D.R. Horton Orders Drop 25%

Elena
10 Oct, 2006
New York City

Stocks turned lower after oil prices slipped and an economic report showed a larger-than-expected rise in wholesale inventories. The Commerce Department said that businesses'' inventories and sales rose by 1.1% each, keeping the inventory to sales ratio at 1.15. The report exceeded economists'' expectations of 0.6% increase by wholesale inventories.

[R]11:30AM Stocks turned lower on lower oil and economic data.[/R]
Stocks turned lower after oil prices slipped and an economic report showed a larger-than-expected rise in wholesale inventories. The Commerce Department said that businesses'' inventories and sales rose by 1.1% each, keeping the inventory to sales ratio at 1.15. The report exceeded economists'' expectations of 0.6% increase by wholesale inventories.

Qualcomm Inc. ((QCOM)) was the most notable decliner on the Nasdaq, falling 1.8% after the U.S. International Trade Commission found the chip maker had infringed on some of rival Broadcom Corp.'s patents. D.R. Horton ((DHI)) rose 4.6% after the home builder said Q4 net sales orders for new homes dropped 25% to 10,430 homes valued at $2.5 billion, down from 13,950 and $3.8 billion a year ago. The home builder blamed sluggish demand for housing. Also Tuesday, KB Home ((KBH)) announced 43% quarterly orders drop from a year earlier as the company delayed filing full financial results for Q3 to complete an internal review of stock-option grants. The stock traded up 3.3%.

In late morning trading, the Dow Jones industrial average fell 4.40, or 0.04%, to 11,853.41. The Standard & Poor's 500 index rose 1.14, or 0.08%, to 1,351.80, and the Nasdaq composite index rose 0.58, or 0.03%, to 2,312.35. Bond prices fell, with the yield on the 10-year Treasury note at 4.74%, up from 4.70% Friday.


[R]10:30AM The Sensex closes flat as blue-chips pare gains in late trading Tuesday.[/R]
The Sensex on BSE finished 2.06 points lower, at 12,363.77. The market-breadth was positive, but it had weakened during the course of trading as blue-chips wiped off gains. For 1,347 shares that advanced on BSE, 1,159 declined and 71 shares were unchanged. The turnover on BSE was Rs 3,181 crore, compared to Rs 3,362 crore on Monday. The turnover on NSE was Rs 6,110.09 crore.

The Finance Ministry is likely to restrict foreign direct investment in stock exchanges to 25% and foreign institutional investment to 24%, paving the way for the reported move of New York Stock Exchange to acquire equity in Bombay Stock Exchange.

Declaring that all sectors of the Indian economy were open for FDI, Prime Minister Manmohan Singh has said public works including roads, airports and transport services, besides energy sector are given highest priority for investment.

Advancers

NTPC led the advancers. The company gained 2.01% to Rs 132.15. Auto stocks nudged higher. Tata Motors (up 1.2% to Rs 912.50) advanced for the second day in a row on reports that the company had raised commercial vehicle price by up to 2%, since the beginning of this month. Maruti Udyog gained 1.1% to Rs 950.90. Maruti and ONGC on Monday signed an agreement for leasing vehicles under an end-to-end scheme of Maruti.

Bharti Airtel rose 0.6% to Rs 467. It added 1.41 million GSM users in September 2006, lifting its customer base to 27.061 million. Infosys advanced 0.5% to Rs 1,906.90. The stock came off the higher level after having risen as much as 2.7% in opening trade, to a 52-week high of Rs 1,950 buoyed by a 4% surge in its ADR on Monday.

Cement shares, having performed well earlier, trimmed gains. ACC rose 0.9% to Rs 990, off the session high of Rs 997.65. Grasim rose 0.6% to Rs 2,574, off a high of Rs 2,605.70.

Decliners

Hindustan Lever led the decliners. The stock shed 1.8% to Rs 238.90. Tata Steel fell 1.5% to Rs 518. Tata Steel said last week it may bid for the Anglo-Dutch steel maker, Corus Group Plc. Gujarat Ambuja Cements shed 0.4% to Rs 123.25. UltraTech Cement rose 2.7% to Rs 893.

Shree Cement fell 3.8%, to Rs 1,095. The company today reported a net profit of Rs 77.79 crore for Q2 September 2006 as compared to a net profit of Rs 37.36 crore for Q2. The results reflected Rs 33 crore tax provision in the current quarter compared to tax-free earnings a year ago.

Reliance Industries lost 0.3% to Rs 1,150.35. The stock was firm, trading at the Rs 1,158 - Rs 1,161 level in early afternoon trade.

Bank shares declined on profit-taking. ICICI Bank shed 0.8% to Rs 693 and State Bank of India shed 0.9% to Rs 1,025. However, HDFC Bank (up 1.3% to Rs 944.70) held positive territory. HDFC Bank announces Q2 results on October 17, 2006. Investors expect strong Q2 results from HDFC Bank.

Infosys, is expected to report a 40.8% rise in net profit for the July-September quarter on Wednesday, when it starts the earning season.


[R]9:45AM Market opened little changed.[/R]
Stock markets opened in the positive. The early strength was partly due to gains by housing stocks on positive broker comments. Standard Pacific ((SPF)), Toll Brothers ((TOL)) and D.R. Horton ((DHI)) helped to lead the housing sector higher after J.P. Morgan upgraded its ratings on the homebuilders. Transportation stocks also showed some strength amid a notable decline by the price of oil. Meanwhile, some healthcare provider stocks came under pressure, helping to limit the upside for the broader markets. LifePoint ((LPNT)) and Community Health ((CYH)) moved notably lower following downgrades by Deutsche Securities.

Google ((GOOG)) stood out as an early riser, up 2%, as investors cheered its agreement to acquire privately held YouTube for $1.65 billion. CVS Corp. ((CVS)) rose 2.8% after the drugstore chain posted higher same-store sales and raised its earnings forecasts. In the first minutes of trading, the Dow Jones industrial average fell 2.88, or 0.02%, to 11,854.93. The Dow remains near its record closing high of 11,866.69. The Standard & Poor''s 500 index fell 0.33, or 0.02%, to 1,350.33, and the Nasdaq composite index rose 0.53, or 0.02%, to 2,312.30.


[R]9:30AM FTSE 100 advances on Tuesday on merger speculation.[/R]
By late morning, the FTSE 100 was 24.5 points, or 0.2%, higher at 6,055.4, advancing to a five-year high.

Advancers

Man Group jumped 5.6% higher on reports that Goldman Sachs was considering a takeover of the hedge fund group. Dual-listed Brambles Industries rose 2.2% in the wake of a strong performance in Australia overnight. First Choice was up 5.7% as takeover speculation boosted the holiday group.

Amvescap gainer 5% after the fund manager said late on Monday that assets under management were were growing steadily from August and July. Shares of mining company Vedanta Resources advanced 0.6%. as the company second-quarter aluminum production advanced 71.7% to 79,000 tonnes, copper cathode production in India moved up 17.6% to 80,000 tonnes and Zambia copper cathode production decreased 16.2% to 31,000 tonnes.

Decliners

Corus fell 4.4% as the Anglo-Dutch steelmaker has held talks with Tata Steel of India but has yet to receive a firm bid proposal. Carnival slipped 1.9% after JP Morgan downgraded the cruise operator from overweight to neutral. The bank said there could be limited advanctage to the shares in the near term.

Northern Foods was 3.6% lower after it said underlying revenue for the 26 weeks to the end of September fell 1.1 per cent on the prior year. Inter Link Foods fell 14% following its previously announced talks with a private-equity firm in relation to a possible takeover have been terminated and no offer is anticipated.

FireOne also plunged 24.4% after its 76%-owner Optimal Group said that, in light of its expectation that U.S. Administration will soon sign into law the Unlawful Internet Gambling Enforcement Act of 2006, it would stop processing settlement for transactions originating from consumers that may be viewed as related to online gambling.

Other news

The trade gap of the UK was reduced a little in August after the deficit for July was revised upwards to reflect the effects of VAT fraud, according to official data.


[R]09:00AM Stock futures pointed to a positive start.[/R]
U.S. stock futures seemed poised for a positive market opening, supported by lower oil prices and gains for Internet stocks after Google agreed to buy video Web site YouTube Inc. Investors were also looking forward to the third-quarter earnings season. Dow component Alcoa ((AA)) will be first to release quarterly results, expected to earn 77 cents a share on revenue of $7.75 billion.

Drugstore chain CVS Corp. ((CVS)) rose 2.3% before the opening bell to $30.40 after the company raised its Q3 and full-year earnings outlook. The stock was up nearly 2% in pre-open trading. Shares of Supervalu ((SVU)) climbed over 3% in the pre-open after the grocery retailer reported Q2 earnings increase, beating forecasts.

Elsewhere, cruise operators Carnival ((CCL)) and Royal Caribbean Cruises ((RCL)) were downgraded at J.P. Morgan to neutral. The same brokerage took a more positive stance on homebuilders, upgrading D.R. Horton Inc. ((DHI)) and Standard Pacific Corp. ((SPF)) to overweight from neutral and Toll Brothers Inc. ((TOL)) to neutral from underweight. In merger-and-deal news, Google Inc. ((GOOG)) added 0.8% to $431.70 after the Internet services giant agreed to buy YouTube for $1.65 billion. S&P 500 futures edged up 0.70 of a point at 1,359.90 and Nasdaq 100 futures were up 3.75 points at 1,707.50. Dow industrial futures were flat at 11,928.


[R]8:00AM Google agreed to acquire YouTube for $1.65 billion.[/R]
Google Inc. ((GOOG)) agreed late Monday to takeover privately held YouTube Inc. for $1.65 billion in stock, with the boards of both Google and YouTube approving the terms of the deal. Google agreed to let YouTube operate as a separate unit and work out of its offices in Silicon Valley. It also allow youTube to keep all its employees. The deal is expected to close in the fourth quarter. Further details were not disclosed.

The acquisition of the No. 1 Internet video-sharing site on the Web is the biggest deal for Google, giving the online search engine a leading role in the Internet''s online-video marketplace. Like other Internet companies, Google relies on video to attract bigger numbers of customers and generate more advertising profits. There are plans for incorporating YouTube videos into Google search results, and making YouTube part of Google''s AdSense advertising feature. In its less than two years on the Web, YouTube currently streams 100 million videos daily to an audience of nearly 40 million a day. Shares of Google rose to $429, and were up as much as $4 a share in after-hours trading.


[R]7:30AM Asian markets recover from N. Korea scare, end higher on Tuesday.[/R]
Asian markets ended higher on Tuesday. The Nikkei 225 Average in Japan finished up 0.3% at 16,477.3. Shares of Canon gained 0.9, while automaker Toyota''s shares rose 0.7%. Shares of Toshiba Corp gained 2% after the company said it will invest 5.5 billion yen ($46 million) in a venture to produce LCD panels with a Polish subsidiary of South Korea''s LG.Philips LCD Co.

South Korea''s Composite Stock Price Index, or Kospi, was up 0.7%, at 1,328.37, rebounding from a 2.4% slump in the previous session. South Korean steelmaker Posco Co. advanced as much as 2.1% on expectations of further industry consolidation in the wake of Tata Steel of India bid for the Anglo-Dutch Corus Group Plc. Shares of Samsung Electronics Co ended up 0.2%.

Hong Kong Hang Seng Index gained 0.8% to 17,823.7. The China Enterprises Index rose 1.3% and shares listed in Malaysia, New Zealand and Shanghai traded nearly flat. Singapore Straits Times Index edged up 1%, while Indonesia Jakarta Composite was up 0.7%.
Australia S&P/ASX 200 index advanced 1%. BHP Billiton advanced 3.1%. Upbeat oil prices inspired shares of oil and gas producers. Inpex Holdings Inc gained 1.5%. Australian Woodside Petroleum advanced 1.6%


[R]6:30AM European markets advanced, recovering from political concerns.[/R]
European markets were higher by mid-morning on Tuesday. London FTSE 100 gained 0.3% to 6,048.0, Frankfurt Xetra Dax added 0.5% to 6,111.41, and the CAC 40 in Paris climbed 0.4% to 5,306.83.

Advancers

EADS, the French aerospace group, rose 3.9% after the new chief executive of the company troubled Airbus unit said there would be painful job cuts. The U.K. index got a boost from mobile phone giant Vodafone shares of which climbed 2.4%.

French aero-engine maker, Safran, gained 3.3% after it revealed late on Monday its CFM56 engine set a new sales record at the company. Ras Holding gained 1.6% and French group Axa rose 1.1%

Banca Intesa in Italy rose 1.5% as it neared agreement on a sale of a number of its branches to Credit Agricole in order to meet regulatory terms for the approval of its merger with Sanpaolo IMI. Sanpaolo shares gained 1.3%. Sanofi-Aventis shares added 0.6%.

Decliners

There was no eminent decliner this morning in Europe.

Oil and gold

Crude oil for November delivery rose 58 cents to $60.54 a barrel in Asian electronic trading on the NYME. November Brent crude at London ICE Futures traded 31 cents higher at $60.85 a barrel.

Gold rose as high as $579.60 an ounce and slid to $578.40/579.40 an ounce, still higher than $576.00/577.10 an ounce late in New York.

Currencies

The euro inched down to $1.2598 from $1.2605.The dollar initially gained to 119.35 yen, its highest level since hitting 119.40 yen Feb. 3, but fell to 119.10 yen, down from 119.12 yen late Monday in New York. The British pound traded at $1.8672, compared with $1.8706 yesterday.