Early Rally Stays Narrow

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

June retail sales were driven higher by 1.7% as auto discounts spurred better-than-anticipated sales. The inflation when measured at CPI level rose by 0.1% in June compared to 0.2% forecast. The benign inflation in the CPI index supported the early gains in the market. The Initial Claims for the unemployment jumped to 336,000 last week.

U.S. MARKET AVERAGES

Market showed solid advances for the day but trimmed early gains in the last hour of the session. The solid gains were seen only in bio-tech, technology, and in semiconductor stocks. The shares of homebuilders and energy sectors were in decline as traders took profit.

The decline in oil price, strong June retail report and better-than-expected news on inflation supported the rally in the early hours of trading. The market’s breadth failed to expand to more sectors and rally began to fade in the last hours of trading.

Retail stocks gained 0.6% after the latest data showed a strong month for the sector in June. The computer hardware sector benefited from Apple Computer's strong earnings performance in the second quarter.

Apple Computer shares traded as high as 8.2% after it reported 2Q revenue up 75% and earnings up five fold from a year ago. Advanced Micro Devices shares traded as high as 4% after it reported a decline in a profit but not loss as market was expecting.

Better Online Solutions Ltd. stock soared 118% after the Israeli company said its Odem Electronic Technologies unit received orders worth more than $3.5 million over the past three months to customers in the U.S., Asia, and Europe.

ECONOMIC NEWS

On the economic news front, consumer prices in June were unchanged as energy prices actually fell, the Labor Department said Thursday. Excluding food and energy prices, core inflation at the consumer level increased 0.1%. The figures were well below expectations of a 0.2% increase.

U.S. retail sales rose a better-than-expected 1.7% in June, the Commerce Department estimated Thursday. The sales gain was led by auto sales, which rose 4.8%. Excluding autos, sales increased 0.7%. Ahead of the report, economists were expecting a 1.0% rise in retail sales, and a 0.6% increase in sales excluding motor vehicles. The strength was tempered somewhat by weaker May sales than first believed. May sales were revised to a drop of 0.3% compared with the initial estimate of a 0.5% gain.

First-time filings for state unemployment rose by 16,000 to a six-week high of 336,000 in the week ended July 9, the Labor Department said Thursday. Back on the employment front, the Labor Department said the number of former workers collecting jobless checks rose by 45,000 in the week ended July 2 to 2.62 million, a four-week high. The four-week average of continuing claims declined by about 5,000, standing at 2.60 million. The insured unemployment rate increased by 0.1% to 2.1%.

The level of initial jobless claims has fallen by about 6% in the past year vs. claims averaging about 340,000 a year ago. Last year continuing claims were about 300,000 higher, averaging 2.92 million.

INTERNATIONAL MARKET NEWS

European shares closed higher lifted by optimistic results in the semiconductor sector, positive news from the Swiss drug maker Novartis and the Belgian brewer InBev, as well as by the U.S. data released to show flat inflation and improved retail sales. Averages in Germany advanced 0.4%, in France added 0.6%, and in the U.K. rose 0.3%.

European stocks advanced at mid-day trading boosted by gains in the semiconductor sector with Infineon Technologies and STMicroelectronics among the gainers after AMD and Apple Computer released better-than-anticipated results. Positive news from Swiss drug maker Novartis and Belgian brewer InBev also provided a lift, as well as U.S. economic data and jumps in retail sales. The German DAX 30 added 0.7%, The French CAC 40 gained 0.9%, and London’s FTSE rose 0.3%. In currency markets the euro was flat at $1.2074.

Asian benchmarks made solid gains on U.S. strength and tech optimism on the back of strong results from chip maker Advanced Micro Devices and Apple Computer. Japanese stocks rose to a three-month high, reaching 0.9% rise, as traders bought high-tech issues. Hong Kong’s Hang Seng reached a four-year high of 1.29% with gains in property stocks. The South Korean Kospi advanced to a ten-year high of 1.1% on tech and auto shares. The dollar traded at 111.83 yen in Tokyo at 5 p.m.

ENERGY, METALS AND CURRENCIES MARKETS

The dollar was mixed against other major currencies in European trading. The euro was $1.2100, up from $1.2082; the pound quoted at $1.7601, down from $1.7617; the dollar bought 112.17 yen. At mid-day trading in NY the greenback bought 112.164 yen, the euro slipped back to $1.2082, and the pound was $1.7581.

Oil futures dropped by more than $1 on forecasts that an oncoming hurricane would fail to hit key energy production regions in the Gulf of Mexico. Supply concerns eased on expectations of slower oil demand growth in China and U.S. data showing rising inventories of heating oil and diesel fuel. Light sweet crude for August delivery fell by $1.76 to $58.20 a barrel on the NYME at mid-day. London Brent traded at $57.85, 42 cents off.

Gold futures fell to a six-week low dragged on the strong U.S. dollar. August delivery was last down $2.50, at $422.10 bid per troy ounce on the NYME. Analysts expect short-term lower prices of gold. September silver was up 3 cents to $7.10 per ounce. Copper gained ground and rose 41.35 to $1.563 a pound.

EARNINGS NEWS

Genzyme, biotechnology group, reported 2Q earnings rise of 46 cents a share vs. 33 cents a year ago, beating expectations by 4 cents. The company raised its 2005 outlook to $1.75 to $1.80 a share.

Iona Technologies, business technology software maker, posted wider 2Q loss of 7 cents a share compared with 5 cents a year earlier.

Monro Muffler Brake, undercar repair and tire service chain, posted 1Q profit increase of 52 cents a share vs. 47 cents last year on improved purchasing power and higher prices. Same-store sales rose 1.7%.

NEXEN, Canadian oil group, reported 2Q net income of 77 cents per share vs. 55 cents last-year same quarter on higher production and energy prices.

Novartis AG, drug maker, posted 2Q profit growth of 70 cents a share compared with 63 last year on brisk sales.

Polaris Industries, motorcycle maker, reported 2Q earnings rise of 68 cents a share vs. 54 cents a year ago, boosted by lower operating costs and higher demand.

AMCORE Financial, posted 2Q earnings rise of 49 cents a share vs. 41 cents a year ago on deposit growth, but missed estimates of 50 cents a share.

Fairchild Semiconductor International swung to a 2Q loss of $1.71 per share compared with a net income of 14 cents a share last year, missing expectations of 5 cents net income. The quarterly results include $195.3 million non-cash charges.

Fifth Third Bancorp, financial services company, reported income decline of 75 cents a share vs. 79 cents a year earlier on lower long-term interest rates and weaker deposit growth. The results exceeded expectations of 74 cents a share.

HDFC Banc, Indian third-biggest bank, posted 1Q income rise of 1.84 billion rupees compared with 1.4 billion last year on growth in loans and fee-based income. The quarterly results are in line with expectations.

Knight Ridder, newspaper publisher, reported 2Q profit decrease of $1 per share vs. $1.08 a year ago due to declines in circulation income and increased costs. Analysts had expected 99 cents per share.

Landstar System, logistics and transportation services provider, posted 2Q income growth of 39 cents a share against 29 cents last year, beating estimates of 36 cents a share.

Marriott International, hotel operator, posted 2Q profit fall of 59 cents a share, down from 67 cents a year ago on acquisition charges. The quarterly results failed to meet expectations of 78 cents a share.

MGIC Investment, private mortgage insurer, posted net income of $1.87 per share vs. $1.56 a year ago, topping estimates of $1.52 a share. The results are helped by fewer loan delinquencies.

Apple Computer posted 3Q record profit of 37 cents a share compared with 8 cents last year on 75% sales growth, beating expectations of 31 cents a share. The company projected 4Q earnings of 32 cents a share.

Advanced Micro Devices, computer chip maker, posted higher 2Q profit of 3 cents a share vs. 9 cents a year ago, beating expectations of a loss of 5 cents per share. The favorable quarterly results are due to strong microprocessor sales and a narrower loss in memory chips.

CanWest Global Communications, an international media company, reported 3Q earnings of 30 Canadian cents versus 31 cents last year.

Fastenal, screw, nuts and bolts maker, announced 2Q profit growth of 59 cents a share compared with 46 cents a year earlier on higher sales and new-stores opening, exceeding expectations of 57 cents a share.

Gold Bank, financial services company, reported 2Q earnings rise of 66 cents a share compared with1 cent a year ago mainly attributable to a sales gain of five Oklahoma branches.

Harbor Florida Bancshares, the holding company for Harbor Federal Savings, posted 3Q increase in net income of 51 cents a share vs. 44 cents for the comparable last-year period reflecting net income interest increase.

Lone Star Steakhouse & Saloon, restaurants chain, reported preliminary 2Q profit of 26 cents per share vs. 25 cents a year ago. Comparable-store sales declined 1.2%.

M.D.C. Holdings reported 2Q net income rise of $2.25 per share compared with $1.87 last year on low interest rates and boosted demand for homes. Analysts had expected $2.06 per share.

MGI Pharma, drug maker, posted 2Q profit rise of 17 cents a share vs. 11 cents a year ago driven by sales of Aloxi, drug used to treat nausea.

Network Equipment Technologies, networking technology provider, posted 1Q wider loss of 21 cents a share compared with 3 cents a year ago citing sluggish government business. The quarterly results missed estimates of a loss of 12 cents a share.

Pharmaceutical Product Development, pharmaceutical research company, reported 2Q profit of 41 cents a share vs. 41 cents a year ago on higher revenue, beating estimates of 40 cents a share. The company projected 3Q earnings of 67 to 69 cents a share, up from previously announced 43 to 45 cents a share.

Texas Industries, maker of cement and structure steel products, posted 4Q profit rise of $1.66 a share, up from $1.59 last year on stronger sales.

Vasogen, development stage company, posted a net loss of 31 cents a share compared with a loss of 20 cents a year ago on higher expansion costs.

Yum Brands, fast-food company, reported better-than-expected 2Q earnings of 62 a share vs. 58 cents a year earlier, beating expectations of 56 cents a share. Same-store sales rose 5%. The company raised its 2005 profit outlook by 2 cents to $2.62 a share.