Down Down 41, Nasdaq Down 15

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

Market managed to trade higher in the early trading but quickly lost its drive after the release of existing home sales report. Home sales in July dropped 11% from a year ago and 4.1% from June. Weekly petroleum inventory report reported a fall in crude oil by 0.6 million and a rise of 0.4 million in gasoline inventory. IBM agreed to buy Internet Security company for $1.3 billion.

[R]5:00PM Market declined after the release of home sales report.[/R]

-Yield on 10-year bond closed at 4.82% and 30-year bond closed at 4.95%.
-Crude oil fell $1.34 to $71.76 per barrel.
-Gold fell $1 to $627 per ounce.

-Asian Markets closed lower. Thailand closed 1.2% down, Japan was down 0.11%, Hong Kong was down 0.4% and India closed down 0.8%. South Korea lost 0.75%.

-European Markets closed lower. France closed 0.9% lower, Germany down 0.75% and U.K. closed 0.72% lower. South Africa closed 1.5% lower and Russia closed up 0.4%.

-Latin American Markets closed sharply lower. Brazil dropped 3.2%, Argentina and Mexico closed 1.2% lower.

Market had lot to digest after two economic reports, a deal worth $1.3 billion and continuning geopolitical problmes involving Iran. After making an early postive advance, market for reversed its course after the release of the housing report and failed to recover in the afternoon trading. Major averages closed lower with Dow down 42 points, Nasdaq down 15 points and S&P 500 down 5.8 points. After the close Apple agreed to pay $100 million to settle patent dispute case with Creative Technology, Singapore based maker of MP3 players.

Existing home sales in July dropped 4.1% from June and 11% from a year ago. The home sales to the lowest level in the last two years. The home sales are likely to dip even lower in the coming months as interest rates rise and investor driven demad for homes decline. Weekly petroleum report indicated that crude oil inventory rose 0.6million of barrels but that of gasoline dropped.

IBM agreed to pay $1.3 billion in cash to purchase Internet Security Systems. The network security company has 1,300 employees and serves 17,000 customers. IBM has been active in acquiring internet and document management companies in the alst two months.

Dutch publishing firm which was recently acquired by private equity firms, VNU Group BV named David L Calhoun as chairman of the executive board and chief executive officer of the company. Mr. Calhoun is currently at General Electric as vice chairman. VNU is controlled by private equity investors Thomas H Lee Partners and Blackstone Group.

[R]2:00PM European markets closed lower on economic worries.[/R]
European markets closed lower led by a sharp decline in Germany, France and the U.K. French index CAC-40 lost 0.89% to close at 5,082.7, German DAX Xetra Index lost 42.87 points to close at 5,775.64 and UK FTSE Index lost 0.72% or 42.60 points to close at 5,860.00. The crude oil prices dropped sharply in New York trading after weekly petroleum report. The surprise rise in gasoline inventory led a fall in oil price of $1.44 to $71.85 per barrel.

In Swiss trading Nestle SA rose to an all time high to SFr 419.50 on earnings report. The company reported 11% rise in sales to 47.14 swiss francs and earnings rose 11% to 4.15 swiss francs for the first half of the fiscal year. The organic revenue grwoth overcame the rise in raw materials cost. The compay still express confidence that the full year earnings will reach upper end of the forecast earnings range. The company sales growth in the U.S. and emerging markets was stronger than the sluggish sales in Europe. The company also mentioned in the conference call that it will take a while for sales to rebound in china. Company was forced to recall baby milk due to higher than permitted iodine level by Chinese authority.

Tech stocks came under pressure on the news of earnings and sales warning from National Semiconductor in the U.S. STMicroelectronics dropped 1.5% to 12.44 euro, ASM Litho dropped 1.1% to 16.41 euro and Infineon lost 1.1% to 8.66 euro.

In the telecom sector Deutsche Telekom dropped 0.6% to 11.50 on the target price revision from HSBC to 10.20 euro, France Telecom fell 1% to 16.42 euro but Telekon Austria gained 2.5% to 18.97 euro on earnings news. The company earnings rose 20% in the second quarter compared to a year ago.

TNT, the Dutch mail service group, fell 2.5% to 28.45 euro after the news that it had sold its U.S. logistics business to a private equity group for 1.48 billion euros. The stock had run in aticipation of higher bid.

The stocks in the UK fell after the housing report in the U.S. showed a weakening market. The FTSE index dropped 42 points with number of mining stocks led the decliners list. BHP Billiton reported 58% rise in profit but said that in the longer terms the earnings growth will slow down. The company also said that it plans to buyback shares worth as much as $3 billion in the coming months. BHP dropped 4% to close above 10 GBP. Other minig stocks fell in sympathy.

However, Anglo Austalian pallet company rose 4.7% on the full year results. Nikanor, the copper miner in Congo Republic, jumped 3.6% on the outperfom rating from a local broker Caznove. Italian restaurant chain, Prezzo, surged 6.5% on takeover rumors and Café Nero ganied 0.6% on the speculation that hedge fund may bid for the company.


[R]12:15PM IBM to buy Internet Security Systems for $1.3 billion.[/R]
Market averages traded lower after existing home report. Dow at mid-day is trading down 44.01 points, Nasdaq down 14.02 points and S&P 500 dropped 5.3 points. Home builders stocks declined between 1% and 3%. Toll Bros ((TOL)) lost 74 cents to $24.47, D.R. Horton ((DHI)) declined 46 cents to $21.05 and Bezer Homes ((BZH)) lost $1.07 to $39.47.

IBM ((IBM)) said that it plans to spend $1.3 billion in cash to purchase Internet Security Systems ((ISSX)). The network monitoring and analysis company is known for network management and security seystems services for large companies. The Company stock closed at $26 in yesterday’s closing. IBM is offering only 8% proemium to acquire the company.

IBM has been actively purchasing companies in the Internet services and online document management area. ISS has app. 1,300 employees and 17,000 customers.

[R]10:30AM The Sensex falls for a second day in a row in a volatile trading.[/R]
The Sensex on BSE lost 95.97 points, or 0.83%, to end on 11,406.65. The turnover on BSE was Rs 2,982 crore, down from Tuesday’s Rs 3,079 crore. The index traded in the range of 205 points. The market-breadth was weak, as only 887 shares advanced on BSE compared to 1,610 that declined while 64 shares were unchanged. Of the 30-member Sensex stocks, 21 declined while only 9 advanced.

HDFC led the decliners, plunging 3.15% to Rs 1,276.10 followed by Bajaj Auto losing 2.16% to Rs 2691.40 and Cipla shedding 2% to Rs 246.40. Satyam Computers led the advancers, adding 1.24% to Rs 804.

Metal shares were the worst hit. Tata Steel plunged 1.80% to Rs 506.10, SAIL was down 2.32% to Rs 75.70, Uttam Galva lost 1.55% to Rs 32, Kalyani Steel sank 4.53% to Rs 277 and Jindal Saw moved back 4.66% to Rs 291.50. Auto stocks were also hit. Maruti Udyog shed 1.46% to Rs 826, LML was off 4.42% to Rs 18.40, Hindustan Motors declined 4.53% to Rs 36.85, Ashok Leyland dipped 2% to Rs 38.85 and Mahindra & Mahindra moved down 3.70% to Rs 635.

Consumer stocks also declined, pressed down by selling pressure. Nestle India lost 0.82% to Rs 1,011, Dabur India declined 1.66% to Rs 136.25, ITC shed 2% to Rs 178.10, Colgate-Palmolive slipped 2.30% to Rs 357 and Hindustan Lever edged down 1% to Rs 230.

Index large-cap Reliance Industries slid 0.06% to Rs 1,064.25. It traded between Rs 1,073.85 and Rs 1,056.05 for the day. Shares of SBI were unstable throughout. It traded between Rs 1,053.45 and Rs 859.50. The stock closed at 1.91% lower, at Rs 861.10 on a volume of 7.15 lakh shares. The most active stock on BSE was Educomp Solutions with a turnover of Rs 154.14 crore. Educomp closed 6.90% lower, at Rs 532.20 on a high volume of 27.63 lakh shares.

Other companies that declined were Bombay Dyeing plunging 10.90% to Rs 635 on high volumes of 19.41 lakh shares, Mahindra Gesco Developers'' falling 10% to Rs 756.50 on 16.08 lakh shares.

Apart from Satyam Computers, other stocks that advanced were Sundram Fasteners soaring 6.91%, to Rs 128.50 following the company surprising statement of declaring a liberal 1:1 bonus issue. Suzlon Energy gained 1.15%, to Rs 1,209, Gayatri Sugar advanced 1% to Rs 12.40 and R Systems International rose 1.80%, to Rs 165.50.

[R]10:10AM Existing home sales declined 4.1% in July.[/R]
Total existing home sales including single-family, townhomes, condominiums and co-ops – dropped 4.1 percent to a seasonally adjusted annual rate1 of 6.33 million units in July from a downwardly revised pace of 6.60 million June, and were 11.2 percent below the 7.13 million-unit level in July 2005. The national median existing-home prices for all housing types was $230,000 in July, up 0.9 percent from July 2005 when the median was $228,000.

[R]9:45AM Market show steady rise from the opening.[/R]
Market averages opened on a weak note only to rise steadily in the first fifteen minutes of trading. Traders are waiting for a reprot on existing home sales and weekly petroleum invenotory report. Industrial stocks are taking the leads in the early opening. Caterpillar is up 40 cents, Deere & Co is 30 cents and Ingersoll Rand is 5 cents at the opening. BHP Billiton is down 25 cents on earnings.

Oil is trading 30 cents lower in the early trading but gold is up $4.40 at the opening in New York.

[R]9:20AM Pre-Market trading averages expect market to open lower.[/R]
Market averages are expected to open lower despite a fall in oil prices in the pre-market trading. Iran has requested for negotiations to respond to the demands of the U.N. to stop the uranium enrichment process. Traders are also awaiting two economic reports this morning. Weekly petroleum report due in the morning at 10:30 AM and existing home sales report at 10:AM.

Weekly Petroleum Report is expected to show a decline in crude oil and gasoline invenotries of at least 1 million barrels. Housing report for the month of July is expected to show that existing home sales have declined in July. Housing market has been steadily declining for the last six months and has become a subject of intense debate. Increasigly the ‘soft landing’ view is revised by analysts to somewhat approaching ‘hard landig’ in the housing market.

Asian markets closed lower with 0.11% decline in Tokyo. Thailand lost 1.12% and India declined 0.83% in a volatile session. At mid-day European markets are trading lower with 0.3% decline in Frankfurt.

BHP Billiton ((BHP)), Anglo-Australian mining giant, lost 3% in the UK trading on the earnings news. The company reported a profit of $10.45 billion compared to $6.43 billion a year ago on revenue of $39.10 compared to $31.15 billion a year ago. The company also stated that it plans to spend $3 billion to buy back stocks in the next eighteen months.

[R]7:30AM Asian markets fell Wednesday, ahead of earnings releases.[/R]
Asian markets ended lower on Wednesday. The Nikkei 225 Average finished down 0.1% to 16,163.03. Shares of Canon gained 1% as traders factored in what are expected to be strong earnings for the July to September period. KDDI, cellular services provider, edged up 0.3% after the company announced it would provide a service allowing its cell phones to be used as credit cards. Shares of NTT DoCoMo, which already offers a credit facility on its cellular phones, shed 1.1%.

Australia''s S&P/ASX 200 ended up 0.1% to 5,082.32, after trading flat for most of the day, on rising optimism ahead of half-year results from BHP Billiton. The Hang Seng index of Hong Kong closed lower 0.3% at 17,088.39. The H share index, which tracks mainland incorporated companies listed in Hong Kong, was down 0.7% at 6,960.10. South Korea''s Kospi shed 0.8%, while Singapore''s Straits Times index fell 0.4%. In Shanghai, the benchmark Composite index finished basically flat, down less than 0.1%.

[R]6:30AM European stocks traded slightly lower, holding to a tight range.[/R]
European markets traded lower by mid-morning on Wednesday. London’s FTSE 100 edged down 0.1% to 5,896.2, while Frankfurt’s Xetra Dax lost 0.2% to 5,810.12. The CAC 40 in Paris shed 0.1% to 5,124.91. Nestle advanced 1.9% following its statement that its first-half net income grew a better-than-forecast 11.4%. Unilever and Cadbury Schweppes were marginally higher.

Mining stocks, however, declined. BHP Billiton plunged 2.4% after gaining in recent weeks and after the company said over the longer term it expects the introduction of new capacity to return prices to more sustainable levels. Away from mining, European defense company EADS was another decliner, shedding 1.4% in the wake of a report stating that it''''s planning to invest 2 billion euros ($2.58 billion) in India over the next 15 years.

Crude oil fell on expectations that gasoline demand will slow with the end of the travel season in the U.S., the world''''s biggest energy consumer. Crude oil for October delivery declined as much as 59 cents, or 0.8%, to $72.51 a barrel in after-hours trading on the NYME. It traded at $72.54 at 10:59 a.m. in London, where, also, Brent crude oil for October settlement declined 52 cents to $72.70 a barrel on the ICE Futures Exchange.

The U.S. dollar was lower against other major currencies in European trading Wednesday morning. The euro purchased $1.2817, up from $1.2796 late Tuesday in New York. The British pound traded at $1.8920, up from $1.8866. The greenback bought 116.25 Japanese yen, down from 116.57. Gold dealers in London fixed a recommended price of $623.50 per troy ounce at midmorning, up from $622.30 late Tuesday.

[R]5:00AM Gold futures fell Tuesday on stronger dollar and technical trading.[/R]
December gold ended $1.20 lower at $634 a troy ounce, as the contract got as low as $629.60 during the session. The most-active September silver contract finished at $12.265 an ounce, down 8 cents on the day. October platinum was off $4.30 at $1,237.80 an ounce while September palladium lost $4.20 at $341 an ounce. The September copper contract shed 2.65 cents to settle at $3.4930 per pound. December moved back 1.15 cents to $3.4780.

The front-month September light, sweet crude-oil contract, which expires Tuesday, finished 18 cents higher at $72.63 a barrel. October futures, which will become the front-month contract, sank 20 cents to $73.10. September gasoline rose 0.27 cent to $1.9393 a gallon. September heating oil was up 0.39 cent to $2.0366 a gallon, while September natural gas ended up 38.4 cents at $7.008 a million British thermal units. On the New York Board of Trade, September Arabica coffee futures settled up 1.20 cents at $1.0820 a pound while December gained 1.65 cents to $1.1260. Futures on raw sugar in foreign ports for October moved 0.08 cent lower to 12.06 cents a pound.