Oil Drives Stock Market Lower

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

In day of oil dominating tradig for the most of the day energy stocks rallied while transports came under selling pressure. Nike, Cardinal Health drop on lower outlook for the year and eBay drop due to negative sentimet related to the recent news articles. Bausch & Lomb, Beazer Homes and WalGreen are favored by analysts. Google closes above $300 for the first time.

MARKET AVERAGES

In the absence of any economic and significant earnings data impact of oil price volatility was felt at a greater level in the stock market. The price of oil crossed $60 per barrel and came close to $61 as nervous oil trader pushed the price of oil higher again.

Consumer durables, technology and transportation sector stocks were under pressure. Investors were disappointed with the Nike’s outlook for the year and sold-off the stock.

Shares of Bausch and Lomb jumped by 5.36% on an analyst upgrade shift in manufacturing focus to spherical lenses from toric lenses.

Shares of Nike were 4% on company’s earnings report. The company reported 15% rise in earnings for the 4Q but gave a low end revenue growth guidance between 7 to 9 percent.

Shares of International Paper dropped 3.1% after issuing warning for the 2Q earnings. The company now expects earnings to be between 25 to 30 cents a share vs. estimates of 38 cents.

ITT Educational Services gained 13% to $51.68 after reporting that the company has been cleared after three-year investigation by Department of Justice.

Apple Computer stock fell 1.8% to $37.10 after its competitor Creative Technology reported lower than expected market demand and lower average selling price for MP3 players.

Petsmart, pet food and supplies retailer, reported that it will buy back up to $270 million of its shares. The stock jumped 4.7% to $29.94.

INTERNATIONAL MARKETS

Asian benchmarks ended broadly lower after crude-oil prices hit a record high of $60.45 in after-hours trading and raised concerns about the impact of the higher energy costs on corporate profits and global demand. The Nikkei fell 1.1%, South Korea’s Kospi lost 1.1%, and Taiwan’s Taiex slid 0.6%. The U.S. dollar was trading at 109.28 yen.

European stocks lost ground at mid-day trading, tracking U.S. losses made at the end of last week as crude-oil touched a record high of $60.47 a barrel. Expected disappointment in corporate earnings added to the investors’ gloom. Germany’s DAX 30 fell 0.6%, France’s CAC 40 shed 0.6%, and London’s FTSE 100 lost 0.4%. The euro traded 0.6% higher against the dollar at $1.2161.

COPRPORATE NEWS AND EARNINGS

Hartmax, apparel retailer, reported 2Q earnings rise of 12 cents a share compared with 6 cents a share a year ago on higher operating margins. The company reiterated its full-year earnings with growth guidance of 30% to 40% and sales guidance of mid single digit to low teens in 2005.

Value Click, online advertising services firm, announced closing its acquisition of Web Marketing Holding and E-Babylon and lifted 2005 earnings guidance to 39 to 41 cents per share from previous 38 and 40 cents per share. The company held its 2Q earnings view of 8 cents a share.

Record crude-oil prices led to auto stocks drop. In Germany Daimler Chrysler fell 0.7%, BMW lost 0.6%, and Volkswagen declined 0.7%. Car markets in France were down as well. Renault slipped 1.5%, Peugeot slid 1%.

Asian technology and brokerage shares were among those hardest hit by the rising oil prices. Tokyo Electron lost 2.3%, Advantest sank 2.7%, and NEC Electronics dropped 2.4%.

European leading steelmaker Corus said it would stop making multiyear deals with car makers because of volatile steel prices. Arcelor, world’s leading steel company, is expected to reconsider its contracts with automakers and suppliers.

Nike, sports shoe and apparel company, posted 4Q earnings rise to $1.30 per share from $1.13 per share last year on strong sales and demand. The quarterly profit exceeded analysts’ estimates by 3 cents. The company forecasted 1Q revenue growth to be in the low end of the range between 7 to 9 percent.

Handleman, distributor of CDs & movies, reported 4Q income drop of 20 cents per share vs. 22 cents last year on weak music sales and discounts. The company projected 2006 net income to be slightly higher than the income.


OIL, METALS AND CURRENCIES

The U.S. dollar was mixed against other major currencies in early European trading. The euro rose against the greenback to $1.2163 on improved German business confidence and awaited U.S. interest-rate decision later in the week. The dollar stood at 109.28 yen. The pound quoted at $1.8284.

Gold was mixed. In London trading it rose to $439.35 bid per troy ounce up from $438.60, in Zurich the precious metal traded at $439.15 bid per troy ounce. In Hong Kong gold fell $3.40 to $439.75. In London silver cost $7.25 bid per troy once. In NY gold fell by a fraction.

Crude-oil prices vaulted over the $60 mark on concerns that supplies would not meet demand especially in the USA. In European mid-day trading oil touched $60.45 a barrel and in NY closed up 70 cents at $60.54 before touching $60.95 per barrel. August delivery of gasoline closed at $1.682 per gallon. August futures of copper contract closed up 0.50 cents at $1.598.