Trading in Tight Range After Revised GDP

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

On the back of housing and construction sectors and lower trade deficit higher capital investment by businesses powered 1Q GDP to 3.8%. Oil, gold and silver are trading down in th morning hours. In the overnight trading Asian markets closed mixed and at mid-day European markests were selectively higher.

U.S. MARKET AVERAGES

In morning hours averages are trading in a tight trading range. Latest read on 1Q GDP at 3.8% was better than predicted in the last month (3.5%) and better than forecasted by private groups (3.7%) has not lifted market averages. Market is still awaiting the oil inventory report from the Energy Department in about thirty minutes.

ECONOMIC NEWS

Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 3.8 percent in the first quarter of 2005, according to final estimates released by the Bureau of Economic Analysis. In the fourth quarter, real GDP also increased 3.8 percent. Excerpts of the release are at the end of this report.

EARNINGS AND U.S. CORPORATE NEWS

American International Group, insurance company, posted 1Q higher profit of $1.40 per share vs. 97 cents per share last year on life insurance growth, retirement businesses and gains in asset management business.

Bassett Furniture Industries, home furnishings manufacturer, reported 2Q earnings of $09 per share including pretax charges compared with $16 a share a year ago. The company declared regular quarterly dividend of $20 a share.

Cardio Dynamics International, medical devices maker, reported 2Q loss of 1 cent per share vs. a profit of 2 cents per share a year earlier due to lower sales hurt by different approach and higher costs.

Cardiotech International, medical devices maker, reported fiscal 2005 earnings loss of 9 cents per share against 10 cents for the prior-year period citing one-time charge related to termination of proposed acquisition and flat revenue.

Electro Scientific Industries, industrial electronic maker, announced 4Q loss of 3 cents per share vs. a profit of 57 cent par share. The company projected full-year earnings of 69 cents a share.

Synnex, computer hardware distributor company posted doubled 2Q profit of 72 cents per share vs. 34 cents per share a year ago on higher sales and revenuer.

ePlus, provider of Enterprise Cost Management, posted 4Q record profit of $2.06 a share compared with 26 cents a share. The high results are due to a $37 million payment patent infringement lawsuit.

Monsanto, maker of herbicides and bioengineered seeds, reported 3Q earnings decrease to 17 cents a share from 93 cents a year earlier. The company backed its 2005 guidance and expects earnings between 82 and 87 cents a share.

INTERNATIONAL MARKETS

Asian markets ended mixed. Some benchmarks advanced on easing crude-oil futures prices and strong gains for U.S. equities, but others lost on lingering global demand fears and domestic concerns. The Nikkei rose 0.6%, South Korea’s Kospi climbed 0.4%, and Taiwan’s Taiex dropped 1.4%.

European stocks gained at mid-day as crude-oil held at about $58 a barrel giving a boost to oil-sensitive shares. They were helped by France Telecom’s dividend , and growth targets which were well received by the investors. Averages in Germany advanced 0.2%, in France rose 0.5%, in the U.K. added 0.1%. The euro traded slightly lower at $1.2055.

OIL, METALS AND CURRENCIES


GDP Release from Commerce Department

Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 3.8 percent in the first quarter of 2005, according to final estimates released by the Bureau of Economic Analysis. In the fourth quarter, real GDP also increased 3.8 percent. Excerpts of the release are at the end of this report.

The GDP estimates released today are based on more complete source data than were available for the preliminary estimates issued last month. In the preliminary estimates, the increase in real GDP was 3.5 percent.

The growth rate of real GDP in the first quarter was the same as that in the fourth. In the first quarter, accelerations in exports, in residential fixed investment, and in private inventory investment and a deceleration in imports were offset by decelerations in equipment and software and in PCE.

Final sales of computers contributed 0.48 percentage point to the first-quarter change in real GDP after contributing 0.56 percentage point to the fourth-quarter change. Motor vehicle output contributed 0.24 percentage point to the first-quarter change in real GDP after contributing 0.86 percentage point to the fourth-quarter change.

The price index for gross domestic purchases, which measures prices paid by U.S. residents, increased 2.7 percent in the first quarter, 0.2 percentage point less than the preliminary estimate; this index increased 2.9 percent in the fourth quarter.

Excluding food and energy prices, the price index for gross domestic purchases increased 2.7 percent in the first quarter, compared with an increase of 2.0 percent in the fourth. About 0.2 percentage point of the first-quarter increase in the index was accounted for by the pay raise for federal civilian and military personnel, which is treated as an increase in the price index of employee services purchased by the federal government.

Real personal consumption expenditures increased 3.6 percent in the first quarter, compared with an increase of 4.2 percent in the fourth. Real nonresidential fixed investment increased 4.1 percent, compared with an increase of 14.5 percent. Nonresidential structures decreased 2.4 percent, in contrast to an increase of 2.1 percent. Equipment and software increased 6.1 percent, compared with an increase of 18.4 percent. Real residential fixed investment increased 11.5 percent, compared with an increase of 3.4 percent.

Real exports of goods and services increased 8.9 percent in the first quarter, compared with an increase of 3.2 percent in the fourth. Real imports of goods and services increased 9.6 percent, compared with an increase of 11.4 percent.

Real federal government consumption expenditures and gross investment increased 0.6 percent in the first quarter, compared with an increase of 1.2 percent in the fourth. National defense increased 0.5 percent, in contrast to a decrease of 0.6 percent. Non-defense increased 0.9 percent, compared with an increase of 5.3 percent. Real state and local government consumption expenditures and gross investment decreased 0.1 percent, in contrast to an increase of 0.6 percent.

The real change in private inventories added 0.72 percentage point to the first-quarter change in real GDP after adding 0.46 percentage point to the fourth-quarter change. Private businesses increased inventories $66.8 billion in the first quarter, following increases of $47.2 billion in the fourth quarter and $34.5 billion in the third.

Real final sales of domestic product -- GDP less change in private inventories -- increased 3.0 percent in the first quarter, compared with an increase of 3.4 percent in the fourth.