In the Market Rise Rate Hike is Factored

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

Market in the morning hour remains on the offensive. The Bank of America deal to buy MBNA, decline in oil and rally in home builders is supporting the morning rally. In the earnings report BMC software disappoint but RIMM and PalmSource deliver the better earnings.Gold is unchanged.

MARKET AVERAGES

In the first hour of trading market has found some enthusiasm from buyers. Even though personal income is up only 0.2% compared the estimate of 0.3% but the decline in oil price in the global markets has encouraged buyers.

At this hour market has already concluded that Federal Reserve is likely to raise interest rate for the ninth time by 25 basis points. Fed’s inaction may have a sharp reaction in the market.


ECONOMIC NEWS

Personal income increased $23.5 billion, or 0.2 percent, and disposable personal income increased $16.0 billion, or 0.2 percent, in May, according to the Bureau of Economic Analysis. Personal consumption expenditures increased $0.5 billion, or less than 0.1 percent. In April, personal income increased $65.4 billion, or 0.6 percent, DPI increased $41.9 billion, or 0.5 percent, and PCE increased $55.4 billion, or 0.6 percent, based on revised estimates.


INTERNATIONAL MARKETS

Asian markets ended mixed as investors were cautious in their movements awaiting key economic data due out later in the U.S and Japan. The Nikkei closed almost flat, South Korea’s Kospi added 0.9%, Taiwan’s Taiex climbed 0.2%, but China’s Shanghai Composite tumbled 2.2% led by steelmakers. The dollar traded at 110.23 yen.


EARNINGS AND CORPORATE NEWS

MBNA, one of the largest credit card issuer, has agreed to be acquired by Bank of America for $35 billion. The bank will issue 0.5009 shares of BofA and $4.125 cash for each share valuing it at 31% higher than the share price of MBNA at $27.50 per share. BofA plans to cut 6,000 jobs to achieve its overall savings goal of $850 million.

Boeing has named James N. McNerney CEO of 3M as its new CEO. Mr. McNerney has been on the board of Boeing and he has said in the past that he has been happy at 3M. Boeing has been with permanent CEO since Mr. Harry Stonecipher, the CEO, was forced out. Boeing stock is up close 6.5%.


3Com, communications-technology company, posted 4Q loss of 15 cents per share compared with 5 cents last year on higher expenses after acquisition.

BMC Software, enterprise-management software firm, reported 4Q decrease in profit of 7 cents a share vs. 16 cents for the comparable last-year period due to lower demand. Analysts had expected a profit of 10 cents per share.

CHC Helicopter reported 4Q earnings decline to 44 cents a share compared with 61 cents last year.

PalmSource, mobile-device software company, posted 4Q net profit of $1.12 compared with a loss of 23 cents last year on large asset sale gain.

Research In Motion, reported 1Q doubled profit of 67 cents a share vs. 28 cents a year earlier on strong consumers’ interest in the company’s BlackBerry wireless-email devices.

Robbins & Myers, machinery maker, announced 3Q profit decline of 14 cents a share compared with 26 cents a year ago on weak pharmaceutical orders. The company cut its 2005 outlook from previous 85 to 95 cents a share to the range of 63 to 68 cents a share.

US Dataworks, developer of payment processing solutions posted 4Q loss of 5 cents per share vs. 1 cent for the prior-year same period.


OIL, METALS AND CURRENCIES

In the morning trading hours crude oil is down 57 cents $56.85 per barrel. Oil has receded from the recent record oil prices. However, the weekly Energy Department report showed that the U.S. continues to import record amount of gasoline and oil and demand is growing at least 2% a year.

Gold fund some buying in the morning hours but the after more than an hour of trading the gold is unchanged in the Nymex trading.