Budget Deficit Declines 14%

123jump.com Staff
13 Sep, 2006
New York City

Market averages retained a potive bias. Oil dropped below $64 and Treasure Department reported 14% lower deficit than a year ago. Lehman Bros rose on better than expected revenue and solid earnings. Advanced Micro and Google led the gainers in the tech sector. Valero and Conoco Phillips led energy sector.

[R]3:00PM Market averages maintain upward charge.[/R]
Market averages retained a positive bias with less than one hour of trading. Dow is 46 points, Nasdaq is up 7 points and S&P 500 is up 4 points. Treasury Department reported budget deficit of $304.3 billion, 14% lower than a year ago at the end of eleven months of the current fiscal year. The Congressional Budget Office is forecasting that the deficit for the year will be $260 billion at the end of the fiscal year in September. The administration is still expecting the deficit for the year to be near $295 billion higher than $319 billion a year ago.

Energy and tech stocks were leading the advancers. Google ((GOOG)) advanced $11.87 or 3.3% to $403.77% on the release of revised product Google Earth. The stock has rebounded after six months of trading lower in the last one week of trading. The stock traded as low as $339 in March of this year.

Peabody Energy ((BTU)) jumped $2.59 or 7.4% to $37.66. The stock has been under pressure with the lower revenue and earnings forecast and recent downgrades from analysts. The stock traded as high as $73.66 on May 11, 2006.

[R]12:30PM European markets closed largely higher on M&A talk.[/R]
European markets finished mostly in the positive Wednesday, supported by merger-and-acquisition talk in the truck-making sector. However, mixed earnings reports helped limit gains. Swedish truck maker Scania jumped 8.2% on expectations that Germany''s Man AG will make a bid for the company. Man shares dipped 0.9% after it confirmed interests in buying Scania. In earnings news, BAE Systems reported 28% profit rise in the first half but closed down 0.7% after a volatile session. Gemalto, maker of smart cards, dropped 16.2% after its first-half net income fell 47%. Airline Alitalia fell 10% on wider first-half income loss. The German DAX 30 climbed 0.6%, the French CAC 40 added 0.2%, while London FTSE 100 lost 0.1%.

Oil prices slightly recovered from a seven-day decline as a report showed a decrease by crude oil inventories. Light crude October delivery gained 27 cents to $64.03 a barrel. Heating oil inched down to 41.7525 a gallon, while gasoline added 2 cents to $1.570. Natural gas futures slipped 10 cents to $5.465 per 1,000 cubic feet. The U.S. dollar traded mixed. The euro traded at $1.2672, down from $1.2689. The dollar bought 117.62 yen, down from 117.95. The British pound stood at $1.8745, up from $1.8743. European gold posted weakness Wednesday. In London the precious metal traded at $587, down from $593.40 per ounce. In Zurich gold traded at $586.05, down from $591.85. Silver closed at $11.09, down from $11.23.

[R]11:30AM Stocks turned to choppy trading.[/R]
Stocks traded in a lackluster manner Wednesday morning as a reaction to the strong market rally in the previous session. Significant strength emerged among energy and metal stocks thanks to bargain hunting. At the same time, a notable loss by Merck ((MRK)) helped limit the upside move by the Dow. The drug maker traded down 2.4% due to concerns over heart and kidney problems associated with Vioxx. Financial stocks moved higher, led by Lehman Bros ((LEH)) which advanced 1.7% on better-than-expected Q3 earnings. Ford Motor ((F)) gained 2.98% on news the automaker would slash white-collar costs by nearly one third. In late morning trading, the Dow gained 7.45, or 0.06%. The Standard & Poor''s 500 index rose 1.05, or 0.08%, and the Nasdaq composite index gained 4.49, or 0.20%. Bonds rose, with the yield on the benchmark 10-year Treasury note falling to 4.76% from 4.77% late Tuesday.

Crude oil inventories slipped in the most recent week, according to government statistics released Wednesday. This added to a decline posted in the previous week. Meanwhile, gasoline stockpiles continued to edge higher. The Department of Energy''s Energy Information Administration said that crude oil inventories slipped 2.9 million barrels in the week ended September 8. Specifically, the measure fell to 327.7 million barrels from the previous week''s level of 330.6 million barrels. The decline in oil inventories added to a draw down of 2.2 million barrels posted in the previous week. Oil inventories for the September 8 week were 5.6% higher than last year. Meanwhile, gasoline inventories showed a week-over-week increase 100,000 barrels. This added to a recent string of mild gains. In the previous week, gasoline stockpiles rose by 700,000 barrels. The level of gasoline inventories was 6.4% above last year. Distillate fuel oil had an inventory increase of 4.7 million barrels for the week ended September 8. This followed an advance of 3.1 million barrels reported in the previous week.

[R]10:30AM India rallies for a second day in a row on fall in crude oil.[/R]
The Sensex on BSE ended 233 points, or 2% higher, to settle at 11,893.79. The market breadth was strong as1,698 shares advanced, 822 declined and 68 shares were unchanged. Advancers outpaced decliners by a ratio of two to one. From the Sensex stocks 28 advanced and 2 declined. The turnover on BSE was Rs 3,967 crore, compared to Tuesday’s Rs 3,341.43 crore. The turnover on NSE was 7,473 crore.

Brazilian and Indian state controlled oil companies signed a two-year cooperation agreement to explore deep water oil and gas drilling and bid jointly for oil exploration blocks in India and Brazil. ONGC of India and Petrobras of Brazil may extend the agreement two more years if certain conditions are met.

Cellular services provider Bharti Airtel soared 5% to Rs 444.80 on 4.8 lakh shares on BSE. Power generation firms were in focus. NTPC jumped nearly 5% to Rs 130 and Tata Power rose 4.7% to Rs 526. Banks advanced as declining oil price triggered hopes that the central bank may keep rates unchanged at its credit policy review meeting in October 2006. ICICI Bank gained 4.3% to Rs 630.95, HDFC Bank rose 3.4% to Rs 870 and State Bank of India advanced nearly 4% to Rs 969.

IDBI jumped nearly 14% to Rs 70.90 and United Western Bank added 5%, to Rs 22.50, after the Reserve Bank of India offered ailing UWB to IDBI. Leading airline Jet Airways Ltd. gained 7.7% to Rs 685.35, and state-run refiner Indian Oil Corp. was up 3.9% at Rs 534.95.

Auto shares continued to trade in positive territory on hopes that the government will not raise domestic fuel prices in the near term due to falling global crude oil price. Car large-cap Maruti Udyog jumped 3.6% to Rs 956, TVS Motor advanced 3.3% to Rs 115.50, Bajaj Auto rose 2.5%, to Rs 2,779, Ashok Leyland gained 2.5% to Rs 42.40 and Tata Motors jumped 2.3%, to Rs 874.

Software shares were in demand after a higher overnight closing of the Nasdaq Composite in the US. Infosys advanced 2% to Rs 1,808, TCS rose 2% to Rs 1,000, Satyam Computer gained 2.7% to Rs 804.95 and Wipro edged up 1.3% to Rs 510.

Marico Ltd advanced 0.9% to Rs 517.50 on announcing its entry into the Rs 170 crore hair-care market in Egypt through the brand Fiancee, hitherto owned by the Egypt-based Ready Group. Hindustan Oil Exploration Company surged 3% to Rs 120.15 after Indian authorities handed over to it operations of an existing oil block.

[R]09:45AM Stocks opened lower on rising oil, Merck, Lehman Bros.[/R]
U.S. stocks opened in the negative, reversing from a strong rally Tuesday when the Dow Jones industrials rose more than 100 points. Negative news from Merck & Co., a decline by the shares of Lehman Brothers Holdings Inc, as well as an upward move by the price of oil generated some negative sentiment. Recently stocks have turned mixed.

After ending the previous session at a five-month closing low, crude futures rose to $64.25 a barrel sending energy stocks higher. Shares of Merck ((MRK)) fell more than 2% after two new studies indicated that withdrawn pain reliever Vioxx carries an increased risk of kidney and heart arrhythmia problems. Lehman Brothers slipped after reporting a better-than-expected Q3 profit despite a slowdown in its investment-banking business. Lehman Brothers ((LEH)) reported Q3 profit increase to $916 million, or $1.57 a share from $864 million, or $1.47 a share last year, supported by higher trading revenue. The company''s revenue in the quarter totaled $4.18 billion, compared to $3.85 billion. Company’s quarterly results exceeded expectations of 1.50 a share, on revenue of $4.01 billion. In the first hour of trading, the Dow Jones industrial average fell 2.24, or 0.02%. The Standard & Poor''s 500 index rose 0.68, or 0.05%, and the Nasdaq composite index gained 4.83, or 0.22%.

[R]8:15AM Stock futures were mixed ahead of Lehman Bros earnings.[/R]
Stock market futures traded mixed Wednesday, with investors awaiting third-quarter earnings release by investment-banking giant Lehman Brothers. Lehman Brothers ((LEH)) is due to report Q3 earnings, following Goldman Sachs results announced Tuesday. Analysts expect Lehman to report net income of $1.49 a share.

Automaker Ford ((F)) will be another company in focus after reports it is planning to cut its white-collar costs by nearly a third. Hewlett-Packard ((HPQ)) is also expected to draw some attention as a California''s Attorney General said he had enough evidence for indictments inside and outside the company. Lehman Brothers upgraded the Gap Inc. ((GPS)) to overweight from equal-weight. The broker told clients that unless same-store sales improve, a management change could happen before the end of the contract of the present CEO. BP ((BP)) gained 0.7% in London on news that the company is close to a deal with the Department of Interior that would help resolve the agency''s worries about flawed Gulf of Mexico drilling leases. Dow Jones futures were recently down 10 points, S&P futures slipped 1.5 points, while Nasdaq futures climbed 2 points.

[R]7:30AM Asian markets close higher on chip-makers and property stocks.[/R]
Asian markets finished higher on Wednesday. The Nikkei 225 Average finished the day 0.2% higher at 15750.05. Stocks in Tokyo closed mixed as a strong showing amid the export-oriented technology sector failed to counter declines in commodity companies. Elpida Memory advanced 6.6%, and Sumco gained 5.2%. On the other hand, selling pressure on consumer finance stocks continued, as Takefuji lost 3.4% and Aiful sank 3.3%.

Hong Kong Hang Seng Index gained 0.79% to close at 17210.04. shares ended higher for the second straight session. HSBC closed 0.7% higher, and China Mobile rose 1.2%. South Korea Kospi Index advanced 0.38% to 1333.13. Hynix Semiconductor advanced 3.1% on the company positive fundamentals and stabilizing memory chip prices. Transport shares rose on a sustained fall in oil prices, as Hyundai Merchant Marine rose 0.9% and Asiana Airlines climbed 1.6%.

Taiwan gained 0.59% to 6664.87. Stocks tracked Wall Street, with food companies leading after Uni-President Enterprises was chosen as a sponsor of the 2008 Beijing Olympics. Australia S&P/ASX 200 closed 0.86% higher at 5017.20. The stock market reversed two days of heavy losses with share-price gains tempered by the outlook for the Chinese-driven commodity boom. BHP Billiton gained 1.6% and Rio Tinto advanced 1.4%. Shanghai Composite Index bucked the upward trend and lost 0.4% to finish at 1689.39.

[R]6:30AM European stocks traded higher Wednesday, tracking U.S. markets[/R]
European markets were higher by mid-morning on Wednesday. The U.K. FTSE 100 index rose 0.1% to 5,902, the German DAX Xetra 30 index advanced 0.2% to 5,888 and the French CAC-40 index increased 0.2% to 5,134. BAE Systems gained 1% after it said that its first-half net income rose 28%. On the other hand, Safran, the aero engine and telecoms group, plunged 7.6% after first half pro-forma operating profits fell 35%.

Scania, the Swedish truck company, jumped 8.9% in the wake of confirming MAN AG, its German rival was likely to make a bid. The stock rose 9% on Tuesday. MAN added 2.8%. Investor rose 4.4% following the investment vehicle statement it was willing to sell its Scania stake. Mediaset, private broadcaster, fell 3.5% after it announced its Italian advertising sales target of 2-3% did not seem achievable.

Crude oil for October delivery fell 26 cents to $63.50 in electronic trading on the NYME in London. Gold for immediate delivery dropped $5.88, or 1%, to $581.57 an ounce in London. The euro was down slightly against the U.S. dollar Wednesday. In morning European trading the euro bought $1.2695, down from $1.2702 in New York on Tuesday. The British pound climbed slightly to $1.8748 from $1.8743 the day before, while the dollar rose to purchase 117.75 Japanese yen from 117.68 in New York.