656.76, and the CAC-40 in Paris moved up 0.6% at 5,006.68. On the corporate front, ThyssenKrupp, the German steel and engineering group, topped expectations with pre-tax profits of ˆ806m, up from ˆ577m a year earlier. The stock eased however on profit-taking, losing 0.8%.

Michelin, gained 3% after the French tyre maker said it was planning to lift its tyre prices by 6-8% in reaction to higher raw material costs. AGF, the French insurer, advanced 2.4% following first-half net profit growth of 33%. Allianz, which owns 58% of AGF, moved up 1%. Fortis, the Belgian-Dutch financial group, rose 1.8% after JP Morgan raised its price target on the stock.

Crude oil prices partially recovered early Friday. Light, sweet crude for September delivery gained 24 cents at $74.24 on the NYME. Gold opened Friday at a bid price of $641.00 a troy ounce, up from $640.70 late Thursday. The U.S. dollar gained slightly on the euro Friday, as markets continued to absorb the thwarted terror plot in Britain.

The euro bought $1.2781, down slightly from $1.2784 in late New York trading. The British pound regained some ground to $1.8937, from $1.8922. The dollar also strengthened against the Japanese currency, to 115.70 yen, from 115.27 after weaker-than-expected Japanese economic growth data set off yen-selling.