Waiting for Fed Decision

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 European markets closed higher. Energy Deaprtment weekly oil inventory showed that inventories of crude, gasoline distillate are up. DSW prices its IPO at $19 and stock jumps 20%.

U.S. MARKET AVERAGES

Market traded in a tight range during the session with very little conviction from buyers. Despite the revision to GDP to 3.8% and rising crude and gasoline production and inventory the market sold-off in the afternoon. Market decided to focus on the rate rise possibilities after tomorrow's Fed meeting.

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.

The weekly petroleum report from the Energy Department reported that nation’s inventory of crude oil rose by 1.1 million barrel, gasoline inventories by 0.3 million barrels and distillate inventory by 1.7 million barrels. Gasoline production also rose and crude oil import did not rise as much as market had anticipated. Crude oil futures in New York fell 80 cents.

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.

The International Air Transport Association (IATA) announced traffic results for the January to May period. For the Month of May, freight traffic was 1.6% below the 2004 level while growth for the first five months of 2005 was 3.1%. Passenger traffic showed 8.8% growth comparing May 2004 to May 2005 and January-May passenger growth was 8.7%.


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 9 cents per share including pretax charges compared with 16 cents a share a year ago. The company declared regular quarterly dividend of 20 cents 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.

France Telecom, European second largest telecommunication operator, announced its plans to more than double its annual dividend to $1.21 a share. The company which has returned to health after nearly collapsing in 2002, unveiled a new strategy focusing on combining mobile and broadband services under a new brand name Orange.

Cuban pharmaceutical sector will generate foreign exchange of $300 million in 2005 a rise of 100% from the year earlier. The pharma industry is the sixth largest foreign exchange generator for the island nation after tourism, remittances, professional services export and nickel exports. The country has several joint ventures in various stages of development in India, China, Venezuela and Egypt for various vaccines.

OIL, METALS AND CURRENCIES

Crude-oil prices weakened to trade at their lowest levels for the last two weeks on data awaited from a weekly U.S. petroleum inventory report which could send oil up again. August delivery crude lost $2.34 and traded at $58.20 a barrel on the New York Mercantile Exchange.

In currency markets the U.S. dollar jumped to its highest level against the yen since October to 110.44 up from 109.96. The euro bought $1.2043 down from $1.2060. The pound also traded lower at $1.8139 down from $1.8153.


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.


WEEKLY PETROLEUM REPORT

U.S. crude oil refinery inputs averaged nearly 16.3 million barrels per day during the week ending June 24, up 315,000 barrels per day from the previous week's average. Refineries operated at 96.3 percent of their operable capacity last week. Gasoline production increased substantially, averaging over 9.1 million barrels per day, and the second highest weekly average ever. Distillate fuel production increased only slightly, averaging 4.2 million barrels per day.

U.S. crude oil imports averaged nearly 11.0 million barrels per day last week, up 794,000 barrels per day from the previous week, and the second highest weekly average ever. Over the last four weeks, crude oil imports have averaged 10.5 million barrels per day, an increase of 23,000 barrels per day from the comparable four weeks last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged over 1.0 million barrels per day, while distillate fuel imports averaged 201,000 barrels per day.

U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) rose by 1.1 million barrels from the previous week. At 328.5 million barrels, U.S. crude oil inventories remain well above the upper end of the average range for this time of year. Total motor gasoline inventories increased by 0.3 million barrels last week, putting them near the upper end of the average range. Distillate fuel inventories rose by 1.7 million barrels last week, but remain in the lower half of the average range for this time of year.

Almost all of the increase was seen in high-sulfur distillate fuel (heating oil) inventories, with low-sulfur distillate fuel (diesel fuel) inventories relatively unchanged. Total commercial petroleum inventories increased by 9.4 million barrels last week, placing them near the upper end of the average range for this time of year.

Total product supplied over the last four-week period has averaged nearly 20.6 million barrels per day, or 1.2 percent more than averaged over the same period last year. Over the last four weeks, motor gasoline demand has averaged over 9.4 million barrels per day, or 2.0 percent above the same period last year, while distillate fuel demand has averaged nearly 4.1 million barrels per day, or5.7 percent above the same period last year. Kerosene-type jet fuel demand is up 3.3 percent over the last four weeks compared to the same four-week period last year.