Dow Hits New High, Nasdaq Rallies

Elena
07 Nov, 2006
New York City

U.S. stocks sharply jumped, with the Dow Jones Industrial Average hitting a new all-time high and the Nasdaq rising to a six-year peak. The broad rally was contributed by optimism over corporate earnings and the health of the economy which offset concerns about the outcome of the congressional elections. Cisco supported the Nasdaq, rising 1.26% as brokerage UBS raised its price target for the stock.

[R]11:30AM The Dow hit an all-time high. The Nasdaq struck a 6-year peak.[/R]
U.S. stocks sharply jumped, with the Dow Jones Industrial Average hitting a new all-time high and the Nasdaq rising to a six-year peak. The Dow hit an all-time high of 12,181.43 and the Nasdaq rose as high as 2,391.34, its highest since February 2001. The broad rally was contributed by optimism over corporate earnings and the health of the economy which offset concerns about the outcome of the congressional elections. Analysts say that if the election results in political gridlock, that could be a near-term positive for stocks as there would likely be fewer government policy initiatives. Opinion polls show Democrats could take control of the House of Representatives from Republicans for the first time since 1994.

Boosting the Dow, shares of plane maker Boeing Co. ((BA)) jumped almost 2% on news that Boeing will boost production rates for its new 787 long-range aircraft in response to higher-than-expected demand. The Nasdaq was boosted by network equipment maker Cisco Systems Inc. ((CSCO)), which rose 1.26% after brokerage UBS raised its price target for the stock. Toyota Motor Corp. ((TM)) also helped lift stocks, as the automaker rose 1.7% on surging Q3 earnings by 34%. Another notable gainer was Emerson Electric Co. ((EMR)), which jumped 7.8% after reporting a 26% jump in quarterly profit. Further boos was given by RealNetworks ((ROK)) which surged 8% after it said Q3 profit nearly quadrupled on a strong demand for its games.

The markets benefited from continued strength among airline, semiconductor, and networking stocks. Altera ((ALTR)) rose 5.9%, helping to lead the semiconductor sector higher after reporting Q3 earnings growth. In late morning trading, the Dow rose 63.95, or 0.53%, to 12,169.50. The Standard & Poor's 500 index rose 5.76, or 0.42%, to 1,385.54, and the Nasdaq composite index added 20.56, or 0.87%, to 2,386.51. Bonds gained, with the yield on the benchmark 10-year Treasury note falling to 4.65% from 4.70% late Monday.


[R]10:30AM The Sensex slips Tuesday on volatility in frontline large-caps.[/R]
The Sensex on BSE finished 30 points, or 0.23%, lower to 13,156.66. The market-breadth turned weak in late trading. As 1,390 shares declined on BSE, 1,124 advanced and 80 stocks were unchanged. For every 6 decliners there were 5 advancers. From the Sensex stocks, 10 advanced while the rest declined. The turnover on BSE was Rs 4,714 crore, higher than Rs 4,265 crore on Monday. The turnover on NSE was Rs 9,066.78 crore.

Economic news

The National Council for Applied Economic Research has revised up its 2006/07 economic growth forecast to 8.1% from 7.9% previously due to good monsoon rains, robust exports and foreign investment inflows. Expressing satisfaction on the UPA government performance in the last 30 months, Finance Minister P Chidambaram said the economy will continue to grow at more than 8% in the next few years.

The government is likely to consider reducing petrol and diesel prices if international crude oil prices fall below $52 a barrel.

The government also announced that amendments have been made to the emigration laws as part of a range of measures to protect Indian workers from exploitation by their employers abroad.

Advancers

Gujarat Ambuja led the advance on BSE, rising 2.07% to Rs 130.80. Software large-cap Infosys advanced 1.6% to Rs 2,105. Infosys shareholders today approved an issue of up to 30 million American Depositary Receipts before markets opened.

Housing finance company HDFC jumped 2.5% to Rs 1,566, continuing its recent gains, which have been triggered by expectations of growth in demand for housing loans. Dr Reddy’s Lab gained 2% to Rs 793. Last month, the company reported strong second-quarter results.

Metal shares rose tracking firm base metal prices on London Metal Exchange. Hindustan Zinc jumped 5% to Rs 987.60. Iron ore company Sesa Goa surged 6% to Rs 1,294, following a rally in mining stocks across global markets.

Hotel stocks were in focus on strong prospects in view of rising room rates and healthy occupancies. Indian Hotels gained 3% to Rs 148.75, Hotel Leelaventure rose 0.4% to Rs 64.65, EIH gained 5% to Rs 106 and Royal Orchid Hotels advanced 2% to Rs 190.95.

Decliners

Reliance Industries declined 1.4% to Rs 1,286.60, in contrast to the firm eariler trend when it had traded at about Rs 1,312. Shares of oil marketing firms sank as crude price surged. Indian Oil Corporation dipped 2.2% to Rs 505, BPCL slipped 3.3% to Rs 389.65 and HPCL lost 3.4% to Rs 310.

Auto stocks were under intense selling pressure. Bajaj Auto sagged 2.6% to end at Rs 2,720 and Hero Honda shed 3% to Rs 737. Car large-cap Maruti Udyog lost 1.2% to Rs 943.50, on reports that the ministry of commerce and industry had rejected the automaker’s application for granting special economic zone status for its manufacturing facility being developed at Manesar, together with Nissan.

Tata Steel declined 1.8% to Rs 496.50. Tata Steel is optimistic it will complete the agreed takeover of Corus Group by January. Consumer goods company, Hindustan Lever, finished flat at Rs 247.10.


[R]9:45AM Stocks advanced at opening, awaiting the outcome of the Congressional elections.[/R]
Stocks advanced modestly at opening, as traders awaited the outcome of mid-term congressional elections that could be favorable for the Democrats. Toyota Motor ((TM)) provided a boost in early trading after reporting quarterly profit up 34%. Applied Materials ((AMAT)) helped tech stocks up after Bank of America raised its price target on the chip maker. The stock rose 2.35%. Dow component General Motors ((GM)) also contributed to the upward move after it said in a SEC filing that its Q3 loss was reduced by $24 million, due to additional loan sales that had not been previously reported by its GMAC arm. The stock added 0.2%.

The airline sector continued its strong performance, with Southwest Airlines ((LUV)) helping to lead the airline sector higher. The discount airline rose 3.4% after Credit Suisse upgraded its rating on the stock to outperform from underperform. Semiconductor stocks extended Monday’s advance, with Altera ((ALTR)) posting a notable gain after reporting Q3 earnings growth. Significant strength also emerged in the networking sector, sending the Amex Networking Index near a five-month intraday high. The market also benefited from strength in the gold, biotechnology, and internet sectors.

Housing stocks were under pressure after Toll Brothers Inc. ((TOL)) forecast a 10% drop in quarterly home building revenue. Beazer Homes USA Inc. ((BZH)) fell after it posted a 44% drop in earnings due to lower demand for new homes. In the first hour of trading, the Dow Jones industrial average rose 25.61, or 0.21%, to 12,131.16. The Standard & Poor''s 500 index rose 1.31, or 0.09%, to 1,381.09, and the Nasdaq composite index added 4.36, or 0.18%, to 2,370.31.


[R]9:30AM London benchmark index advances supported by Marks and Spencer.[/R]
The FTSE 100 in London moved 0.1% higher to 6,232.5, a gain of only eight points but enough to take it to renewed five-year highs.

Advancers

Retailers led the advance after strong interim numbers from Marks and Spencer. Shares in the high street favourite were 5.8% stronger after its adjusted profit before tax rose 32%.

The improving sentiment on US equities markets helped Amvescap, the fund manager highly exposed to the US, to gain 0.8%.

Barclays advanced 0.6% after it announced the 240 million euros purchase of Indexchange, a German provider of exchange traded funds.

Industrial materials group Cookson says its full-year results would be slightly ahead of its previous expectations following an encouraging performance in the third quarter. Cookson advanced 5.27%.

Decliners

Interim numbers of Yell Group were poorly received, sending shares in the directories group down 5%.

Associated British Foods was 2.5% weaker after it revealed a 4% decline in full-year profits. The company, which also owns the Primark chain of discount clothing stores, said restructuring costs at its British Sugar unit amounted to 97 million pounds.

Brewer Scottish & Newcastle fell 2.2% after it said consumer markets in western Europe were variable and warned of increasing costs. It also said the upcoming smoking ban in England and Wales would have an adverse effect on its market.

EasyJet, the budget airline, fell 1.3% after it revealed its aircraft were less full in October. The market reacted negatively to this morning recommended all share offer from Celtic Resources for Eureka Mining, as Eureka fell 11.71%.


[R]9:00AM Stock futures turned flat after strong rally Monday.[/R]
Following last session''s strong rally, U.S. stock futures pointed to a flat opening Tuesday as voters headed to the polls for the mid-term Congressional elections.

Toll Brothers ((TOL)) dropped 2.25% in pre-market trading, as it gave a mixed picture on the housing market, saying that it hasn''t spotted a recovery in the housing market, but added the market may improve faster if the current inventory overhang is absorbed and consumer sentiment turns positive. Toll Brothers cut its home delivery forecast for 2007, and reported a 10% decrease in Q4 home building revenue. Peers Beazer Homes USA ((BZH)) and WCI Communities ((WCI)) didn’t express optimistic views about the housing market and reported sharply lower profit.

Diversified manufacturer Emerson Electric Co. ((EMR)) reported a 26% increase in Q4 earnings on strong global demand from industrial, energy and high-technology customers. The company earned $1.29 per share, compared with $1.01 per share a year earlier. The company projected a double-digit profit increase in 2007.

Sara Lee Corp. ((SLE)), a packaged-food and consumer-products company, reported sharply higher Q1 net income, buoyed by tax benefit and sales gains. The company reported earnings increase of 44 cents per share, up from 9 cents per share last year on 5% higher revenue, beating expectations of 25 cents per share on revenue of $3.15 billion.

Toyota Motor ((TM)) reported a 36% jump in Q1 earnings and lifted its earnings outlook for the year. Toyota also took nearly a 6% stake in Isuzu.


[R]8:00AM General Motors reduced its Q3 loss.[/R]
General Motors Corp. ((GM)) announced Tuesday that its Q3 loss was cut by $24 million to $91 million, according to a Securities and Exchange Commission filing. The company previously reported that its Q3 loss was $115 million, or 20 cents per share. The narrower profit loss was attributed to additional loan sales that had not been previously reported by its GMAC arm. GMAC unit revised its loss to $324 million in the third quarter, down from the previously reported $348 million. GM shares rose 0.14% to $34.75 in after-hours trading Monday.


[R]7:30AM Asian markets finish in positive territory on Tuesday, HK, Sydney lead.[/R]
Asian markets closed higher on Tuesday. The Nikkei 225 Index ended 0.2% higher at 16,393.41. Entertainment and electronics conglomerate Sony rose 0.9%.Toyota Motor announced its group net profit soared 34%, powered by robust sales in North America and Europe and a weaker yen. Its shares rose 1%. Shares of Honda rose 1.7%.

Hang Seng Index of Hong Kong rose 0.7% to 19,068.61, breaking the 19000-point barrier for the first time. Trading large-cap property shares were higher, with Sun Hung Kai Properties up 2.8%, while Henderson Land Development jumped 3%. China Mobile, the second-biggest large-cap by market value, rose 0.7% to a record high. The China Enterprises Index rose 1.2% to 7,804.14, breaking its previous all-time high set more than nine years ago.

Australia S&P/ASX 200 set a fresh intraday record before going slightlydown to close 0.9% higher to 5,491.60. Shares of mining company BHP Billiton rose 2% while rival Rio Tinto advanced 3.4%. Woodside Petroleum added 0.5%, lifted by stronger crude-oil prices. Taiwan Weighted Price Index gained 0.9%, rebounding from a 0.6% decline.

Elsewhere, Indonesia JSX Composite hit a record peak before retreating slightly to trade 1.2% higher at 1661.15. South Korea Kospi index advanced 0.6%, while Singapore Straits Times Index added 1.2%.


[R]6:30AM European markets advance in early trading Tuesday on oil and banks.[/R]
European markets were mostly higher on Tuesday. By mid morning, London FTSE 100 was flat at 6,224.5, Frankfurt Xetra Dax added 0.1% to 6,334.85, and the CAC 40 in Paris gained 0.3% to 5,417.81.

Advancers

Strong results from Deutsche Postbank, the biggest retail bank in Germany. The company said its third-quarter net profit rose 16.7%, as interest income climbed nearly 14 %. The shares gained 2.2%.

Repsol of Spain gained 1.7%. JPMorgan raised its target price on the stock, but kept its underweight rating. Neste Oil, the Finnish refiner, gained 1.1%, while BP in Britain gained 0.8%.

Telecom Italia gained 1.2% after reporting a surprise 3.5% rise in net income and added it considering the sale of its Brazilian mobile division and had already received two offers

Marks & Spencer led the advance on the FTSE 100 after reporting a forecast-beating 32% jump in first-half pre-tax profit. Its shares gained 4.7%.

Decliners

Vivendi fell 3% after reporting a smaller-than-forecast rise in third-quarter sales and receiving a broker downgrade from Merrill Lynch.

Shares in Yell Group dropped 2.5% in London after reporting a 44% first-half profit decline on the costs of buying TransWestern and TPI.

Oil and gold

Oil eased but stayed in sight of $60 on Tuesday after leading OPEC producer Saudi Arabia held out the prospect of deeper output cuts to remove excess supply. U.S. crude oil was off 11 cents at $59.91 a barrel. London Brent was down 11 cents at $59.64.

Gold rose, resuming a four-week rally as a drop in the dollar spurred demand for an alternative asset. Gold for immediate delivery rose $1.30, or 0.2%, to $624.70 an ounce in early session in London.

Currencies

The U.S. dollar was at $1.2756 per euro from $1.2724 yesterday. The Japanese yen climbed to 117.84 per dollar in early trading in London from 118.31 in New York yesterday. Against the euro, the British pound was at 67.00 pence in London from 67.07 on Nov. 3. The U.K. currency was also at $1.9039 from $1.8971.