HP Gains after Hurd's Testimony

Elena
29 Sep, 2006
New York City

Stocks were little changed Friday, with the Dow Jones industrial average briefly surpassing its all-time high close before retreating to lower levels. Losses by DuPont and Exxon Mobil helped offset gains for the blue-chip index. Among the leading gainers, Research in Motion surged 19% and Corel Corp. rose 17% after reporting upbeat quarterly earnings. Hewlett-Packard rose more than 2% as investors appeared pleased with the testimony of Hurd.

[R]11:30AM Market traded in a lackluster manner.[/R]
The three major averages were unable to sustain any significant moves and spent the morning session moving back and forth across the unchanged line. In early trading, the Dow crossed its all-time closing high of 11,722.98, but it moved back to the downside shortly afterward. Losses by DuPont ((DD)) and Exxon Mobil ((XOM)) helped offset gains for the blue chip index.

Among the biggest Friday’s gainers, Research in Motion ((RIMM)) surged 19% after reporting strong quarterly results as well as an upbeat forecast. The company also said it may have to restate financial results because of improperly handled stock option grants to top executives. Corel Corp.((CREL)) jumped 17% after it said it swung to Q3 net profit of $5.49 million, or 22 cents a share on higher gross margin and revenue. USA Truck Inc. ((USAK)) shares rallied 17% after Liberate Technologies offered to acquire the company for $21 per share. Wolverine World Wide ((WWW)) rose 4% after it was upgraded at Prudential Equity Group. The firm also lifted its price target on the stock to $31 from $26.

In late morning trading, the Dow Jones industrial average fell 6.08, or 0.05%, to 11,712.37. The Standard & Poor''s 500 index fell 1.33, or 0.10% to 1,337.82, and the Nasdaq composite index rose 0.13, or 0.01% to 2,270.15. Bonds were lower, with the yield on the 10-year Treasury note at 4.64%, up from 4.61% Thursday.


[R]10:30AM The Sensex gained for the fourth straight day in a steady trading.[/R]
The Sensex on BSE advanced 73.68 points, or 0.60%, to close at 12,454.42. It had traded near 12,485 earlier in the day. The market-breadth was positive, as buying intensified in the small-cap and mid-cap stocks. For 1,599 shares advancing, only 899 declined and 70 shares were unchanged. From the Sensex stocks 23 advanced, while the rest declined. The turnover on BSE was Rs 3,705.68 crore, higher than Rs 3,578.65 crore on Thursday. The turnover on NSE was Rs 7,110.51 crore.

The finance minister P Chidambaram stated that there was liquidity in the banking system and that steps will be taken - fiscal and monetary - to keep inflation below 4%. He, however, predicts some pressure on food prices.

India’s GDP grew 8.9% in the April-June 2006 quarter from a year earlier, byoued by manufacturing and services output.

Advancers

Maruti Udyog led the advancers, up 3.78%, to Rs 978 on 6.62 lakh shares. Tata Steel (up 3.29% to Rs 536), Bajaj Auto (up 3.06% to Rs 3,015) and Reliance Communications (up 2.22% to Rs 347.55) were the other advancers.

NTPC rose 2.16%, to Rs 130.35, on 8.14 lakh shares. NTPC has announced that a 210 Mw unit, stage 3 in Uttar Pradesh, has been successfully commissioned.

Index heavyReliance Industries gained 0.24%, to Rs 1,170.80, on 7.83 lakh shares. It had soared to a high of Rs 1,178. the company announced it will reduce its retail pump prices of petrol and diesel from midnight on Saturday.

Metal stocks were in focus, after staying flat in the past couple of sessions, on reports that producers are considering a hike in steel prices. SAIL (up 3.72% to Rs 78.10), Rathi Udyog (up 20%, to Rs 31.70), Essar Steel (up 6.17% to Rs 36.15), Visa Steel (up 15.30% to Rs 36.55), Ispat Industries (up 4.8%, to Rs 11.60) and JSW Steel (up 1.55%, to Rs 285.25) gained.

Auto stocks surged on hopes of strong sales for September. TVS Motor (up 0.70% to Rs 124), Ashok Leyland (up 2.38% to Rs 45.15), Tata Motors (up 1.88% to Rs 858.30) and Mahindra & Mahindra (up 2.31% to Rs 683) advanced.

Decliners

Hero Honda (down 1.66% to Rs 776) and ICICI Bank (down 1.75% to Rs 696) led the decliners. ONGC was down 0.91% to Rs 1,169, Cipla fell 0.89% to Rs 261.65. Bharti Airtel fell 0.58% to Rs 468.35. A huge block deal in Bharti was traded on BSE at Rs 500 per share in afternoon trade.

Kotak Mahindra Bank Ltd slipped 1.9% to Rs 331.50 after its board approved a plan to spin-off trading and principal division of Kotak Mahindra Capital Co Ltd and merge it with the bank.


[R]9:45AM Market averages lacked direction at opening.[/R]
U.S. stocks lacked direction at opening following downbeat economic news, with consumer spending down by the largest amount in a year and inflation higher by 2.5%. The Dow once again briefly tapped its all-time closing high, up to 11,724.78 surpassing its record-high close of 11,722.98 for the second session in a row.

Gold stocks showed significant weakness in early trading, as gold futures dropped $5.50 at $605.40 an ounce. While some weakness also emerged in the semiconductor sector, airline stocks moved higher amid a decrease by the price of oil. In company news, Dell Inc.((DELL)),fell 0.5% after the world''s largest personal computer maker said it is increasing the recall of Sony Corp. battery packs used in its computers to 4.2 million units from 4.1 million units. Sony fell 76 cents to $40.40 Jabil Circuit Inc ((JBL)). rose 0.6% after it said it expects to record a $120.2 million charge related to its restructuring plan. Jabil said in a filing with the SEC that it plans to incur the charge for the period ended Aug. 31.

In the first hour of trading, the Dow Jones industrial average rose 4.16, or 0.04%, to 11,722.61. The Standard & Poor''s 500 index rose 0.50, or 0.04% to 1,339.65, and the Nasdaq composite index rose 0.67, or 0.03%, to 2,270.69. Bonds rose, with the yield on the 10-year Treasury note at 4.60%, down from 4.61% Thursday.


[R]09:00AM Stock futures were off best levels on core inflation data.[/R]
Stock market futures rose, but came off their best levels after data showing that core consumer inflation rose to an 11-year high. S&P 500 futures rose 2.30 points to 1,349.60 and Nasdaq 100 futures rose 6.75 points to 1,680.25. Dow industrial futures rose 20 points to 11,789.

In corporate news, shares in Research in Motion ((RIMM)) surged 18% at $101.95 in pre-open trading after the maker of BlackBerry handheld personal devices exceeded expectations with a Q2 27% profit rise, and after a strong Q3 profit estimate. Hewlett-Packard ((HPQ)) rose 1% in pre-open after saying it''s extending the tender offer for Mercury Interactive to Oct. 13, from a previous deadline of Sept. 28.

The Timken Co. ((TKR)) dropped 10% in pre-market trading after disclosing plans for additional restructuring activities and cutting its financial outlook. It said kit is slashing 700 jobs. Tibco Software ((TIBX)) fell 4.9% to $8.41 after reporting a 19% profit decline, dragged by stock compensation costs.

Core inflation hit an 11-year peak.[/R]
Friday morning, the Department of Commerce released its report on personal income and spending in the month of August. The report showed modest increases in both income and spending. The report showed that personal income rose 0.3 percent in August following a 0.5 percent increase in July. Economists had been expecting personal income to increase by about 0.2 percent. The increase in personal income came as private wage and salary disbursements increased $2.5 billion in August, compared with an increase of $30.3 billion in July.

The Commerce Department also said that personal spending edged up by 0.1 percent in August after a more significant 0.8 percent increase in the previous month. The increase in spending came slightly below economist estimates of a 0.2 percent increase. The modest increase in personal spending marks the slowest pace of spending growth since a 0.3 percent decline in September of 2005, when business activity was disrupted by Hurricane Katrina. With the increase in income outpacing the increase in spending, personal saving as a percentage of disposable personal income was a negative 0.5 percent in August, compared with a negative 0.7 percent in July.

The report also showed that core consumer prices, which exclude food and energy prices, edged up 0.2 percent in August after a 0.1 percent increase in July. With the increase, prices rose at an annual rate of 2.5 percent in August compared to a 2.3 percent year-over-year increase in July.


[R]8:15AM Research in Motion jumped 19.8% on earnings.[/R]
Shares of Research in Motion ((RIMM)) surged 19.8% to $102.80, in pre-market trading after the maker of the BlackBerry wireless device posted late Thursday better-than-expected Q2 preliminary results and released a strong guidance for the current quarter. The stock has traded in a 52-week range of $51.90 to $90.53 and is higher by 30% from the beginning of 2006.

Research in Motion said it earned $140.8 million, or 74 cents per share, exceeding estimate of 71 cents. Revenue for the period ended Sept. 2 jumped 34% to $658.5 million. The handheld wireless device maker also announced that an internal inquiry helped them come to the conclusion that it may have improperly handled stock option grants to top executives, and will need to restate past earnings results.

Following the news, a couple of brokerage analysts upgraded the company’s stock. A Deutsche Securities analyst upgraded the company to Hold from Sell. ThinkEquity Partners analyst Jonathan Hoopes also lifted his rating to Accumulate from Sell and lifted his target price to $115 from $45.


[R]7:30AM Japanese stocks gain on economic data and U.S. rally.[/R]
Asian markets were higher on Friday. Japan''s Nikkei 225 Average finished the day up 0.6% to 16,127.6. Shares of Japanese Internet and telecom conglomerate Softbank Corp. jumped 7.2% after the company unveiled a line of new 3G handsets Thursday. Shares of electronics maker Fujitsu gained 1.7% on news that it would buy manufacturing facilities in Japan from U.S. flash-memory maker Spansion Inc. Mitsubishi UFJ added 1.3% on expectations the continuing economic growth suggested by the morning data would fuel lending.

The Shanghai Composite Index closed up 0.9% at 1,752.4, with bank shares leading gains on expectations the yuan would continue to strengthen. Hang Seng Index in Hong Kong finished up 0.1% after emerging from negative territory in the last minutes of trading. Hang Lung Properties led advancers, adding 3% after having fallen more than 5% in the course of the week.

Australia S&P/ASX 200 gained 0.8%, while South Korea Kospi index ended flat. In Taiwan, shares of Hsinchu International Bank gained 6.9% after the company received a $1.2 billion takeover offer from Standard Chartered Plc. The broader Taiwan market ended flat.


[R]6:30AM European shares advance on auto, hedge funds, and U.S. markets.[/R]
European markets were higher by mid morning on Friday. the FTSE 100 in London added 0.5% to 6,000.4, the Xetra Dax was up 0.6% to 6,023.10, and the CAC 40 in Paris gained 0.6% to 5,281.15.

In focus

Auto stocks performed well as the main European manufacturers were upbeat at the Paris Motor Show.

Advancers

Porsche added 1% after it said it aimed to remain the most profitable carmaker.Elsewhere, Fiat added 1.7% and BMW gained 1.3%. German truckmaker MAN continued to benefit from the possibillity that a costly bid for Swedish rival Scania will fail, and the possibility that it may enter a three way merger deal with Scania and Volkswagen truck unit. MAN gained 1.4%, VW added 1.3%.

Man Group, the largest listed hedge fund in the world, led financial stocks higher after the British company reported strong first-half results. Its shares gained 5.8%. Shares of Spanish group Acciona gained 0.1%.

Decliners

Scania fell 0.3%. Spanish construction group ACS confirmed on Thursday night it had raised its holding in domestic utility Iberdrola to 10%, making it the biggest shareholder in the company. ACS fell 0.5%, while Iberdrola lost 2.4%. Endesa fell 0.1% and Eon fell 0.2%.

Corporate news

it was reported in the Spanish press that Jose Manuel Entrecanales, chairman of conglomerate Acciona, was trying to further block the takeover of Spanish power generator Endesa by Eon, of Germany, asking banking group Santander to buy shares in the company.

Oil and gold

Oil prices declined Friday in what was likely a correction following a rise to more than $63 a barrel a day earlier as the market reacted to reports that OPEC may cut production. Light, sweet crude oil for November delivery fell 26 cents to $62.50 a barrel in midmorning Asian electronic trading on the NYME. Brent crude futures for November on London ICE exchange were down 25 cents to $62.29 a barrel.

Gold traded in London at $601.75, down from $604.40 late Thursday. Silver opened in London at $11.50 per troy ounce, down from $11.60.

Currencies

The U.S. dollar was higher against most other major currencies in European trading Friday morning. The euro bought $1.2669, down from $1.2706 late Thursday in New York. The British pound traded at $1.8695, down from $1.8768. The greenback bought 118.00 Japanese yen, up from 117.79.