Tech Earnings Overshadow Opening

albena
30 Nov, -0001
New York City

U.S. stocks are poised to start lower as some investors were disappointed by the earnings reports from Intel and Yahoo. The raft of other earnings releases will be in the spotlight, together with Greenspan

U.S. MARKET AVERAGES

Some investors’ disappointment with Intel Corp. and Yahoo Inc.'s second-quarter earnings weighed on futures in the early trade Wednesday, as traders are looking forward to the semi-annual testimony from Federal Reserve Chairman Alan Greenspan.

Intel said its profit surged 16% on a 15% jump in revenue and the chip maker forecasted a 16% sales gain this quarter with a rise in profit margins. Intel's earnings slightly topped estimates, and revenue met views, but some investors had expected the company to surprise with better results.

Yahoo said its net increased sevenfold and sales soared 51% but that wasn't satisfactory enough fore some investors’ views and Yahoo stock lost 10% in after-hours trading.

Traders expect a heavy load of earnings releases in the morning, and more after the closing bell Wednesday, including AT&T and eBay.

Five of the six Dow members scheduled to report financial results reported their earnings. Four of the Dow industrials components beat average estimates.

Pfizer Inc. said that 2Q net income rose 21%, topping estimates, as revenue jumped 1%.

Altria Group was in line with the earnings projections for the quarter and boosted its 2005 guidance by 5 cents a share.

J.P. Morgan swung to a profit and announced adjusted results that beat views, while United Technologies and Honeywell also reported quarterly earnings ahead of estimates.

Kraft Foods Inc. reported per-share earnings from continuing operations of 45 cents, below Wall Street's expectation for earnings of 47 cents a share.

ECONOMIC NEWS

Federal Reserve Chairman Alan Greenspan is to give his view of the economy before the House Financial Services Committee in his semi-annual congressional testimony at 10 Wednesday. On Thursday, the testimony will continue with an appearance before the Senate Banking Committee.

President Bush nominated Judge John Roberts as his choice for the Supreme Court on Tuesday night. Stock futures slightly advanced on the news, but shortly afterwards slid back.

INTERNATIONAL MARKET NEWS

Asian benchmarks finished mostly up lifted by steel and automotive shares following overnight gains in Wall Street, strong economic data in China, stating GDP grew 9.5% in the second quarter and a 14-month high of the dollar against the yen, giving support to exporter issues. The Japanese Nikkei rose 0.2%, Hong Kong’s Hang Seng added 0.2% helped by solid gains in shoe maker Yue Yuen. South Korea’s Kospi ended slightly lower to close down 0.1%. The U.S. dollar advanced against the yen in Tokyo markets and quoted at 113.07.

European markets were generally higher on Wednesday, as traders were focused on interest rate policy after the Bank of England announced its meeting minutes. Europeans are also looking forward to Alan Greenspan’s testimony on U.S. monetary policy due later Wednesday.

The Bank of England minutes said that members of its Monetary Policy Committee voted 5 to 4 to keep interest rates at 4.75% in July and observers believe rate hikes look set to continue in the U.S.

The U.K. FTSE 100 index climbed 0.8% to 5,241.8, while the German DAX Xetra 30 index advanced 0.1% at 4,775.14 and the French CAC-40 index remained steady at 4, 424.12.

European tech stocks were also in the spotlight, after earnings results from Yahoo and Intel sparked sell-off in U.S. markets late Tuesday.

ENERGY, METALS AND CURRENCIES MARKETS

U.S. crude oil futures settled up 14 cents to $57.46 a barrel, while London Brent crude futures rose 37 cents to $57.36 a barrel.

The euro rose to $1.2081 in morning European trading, up vs. $1.2030 late Tuesday. The dollar was mixed versus other major currencies, rising to 112.80 yen from 112.69 yen on Tuesday, while the pound was at $1.7411, up from $1.7395.

EARNINGS NEWS

GM swung to a net loss in the second quarter, due to a $1.2 billion loss in its North American auto operations. Overall revenue fell 1.5%.

Kraft Foods, food manufacturer, reported 2Q profit decline of 28 cents a share compared with 41 cents a year ago due to a loss from the sale of its candy divestiture and higher commodity costs. The quarterly results missed expectations of 47 cents a share.

Hutting Building Products, millworks and building supply company, posted 2Q earnings drop of 17 cents per share, down from 34 cents last year, citing lower profit margin and poor weather which affected sales.

Gilead Sciences, biotechnology company, posted 2Q net profit rise of 41 cents a share vs. 25 cents a year ago on strong demand for its drugs treating HIV-virus, beating analysts’ expectations of 36 cents a share.

First Indiana, financial services company, reported 2Q net income increase of 45 cents per share, up from 32 cents for the comparable last-year period on improved net interest margin.

Landec, polymer products developer, posted 4Q net income rise to $4.6 million, up from $4.3 million, but earnings remained flat at 17 cents per share, hurt by produce sourcing issues at Apio, Landec’s subsidiary.

Akzo Nobel, Dutch pharmaceuticals and chemicals group, posted 2Q profit growth of 182 million euro, missing expectations of 187 to 212 million euro. The company sees 2005 income within the range of 2004.

Pfizer, pharmaceutical producer, reported 2Q earnings growth of 47 cents a share compared with 38 cents last year on 1% revenue growth, exceeding estimates of 44 cents a share.

Bank of New York posted 2Q net profit rise to 52 cents a share, up from 48 cents a year earlier, beating average expectations of 50 cents a share.

CIT Group, commercial and consumer financial company, announced 2Q profit increase of $1.03 a share versus 82 cents a year ago.

CORPORATE NEWS

Chevron ((CVX)) increased its bid for Unocal, and is now offering $63.01 in cash and stock. Unocal reaffirmed the revised offer, while Chinese oil company CNOOC said it was holding onto its $67 cash offer.

Groupe Danone continued to post gains from bid speculation, up over 5% on news that PepsiCo has hired UBS and Morgan Stanley to provide advice on a possible bid.

Eastman Kodak boosted the number of jobs it planned to reduce as part of its restructuring to 22,500 to 25,000 from 15,000 due to the faster-than-anticipated decline in consumer film sales. Kodak posted a 2Q loss of $146 million, or 51 cents a share, vs. a profit of $136 million, or 46 cents a share in the same period a year ago.