Blue Chips Drive Market Up

Elena
19 Oct, 2006
New York City

U.S. stocks reversed from earlier weakness, lifted by better-than-expected earnings of blue chips Coca-Cola Co. and Pfizer Inc., which helped offset concerns about weak results of some tech companies. The Dow broke through the historical height of 12,000 for a second straight day. Coca Cola gained 1.6% on better-than-forecast earnings and revenue. Pfizer gained about 0.9% after reporting 112% earnings jump.

[R]11:30AM Blue chips lifted market sentiment.[/R]
U.S. stocks reversed from earlier weakness, lifted by better-than-expected earnings of blue chips Coca-Cola Co. and Pfizer Inc., which helped offset concerns about weak results of some tech companies. The Dow broke through the historical height of 12,000 for a second straight day. Coca Cola ((KO)) gained 1.6% on better-than-forecast earnings and revenue. Pfizer ((PFE)) gained about 0.9% after reporting 112% earnings jump. Outside the blue-chip index , Apple Computer ((AAPL)) was a notable gainer as the maker of the iPod music player surged 6% after a reporting a strong quarter. In contrast, Advanced Micro Devices ((AMD)) tumbled more than 10% on margin and pricing concerns.

Citigroup ((C)) fell 1% due to some disappointment over its Q3 earnings and revenue performance. McDonald's Corp. ((MCD)) said Q3 profit climbed 15%, as revenue grew in double digits and profit margins rose. The stock was off 0.5%. Shares in Honeywell International Inc. ((HON)) tumbled 4%. The company reported Q3 profit above analyst expectations, but when combined with the increase in its full-year view, it suggests an implied Q4 outlook that would be less than Wall Street expects. In late morning trading, the Dow rose 8.56, or 0.07%, to 12,091.33. The Standard & Poor's 500 index shed 1.32, or 0.10%, to 1,364.64, and the Nasdaq composite index fell 1.52, or 0.07%, to 2,335.63. Bonds fell, with the yield on the benchmark 10-year Treasury note rising to 4.79% from 4.76% late Wednesday.


[R]10:30AM The Sensex plunges as profit-taking takes hold on Thursday.[/R]
The Sensex on BSE finished lower Thursday. The benchmark index fell 134.89 points, or 1.05%, to end at 12,723.59. The Sensex traded in a range of 271 points for the day. The market-breadth was negative as 997 shares advanced, 1,1427 declined and 84 stocks remained unchanged. From the 30-issue Sensex stocks, 26 declned, while the rest advanced. The turnover on BSE was Rs 3,441 crore, lower than Rs 3,678 crore on Wednesday. The turnover on NSE was Rs 7,310.85 crore.

Economic news

Indian Prime Minister Manmohan Singh expressed confidence on Thursday that the Indian economy, growing at a 8% for the third straight year, will expand by 9-10% annually over the next five years.

Advancers

Grasim Industries led the advancers, gaining 2% to Rs 2,634, after it posted stronger-than-expected second-quarter results. The net profit jumped 80% to Rs 337.84 crore (Rs 187.65 crore), topping market expectations.

Tech Mahindra surged 12.63% to Rs 770.15, on strong second-quarter results. Its net profit grew to Rs 141 crore from Rs 36.50 crore in second-quarter September 2005. JSW Steel jumped 4.11% to Rs 327.95, following its announcement of 225% surge in net profit for second-quarter September 2006 to Rs 327.95, compared to Rs 106.29 crore for second-quarter September 2005.

Steel maker Ispat Industries jumped 4.72% to Rs 12.20, after the company reported turnaround results for second-quarter September 2006.

Decliners

Bajaj Auto led the decline, down 3.62% to Rs 2,794, after the company came out with results below expectations for second-quarter September 2006. Reliance Communication plunged 2.78% to Rs 367.50, Ranbaxy slipped 3.08% to Rs 411 and ITC declined 2.26% to Rs 190.10 also declined.

HDFC dropped 2% to Rs 1,451, despite reporting 23% growth in bottomline for second-quarter September 2006 to Rs 368.02 crore, compared to a net profit of Rs 298.98 crore in second-quarter September 2005. L&T lost 2.46% to Rs 1,271.10, even as the company reported 40.6% growth in net profit for second-quarter September 2006 to Rs 201.22 crore from Rs 143.05 crore in second-quarter September 2005.

Index heavy Reliance Industries declined 1.53% to Rs 1,189.50 ahead of its second-quarter results today. Analysts have forecast between 4.6% fall and a 16.8% rise in second-quarter net profit. After the close, Reliance reported third quarter profit of earnings of Rs 2,700 crore compared to 2,480 crore from a year ago. The higher profit was delivered by rising profit from plastics and chemical business. The fall in refining margin affected the net profit for the year. For the quarter the company earned 19.40 rupees compared to 17.80 per share. Refining margins for the quarter declined by more than 10% from $10.40 to $9.10 per barrel.

Other news

State-run domestic carrier Indian (formerly known as Indian Airlines) today received the first jet of a 43-plane order placed with Airbus Industries in Europe under a $2 billion deal signed in February. The airline with a fleet of 74 planes has 25 planes from Boeing and the rest from European Airbus.

The board of Anglo-Dutch steelmaker Corus Group met on Wednesday to discuss a takeover bid from Tata Steel. Corsus is expected to recommend Tata Steel bid for 4.1 billion pounds. There were rumors that the bid may be revised in the coming days, before the board accepts the bid.


[R]9:45AM stocks opened lower, dragged down by the tech sector.[/R]
Stocks opened weaker Thursday as investors were cautious amid mixed results from tech stocks like Apple Computer Inc. and Advanced Micro Devices Inc. Advanced Micro Devices ((AMD)) plunged 11.6% after its results raised worries about falling profit margins. Mobile telephone maker Nokia Corp. ((NOK)) dropped 3.12% on disappointing Q3 profit. At the same time, Apple ((AAPL)) jumped 6.6% on strong Q4 earnings, driven by iPod sales rise. Elsewhere, E*Trade ((ET)) helped to lead the brokerage sector lower after reporting weaker-than-expected Q3 revenues. Resource stocks also moved higher, benefiting from an increase in commodities prices. Elsewhere, E*Trade ((ET)) helped to lead the brokerage sector lower after reporting weaker-than-expected Q3 revenues. Resource stocks also moved higher, benefiting from an increase in commodities prices. In the first hour of trading, the Dow fell 24.01, or 0.20%, to 11,968.67.The Standard & Poor''s 500 index fell 3.68, or 0.27%, to 1,362.28, and the Nasdaq composite index dropped 12.72, or 0.54%, to 2,324.43.

[R]Initial jobless claims dropped by 10,000.[/R]
Thursday morning, the Department of Labor released its report on initial jobless claims in the week ended October 14. The report showed that jobless claims fell unexpectedly. The Labor Department said that initial jobless claims fell to 299,000 from the previous week''s revised figure of 309,000. Economists had expected claims to increase to 310,000 compared to the 308,000 originally reported for the previous session. The report also showed that the less volatile 4-week moving average fell to 307,750 from the previous week''s revised average of 313,500. With the decrease, the 4-week moving average fell to its lowest level since the week ended June 24. At the same time, the report showed that continuing claims in the week ended October 7 rose to 2.453 million from the preceding week''s revised level of 2.428 million.


[R]9:30AM The FTSE 100 slips on Thursday as banks and oil stocks declined.[/R]
The FTSE 100 in London lost 0.2% to 6,136.5 by mid-morning on Thursday.

In focus

The market dipped when Prudential blamed an expected second half loss at its internet bank Egg on a 20% rise in individual voluntary arrangements in the third quarter, which Prudential said it had not anticipated when it increased its ownership of the bank a year ago.

Advancers

Pharma stocks advanced after strong figures from Novartis of Swizertland. AstraZeneca rose 1.5% and GlaxoSmithKline gained 1%. News of four acquisitions in fast growing emerging markets impressed investors in advertising group WPP. And its shares were 0.9% higher.

Reckitt Benckiser gained 1.4% after the consumer goods company was upgraded by Panmure Gordon. The mid-cap, Informa, jumped 9.85 as the business information publisher confirmed a story in that it had received an early approach from Springer Science & Business Media. Prudential was higher, up 0.9%, as its new business sales rose 11%.

Decliners

Banks led the decline. Alliance & Leicester fell 1.8% , Bradford & Bingley dropped 1.5%, Northern Rock slipped 0.9% and HSBC eased 0.8%.

Telecoms stock declined on concerns about margin pressure at Nokia. Vodafone fell 0.6%. Oil stocks were also lower despite expectations of a production reduction from the OPEC. BP was off 1% and Royal Dutch fell 0.6%.

Imperial Tobacco dropped 0.4% after Goldman Sachs downgraded their rating on the cigarette company from buy to neutral.


[R]9:00AM Stock futures flat on mixed results from Apple, Nokia, Advanced Micro Devices.[/R]
U.S. stock market futures settled near the unchanged mark, reflecting mixed results in the technology sector from leading companies like Apple Computer, Nokia Corp. and Advanced Micro Devices offset by better-than-anticipated results from Bank of America, Citigroup and Coca-Cola.

Citigroup Inc. ((C)), the U.S. largest bank, said its Q3t fell 23% to $5.51 billion, or $1.10 per share, from $7.14 billion, or $1.38 per share, a year earlier. In the third quarter of 2005, Citigroup sold Travelers Life & Annuity to MetLife Inc. of New York and recorded a $2.12 billion gain on the sale. Bank of America ((BAC)) topped forecasts with a 41% profit rise, and Coca-Cola ((KO)) also exceeded views with a 14% profit rise.

Among other companies in focus today Pfizer Inc. ((PFE)) said its Q3 profit soared 112%, compared with last- year same period, which was hurt by an acquisition charge. Revenue rose 9%to $12.2 billion, beating the expectations. The world''s largest drugmaker said that next year it would announce cost-cutting measures that go beyond the program announced last year. Apple Computer ((AAPL)) shares rose 4% in pre-open trade on a stronger-than-expected 27% profit rise on the back of sales of iPod music players and Macintosh computers. EBay ((EBAY)) rose 2% higher after reporting a 10% profit rise and 31% sales rise. Advanced Micro Devices ((AMD)) slipped 10% in the pre-open after Intel''s chief rival reported lower profit margins and average selling prices for its microchips.

In economic news, the Labor Department reported that the number of laid off workers filing claims for unemployment benefits dropped by 10,000 last week to the lowest level in three months. The decline was steeper than analysts had been expecting. S&P 500 futures turned higher after early losses, with the contract up 0.7 of a point at 1,373.20.
Nasdaq 100 futures were down 1 point at 1,714.00 and Dow industrial futures were flat.


[R]8:00AM Apple Computer posted 27% profit rise in Q4 on strong sales of iPod.[/R]
Apple Computer Inc. ((AAPL)) reported Q4 profit increase of 27%, boosted by strong sales of its iPod and Macintosh computers. Apple said that for the quarter it shipped 8.7 million iPods, 35% more from the year-ago period and 1.6 million computers, up 30% from a year earlier.

Apple posted earnings of $546 million, or 62 cents per share, up from $430 million, 50 cents per share last year, easily beating expectations of 51 cents a share on sales of $4.66 billion. Revenue for the quarter jumped 32% to $4.84 billion. Apple''s fiscal 2006 revenue hit a record $19.3 billion, surpassing its previous all-time high of $13.9 billion last year. The company ended the year with more than $10 billion in cash, up from more than $8 billion fiscal 2005. For the full fiscal year, Apple said it earned $1.99 billion, or $2.27 per share, up from $1.335 billion, or $1.56 per share, the previous period.

Sales for all computers reached $2.2 billion, up 37% from a year-ago, while sales of iPods reached $1.56 billion, up 29%. The iconic portable music player accounted for about a third of Apple''s quarterly sales. For the fiscal year, Apple sold more than 39 million iPods and 5.3 million Macs.

Apple officials said they were optimistic about the current holiday quarter. For Q1, Apple expects revenue of $6 billion to $6.2 billion and earnings per share of 70 cents to 73 cents. The company warned that it might have to restate some of the results later on.


[R]7:30AM Asian markets end mixed, Japan falls on chip-makers.[/R]
Asian maarkets were mostly lower on Thursday. The Nikkei 225 Stock Average shed 0.6% to 16551.36, following a 0.25% increase the previous day. Sony declined 0.4%. as it revised its guidance down, due to the fallout from its laptop battery recalls just after the market closed. Advantest dipped 4.4%, pulled down by an overnight slump on the tech-heavy Philadelphia Semiconductor Sector Index in the US. Nissan shares fell as much as 1.5% after the company said it has begun recalling more than 130,000 vehicles to repair an ignition key defect.

Hang Seng Index in Hong Kong fell 0.34% to 17986.97. The China Enterprises Index ended little changed at 7,440.32. Shares of Cathay Pacific Airways advanced 2.3%, buoyed by softening crude-oil prices.

The Kospi in South Korea ended flat at 1354.06, Taiwan shares fell 0.3% to 6995.83. The Straits Times index in Singapore bucked the trend, gaining 0.64% to 2659.37. Australia S&P/ASX 200 swung from early gains to end down 0.5%. Shares of Woodside Petroleum shed 2.6% after the company reported a 28% jump in production for the third quarter from a year earlier but warned its may struggle to meet full-year production targets.


[R]6:30AM Earnings and U.S.-inspired profit-taking lower stocks in Europe.[/R]
European markets were lower by mid-morning on Thursday. The U.K. FTSE 100 index sank 0.5% to 6,123.30, the French CAC-40 index was 0.5% lower at 5,336.49, and the German DAX Xetra 30 index declined 0.4% to 6,157.06.

Advancers

Metrovacesa, the Spanish property group led the advancers. Amid bid speculation, the shares were up 3.8%, extending a gain of 8.7% on Wednesday. The increase over the past month has been over 50%.
Shares in Atos surged 19% amid talk of a potential buyout by Blackstone. Ericsson was up 1.1%, reversing pre-open losses, as the mobile network equipment maker produced earnings that shaded analyst expectations.

Fiat, Italian car maker was up 2.6% after it hit a four and a half year high on Wednesday. Akzo Nobel bounced back, up 2.7% after taking a plunge on Wednesday when the Dutch pharmaceutical group warned of a delay to the launch of its anti-schizophrenia drug, asenapine.

Some financial stocks also faired well. Banco Popular gained of 2.1%, after its third quarter earnings just beat expectations, despite the fact that Goldman Sachs downgraded the bank to sell from neutral.

Decliners

Shares in SAP dropped 2.4% after the company reported a cautious outlook despite beating quarterly forecasts. German semiconductor company Infineon fell 1.8% as its US rival AMD noted compressed profit margins. Safran declined 1.6%, reversing a 5.7% gain on Wednesday.

The food and beverage sector were one of the biggest decliners in early trading, after Nestle shares shed 1.4% after a recent strong performance.

Oil and gold

Oil prices gained Thursday as traders awaited the outcome of a meeting of the OPEC to discuss a possible reduction in production to prop up prices. Light, sweet crude oil for November delivery rose 29 cents to $57.94 a barrel in on the NYME. Brent crude for December delivery on London ICE Futures exchange rose 34 cents to $59.92 a barrel.


Gold opened Thursday at a bid price of $588.80 a troy ounce, down from $592.80 late Wednesday.

Currencies

The euro recouped Thursday against the U.S. dollar ahead of new U.S. economic data that could offer more direction. The euro bought $1.2555 in morning European trading, up from $1.2533 in New York late Wednesday. The British pound rose to $1.8719 from $1.8675. The dollar declined to 118.53 Japanese yen from 118.92 yen.