Rise in Oil Failed to Keep Buyers from Stocks

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

Broad rally though weak by the end of the day kept investors in the buying mood throughout the day. While oil dropped in the morning hours but during the final hours clocked a sizable gains as worried traders took positions for the long weekend. While Asian markets closed mixed the European markets had a positive closing as oil was still in decline at the mid-day in NY trading.

U.S MARKET AVERAGES

The averages trades in the positive territory for the entire day as investors showed optimism related to consumer sentiment, better manufacturing activity and general upward bias in the market. The early fall in oil price did not last during the session and at close oil jumped $2.25 at $58.75 per barrel. The rally in oil failed to dampen the rally in the market.

Latest read on consumer confidence from University of Michigan for June rose to 96 from 94.8 in May and better-than anticipated 94.6.

The Institute for Supply Management’ Manufacturing index was also stronger than anticipated. The ISM index for June was reported at 53.8 jumped from 51.4 in May. Construction spending fell by 0.9%, third straight decline drove several housing stocks down.

Weaker than anticipated DVD sales of ‘The Incredibles’ led Pixar to revise its earnings downwards. The stock fell in the early trading 12%.

Energy, auto, restaurant, consumer staples traded higher but tech and home builders were under the pressure throughout the session.

AUTO SALES

At least for the month of June GM managed to gain market share from its Asian rivals. Even though GM reported 41% jump in sales compared to a year ago, these gains largely came at the expense of sales at Ford which were down 2.5% and that of Chrysler’s were up close to one percent. Nissan and Toyota reported double digit gains in sales. Nissan reported 14.2% sales gain in June compared to a year ago and 15.6% year-to-date.

At the current rate of sales the U.S. automotive sales are running at an annual rate of 17-18 million.

GM managed to power sales gains on the back of heavy discounting so that customers pay the same rate available to GM employees. Several market analysts believe that GM discounting is costing company at least $1.1 billion so far.

Toyota reported jump in sales of 10.2% of sales in the first five months of 2005 compared to year ago. The company this month set a sales goal of 2.5 million vehicle sales by 2008 and hopes to have 15% of global auto sales up from 11% in 2004. The company’s performance for the year 2005 was the best ever in 48 years of sales history in the U.S.


EARNINGS AND U.S. CORPORATE NEWS

Biomet, medical devices maker, reported 4Q earnings of 41 cents per share vs. 31 cents a year ago on stronger sales almost meeting estimates of42 cents per share. The company projected 2006 earnings in the range of $1.74 to $1.84 per share.

HEI posted 3Q net income of 3cents a share compared with a loss of 12 cents last year due to increased sales.

Intraware, internet services company, announced 1Q preliminary loss of 1 cent per share compared with breakeven on a per-share basis.

Investors Real Estate Trust, posted 3Q net income of 4 cents a share against 3 cents for the prior-year same period on higher revenue.

Lawson Software, software maker, reported 4Q increase in profit to 6 cents per share vs. 3 cents a year earlier on good costs and expenses management.

Quantum Fuel Systems Tech Worldwide, manufacturer of packaged fuel systems, reported net loss of 10 cents per share vs. 6 cents last year on decrease in revenue.

Red Hat, leading distributor of Linux software, posted 1Q earnings rise of 7 cents per share vs. 5 cents for the comparable 2004 period on 46% higher sales. Analysts had expected earnings of 5 cents a share.

SABA Software, provider of human capital management solutions, reported 4Q loss of 2cents per share on a GAAP basis compared with a loss of 16 cents per share This-year fourth quarter results include the effects of the THINQ acquisition.

United Financial Mortgage posted 4Q profit jump of 24 cents a share vs. 17 cents a year earlier.

Verity, enterprise search software provider, reported 4Q net earnings breakeven on a per-share basis compared with 4 cents last year missing estimates of 5 cents a share.

Viisage, identity technology company, posted 1Q net loss of 3 cents per share vs. 5 cents for the last-year same period on higher revenue.


OIL, METALS AND CURRENCIES

Traders and speculation driven short covering prompted broad rally in energy futures. Heating oil futures reached all-time for $1.735 per gallon as futures for oil and gasoline climbed on worries of hurricane possibilities over the week-end. Oil for the week is still down 3% for the week from it’s all-time peak at $60.54 per barrel.

At close in NY Gold futures dropped $8.30 an ounce ahead of the long holiday weekend in the U.S and next week’s meeting of G8 in Scotland and futures for silver dropped 17.7 cents and copper dropped 1.7 cents. The euro was lower against the dollar at $1.196 to its lowest level against the U.S. dollar after U.S. manufacturing report.



INTERNATIONAL MARKETS

The Brazilian government reported that June trade surplus widened to $4.03 billion from $3.45 billion in May. The country is set to reach total export of $112 billion for the current year. Brazilian currency Real has jumped 14% since the begging of the year against dollar and 50% since President Lula took the office.

German drug maker Atlanta lost 13% after ending collaboration with Pfizer which announced that it is dropping the development of a HIV- treating drug and another one treating smoker’s lung and asthma as they failed to show significant advantages over standard strategies.

European markets gained as automotive shares rose and markets shrugged off concerns that the U.S. Fed Reserve may continue increasing interest rates. Germany’s DAX 30 rose 0.67%, France’s CAC 40 climbed 0.93%, and London’s FTSE 100 added 0.9%.

Asian benchmarks ended mixed after the Federal Reserve announced another increase in a key interest rate and U.S stocks tumbled. In Japan shares closed up erasing early losses on upbeat assessment of business environment. The Nikkei added 0.4%, South Korea’s Kospi climbed almost 1%, but Singapore’s Straits Times shed 0.1%. In late Tokyo trading the dollar quoted at 108.31 yen.