Market Attempts a Comeback

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

Investors' enthusiasm on decline in CPI and rise in industrial production was short lived. Treasury reported that net foreign purchase of U.S. assets was $47.4 billion much less than anticipated $70 billion. Oil closing above $55 dollar, strength in dollar and in metals market put market on the edge except in the last 40 minutes of trading.

In a day where economic news, oil price volatility, net foreign fund flows and dollar decline drove averages up, down and then up again but not with conviction.

The morning news of decline in May CPI by 0.1% and industrial production was up and business inventories were up. This put market in the early mood of a rally to be deflated by the fall in net purchase of U.S. assets by foreigners. Net foreign purchases of U.S. assets for April were $47.4 billion vs. $70 billion for the month. This news in the mid-day turned market negative. Oil during the day traded down and then up largely on rumors and closed at the end of the day higher by 57 cents to $55.57 per barrel.

Net foreign purchases of both domestic and foreign long-term securities from U.S. residents were $47.4 billion in April compared with $40.6 billion in March. Net foreign purchases of long-term securities were $750.1 billion in the twelve months through April 2005 as compared to $798.8 billion during the twelve months through April 2004.

Foreign purchases of domestic securities reached $53.6 billion on a net basis in April, relative to $58.9 billion during the previous month. Private net flows reached $42.1 billion in April.

Net private purchases of Treasury Bonds and Notes decreased to $10.7 billion from $42.8 billion the preceding month. Net private purchases of Government Agency Bonds were $8.4 billion, up from $6.5 billion the previous month.

Net private purchases of Corporate Bonds were $18.1 billion, down from $22.3 billion the previous month. Net private purchases of Equities rose to $5.0 billion from $1.7 billion.

Official net purchases of U.S. securities were $11.5 billion in April, relative to minus $14.4 billion in March. Official net purchases of Treasury Bonds and Notes of $14.0 billion accounted for the bulk of official flows in April, up from a negative $15.0 billion the previous month.

The Consumer Price Index for All Urban Consumers decreased 0.1 percent in May, before seasonal adjustment, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. The May CPI level of 194.4 was 2.8 percent higher than in May 2004.

On a seasonally adjusted basis, the CP declined 0.1 percent in May, following an increase of 0.5 percent in April. Energy costs, which advanced sharply in each of the preceding three months, declined 2.0 percent in May. Within energy, the index for petroleum-based energy decreased 4.2 percent while the index for energy services increased 0.8 percent. The index for food rose 0.1 percent, following a 0.7 percent increase in April. The index for all items less food and energy, which was virtually unchanged in April, increased 0.1 percent in May.

The housing index has recently come under pressure as many people find it odd that index does not reflect the consistent price increase in existing and new home prices across the country.

Shelter costs were virtually unchanged for the second consecutive month as a decline in the index for lodging while away from home offset increases in the indexes for rent and owners’ equivalent rent.

The index for housing rose 0.1 percent in May. For the second consecutive month, shelter costs were virtually unchanged, again largely as a result of a decline in the index for lodging away from home. The index for lodging away from home declined 2.4 percent in May, following a 1.2 percent decrease in April.

In May, the indexes for rent and owners' equivalent rent increased 0.2 and 0.3 percent, respectively. The index for fuels and utilities rose 0.6 percent, following a 2.1 percent increase in April. Declines in the indexes for fuel oil and for natural gas--down 2.3 and 0.2 percent, respectively--were more than offset by a 1.4 percent increase in the index for electricity.

Medical care costs rose 0.3 percent in May to a level 4.3 percent higher than a year ago. The index for medical care commodities--prescription drugs, nonprescription drugs, and medical supplies--increased 0.5 percent in May. The index for medical care services rose 0.3 percent in May, with the indexes for professional services and for hospital and related services each up 0.3 percent.

The U.S. Census Bureau announced today that the combined value of distributive trade sales and manufacturers’ shipments for April, adjusted for seasonal and trading-day differences but not for price changes, was estimated at $998.6 billion, up 1.2 percent from March and up 8.3 percent from April 2004.

Manufacturers’ and trade inventories adjusted for seasonal variations but not for price changes, were estimated at an end-of-month level of $1,299.5 billion, up 0.3 percent from March and up 7.6 percent from April 2004.

The total business inventories/sales ratio based on seasonally adjusted data at the end of April was 1.30. The April 2004 ratio was 1.31.

Industrial production increased 0.4 percent in May after a decline of 0.3 percent in April. Manufacturing output rose 0.6 percent in May. Mining production edged up 0.1 percent, and the output of utilities declined 0.7 percent.

At 118.6 percent of the 1997 average, overall industrial output was 2.7 percent above its May 2004 level. The rate of capacity utilization for total industry rose 0.3 percentage point, to 79.4 percent, a rate 1.6 percentage points below its 1972--2004 average.

Bear Sterns, banking and brokerage firm, reported 2Q earnings rise of 3% which translates to $2.56 per share compared with $2.49 last year. The net income rose 5% to $365 million.

Crown Media, cable television operator, reported 1Q net loss of 49 cents per share compared with 40 cents in the prior-year period. The quarterly revenue increased 21%, from $33.4 million to $40.6 million.

AMIS Holdings, parent company of AMI Semiconductor, updated its 2Q outlook stating earnings of 12 cents per share to 14 cents including 2 cents a share tax charge. The company expects higher revenue and gross margins on strong target markets.

Tommy Hilfiger, fashion designer, sees its 2006 pretax earnings from 30% to 35% higher but revenue lower. Preliminary 2005 earnings fell 46% to $92 million, revenue declined to $492 million from $510 million.

Haemonetics, blood processing systems maker, backed its 2006 outlook for earnings of $1.73 to $1.83 on higher revenue.

Publisher John Wiley & Sons posted 4Q 25% earnings increase to 20 cents a share excluding taxes and a 4% revenue rise to $241.6 million on strong sales. The publisher released 2006 revenue and earnings growth outlook.

Lazard, investment bank, posted 281% increase in earnings for the first quarter, or 31cents per share vs. 8 cents a year ago. The results reflect structural changes after the bank went public last month.

Chiron, biotech developer, cut its 2005 earnings guidance due to reduced production forecast. The company expects earnings to be between $1.20 and $1.45 per share vs. earlier forecast of $1.40 to $1.50 a share.

ITW lowered its income outlook for the second quarter to $1.22 or $1.26 per share as well as for 2005 to $4.90 to $5 a share.

Stocks in Europe finished down although banks and insurers gained on M&A speculations. Markets were dragged on climbing oil prices which topped $56 a barrel and expectations of weak consumer spending. Averages fell 0.9% in Germany, 0.3% in France and 0.5% in the U.K.

Most Asia-Pacific markets closed higher as Japanese stocks advanced further up after the Nikkei hit a two-month high the previous session. The index added 0.7% led up by banking and export-related stocks. Taiwan’s index ended up 0.8%, Seoul’s Kospi was up 1.9% whereas China’s Shanghai Composite index closed down 1.9%. The U.S. dollar bought 109.34 yen in late U.S. trading.


IN OTHER NOTES

Bausch & Lomb dropped 3%, the company announced that it will hire 200 people in its R&D team.

Grupo Iusacell jumped 7.5%, Mexican cell phone company operator asked NYSE to terminate its ADR program.

USX, Steel operator, dropped 5% on no specific news.
Alliance Gaming dropped 5.8% after yesterday’s gain in sympathy on small cap gaming stocks upgrade.

Philips, European consumer electronics operator, warned that 2Q will be a difficult quarter on weakness in domestic appliance and consumer electronics business.

Tiger Telematics, owner of Gizmondo Europe declined 28.5% in Nasdaq trading.

Affirmative Insurance rallied 20% on the news that Vesta Insurance will sell rest of its stake of 5.2 million shares to a private company for $15 per share.

Kronos, time clock maker, fell 5% on CIBC downgrade.