New Orders Driven Rally Despite Higher Oil

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

Strong May factory order up 2.9% on reflecting the strength in the airplane orders provided to foundation to the rally of the session. The rally also broadened to tech sector as several traders speculated that EMC may be a target of IBM and Apple's earnings and revenue were revised upwards for the fiscal third quarter. The retail stocks were up on the otimist outlook for the same-store sales to be reported this week.

U.S. MARKET AVERAGES

The session’s rally is focused on energy and retails stocks. In the overnight trading oil closed near-tem high and that rally spilled over in the morning trading. Retail stocks were trading higher on the expectations of better-than expected sales figure for the month of June to be released this week.

First Albany raised sales and earnings forecast for Apple Computer. The bank raised revenue target for the fiscal third quarter from $3.3 billion to $3.4 billion and earnings to 34 cents from 29 cents. The revised revenue expectations are based on 5 million iPod unit sales and 2.8 million Tiger operating system sales.

Retail stocks advanced during the session as investors await monthly sales figures this week. Walgreen reported 7.8% rise in same store sales and Wal-Mart raised its June same-store sales forecast to 4.5% from 2%-4%.

Boston Scientific shares surged more than 5% after Delaware jury found that Johnson & Johnson interfered with the stent patent of the company.

Shares of EMC were in demand as several traders bid up the price in anticipation of the potential bid from Cisco.

Hurricane season is here. Two hurricanes have been formed in the last few hours which are likely to pass through Gulf of Mexico’s oil producing region. The uncertainty of the direction of the hurricane is adding to the oil price rise.

Following the footsteps of AMD, Broadcom has filed lawsuit against Qualcom claiming unfair licensing practices. The abuse indicates monopolistic practices, broad cross-licensing agreements and discriminatory royalties.

ECONOMIC NEWS

New orders for manufactured goods in May increased $11.1 billion or 2.9 percent to $394.1 billion, the U.S. Census Bureau reported today. This was at the highest level since the series was first stated on a NAICS basis in 1992 and followed a 0.7 percent April increase.

Shipments, down following two consecutive monthly increases, decreased $0.1 billion to $390.8 billion. This followed a 0.7 percent April increase. Unfilled orders, up following two consecutive monthly decreases, increased $10.5 billion or 1.9 percent to $563.7 billion. This was at the highest level since the series began and followed a 0.1 percent April decrease.

The unfilled orders-to-shipments ratio was 3.94, up from 3.85 in April. Inventories, up seventeen of the last eighteen months, increased $0.1 billion to $484.6 billion. This was also at the highest level since the series began and followed a slight April decrease. The inventories-to-shipments ratio was unchanged at 1.24.

INTERNATIONAL MARKETS

Japanese Prime Minister Junichiro Koizumi registered a slim victory when the lower house of the Parliament approved bills to privatize Japan’s postal system in spite of the revolt by the ruling party. Next the bill will be submitted to the upper house as their approval is needed for the legislation to be enacted.

Asian-Pacific markets ended mostly lower ahead of U.S. markets re-opening after the extended weekend break and crude-oil prices heading towards the $60 a barrel mark. The Nikkei lost 0.3%, Hong Kong’s Hang Seng slipped 0.4%, and South Korea’s Kospi fell 0.3%. In Tokyo the dollar rose against the yen to a new 10-month high of $112.13.

European stock averages closed lower in six of the eight exchanges. The U.K. and Dutch exchanges were up by a fraction. But markets in Germany and Frnace were down by 0.43% and 0.28% for the day. Energy stocks were higher as oil in London and NY traded close to $60. Shares of BP rose close to a three-year high but that of airlines lost altitude. The tire maker Michelin and Continental shares lost market value as investors worried that rising rubber prices will hurt profit margin.

were steady at mid-day standing on the flat line as investors waited on U.S. markets re-opening after a three-day weekend for the Independence Day holiday and as oil prices started rising again towards the $60 a barrel level.

Sanyo Electric reported that it plans to lay-off 14,000 people in the next three years. The company management hopes that the 15% reduction in staff will reverse the last year’s loss of 171 billion Yen.

OIL, METALS AND CURRENCIES

The euro slid to a 13 and-a-half-month low against the dollar on expectations of a positive U.S. economic outlook. The euro fell to $1.1869 in early European trading and at mid-day it recovered to $1.1879. The greenback rose against the yen, too, reaching a new 10-month high of $111.97. The British pound slid to $1.7530 from $1.7590 ahead of a Bank of England meeting.

U.S. oil prices gained 55 cents to $59.60 as crude-oil prices hovered close to $60 a barrel on approaching hurricane season and supply concerns. U.S. crude-oil companies are close to their highest levels for six years. Last week OPEC suspended talk of increasing production by a further 500,000 bpd.

U.S. gold futures slipped to a 3 and-a-half-week low in early trading falling below $425 an ounce as the strong dollar gave way to speculative selling in the metals after the long holiday weekend. On the NYME August delivery traded down $3.10 at $ 425.70 an ounce.

Lufthansa AG is allowed to proceed with its $374.7 million takeover of Swiss International Air Lines after being given clearance from the European Union. EU approval followed the U.S. antitrust regulators’ clearance to the deal given over the weekend. The company officials expect the deal to be finished by 2006 the earliest.

EARNINGS AND CORPORATE NEWS

Wal-Mart, retailer, lifted its outlook for June same-store sales to 4.5% up from previous forecast of 2% to 4% growth citing demand for seasonal and general merchandise.

Pixar Animation Studios said it will miss its 2Q earnings forecast because of higher-than- expected returns by retailers. The company sees earnings of 10 cents per share against previously announced 15 cents a share.

ConAgra Foods posted 4Q earnings decline to 20 cents per share fron 32 cents a year ago on weak profit from packaged meats. Analysts had expected income of 26 cents per share.

Oracles, software company, reported 4Q profit increase of 20 cents a share vs. 19 cents last year . This-quarter results include acquisition expenses and other charges. The company expects total restructuring costs of $546 million related to pre-merger operations, down from earlier forecast of $611 million.

Bausch & Lomb, eye care company agreed to acquire Shandong China Tai Freda Pharmaceutical Group from Sino Biopharmaceutical for $200 million cash, and an additional 15% for $54.5 million held by other entities. The acquisition is considered to be neutral to 2005 earnings, but will add 5 to 10 cents a share to 2006 earnings.

Phillips-Van Hausen updated its 2Q and 2005 outlook projecting earnings of 17 to 18 cents per share and $1.53 to $1.58 per share respectively. The results include the effects of the secondary common stock offering and the related costs.

Collegiate Pacific, sports clothing & equipment retailer, said that it acquired a majority stake in Sport Supply Group from Emerson Radio for $32 million in cash. The acquisition will increase earnings per share by an unspecified amount.

Mohawk Industries, carpet and floor coverings maker, agreed to acquire Belgian flooring maker Unlin Holding NV for $2.65 billion. Mohawk gained the latest victory by buyers in the same industry over private-equity firms. In the last 13 years the company made 18 acquisitions expanding in range of products. 1Q sales rose 7.4% compared to last year.