Market Awaits Jobs and Manufacturing Data

albena
30 Nov, -0001
New York City

U.S. stock futures are mixed early Thursday morning, with investors waiting to see if the earnings news will continue the rally from the last several days. eBay's strong quarterly earnings could give a boost to tech stocks early Thursday and more earnings releases are expected five Dow components - McDonald's, Coca-Cola, Merck, SBC and Caterpillar. After the bell Microsoft and Google are set to report results.

U.S. MARKET AVERAGES

On Thursday investors will be busy digesting a slew of corporate earnings as well as jobless claims and leading-indicators data and the July Philadelphia Fed regional survey.

Microsoft reports its fiscal fourth-quarter earnings Thursday. Excluding stock-based compensation expenses, analysts see earnings at 31 cents a share, up vs. 28 cents a year ago.

Google is expected to post second-quarter earnings of $1.20 a share, excluding stock-based compensation, up vs. 58 cents a share last year.

Caterpillar Inc. is to report second-quarter earnings before the bell Thursday. Analysts expect earnings of $1.01 a share.

Early Thursday, Coca-Cola reported second-quarter earnings of 72 cents a share, up vs. 65 cents a year ago. Analysts had seen earnings at 64 cents a share for the quarter.

After the closing bell Wednesday, eBay ((EBAY)) reported pro forma earnings for 2Q of $0.22 per share, up 55% vs. last year, beating views of $0.18 per share. Revenues for the period came in at $1.086 billion versus $773 million last year. eBay raised its full-year pro forma earnings guidance to $0.82-$0.83 per share, with $0.19 per share projected for the third quarter.

Early Thursday morning, Dow member Coca-Cola ((KO)) announced a second-quarter profit of $0.72 per share, including a net benefit of $0.04 per share from one-time items. In the same quarter a year ago, the company earned $0.65 per share. Analysts had expected a profit of $0.64 per share.

ECONOMIC NEWS

Weekly employment data are expected before the start of trading on Thursday. Economists expect initial claims to come in at 325,000 for the week ended July 16, down vs. the 336,000 reported last week.

The Conference Board is due to release its index of leading economic indicators, with economists projecting an increase in June of about 0.5%. Later Thursday, the Philadelphia Fed is to announce its regional manufacturing survey. Economists expect the main index to come in at about 10 for July after sliding to negative 2.2 in June.

Federal Reserve Chairman Alan Greenspan will give the second half of his semiannual monetary policy testimony before the Senate Banking Committee. Wednesday Greenspan said that his outlook for the U.S. economy is for sustained growth and contained inflation pressures, with continued removal of monetary accommodation-meaning further rate hikes-necessary to realize these goals.

INTERNATIONAL MARKET NEWS

Japan's Nikkei 225 index ended 2.6 points lower to end the day at 11,786, hit by worries that the Japanese parliament might not pass postal services reform and by lackluster market volume. Japan's trade surplus narrowed for a third month in a row in June as climbing oil prices boosted the value of imports. Japan's merchandise trade surplus in June declined a seasonally adjusted 0.5% vs. the previous month to 694.4 billion yen, the Ministry of Finance said Thursday. Exports increased 2.4% to 5.37 trillion yen, while imports rose 2.9% to 4.67 trillion yen. From a year earlier, the trade surplus dropped 23.5% to 873.1 billion yen.

The Australian All Ordinaries jumped 0.9%, the South Korea Seoul Composite climbed 0.02%, the Shanghai Composite slid 0.04% and Hong Kong's Hang Seng added 0.12%

The Australian stock market reached a record high Thursday on growing confidence in global growth and demand for commodities, particularly from China. The benchmark S&P/ASX 200 index advanced 42 points, or 1% to 4,343.2, beating the previous high on June 17. The index also reached an intraday record of 4,351.7. Australian traders cheered the news that China's economy climbed 9.5% in the first half and Alan Greenspan's comments overnight that the U.S. economy should produce sustained growth with low inflation. Both China and the U.S. are major trading partners with Australia, and China is a big importer of Australian iron ore and coal.

ENERGY, METALS AND CURRENCIES MARKETS

Light, sweet crude for September fell 62 cents by midday in Europe to trade at $57.40 a barrel on the New York Mercantile Exchange. Heating oil lost more than 1 1/2 cents to $1.5815 a gallon, while unleaded gasoline lost over a penny to $1.6630 a gallon.

On London's International Petroleum Exchange, September Brent futures declined 74 cents to $55.91 a barrel.

The U.S. midweek supply report showed a build in distillate fuels, while crude inventories declined less than expected, as Hurricane Dennis caused little damage to output in the Gulf of Mexico. Inventories of crude oil slipped by 900,000 barrels to 320.1 million barrels, or 7% above year-ago levels.

Treasury prices were little changed, with the yield on the 10-year note at 4.16%.

The dollar declined against the euro and the yen Thursday, pressured by Treasury yield drop. The euro added 0.2% at $1.2165, and the dollar slid 0.3% at 112.45 yen.

EARNINGS NEWS

Groupe Danone ((DA)), maker of Evian water and dairy products, announced operating profit for 1Q and 2Q increased to 857 million euros from 820 million euros, just meeting analysts’ expectations. Sales gained 2.9% to 6.44 billion euros, with changes in exchange rates having a negative impact of 0.4%. Net income dipped to 347 million euros from 547 million euros last year the same period. Danone envisages comparable sales growth at between 6% and 7%, with growth in underlying earnings per share reaching 10% higher.

Eastman Kodak Co ((EK)), reported a loss of$146 million, or 51 cents a share in 2Q compared to a profit of $136 million, or 46 cents, a year earlier. Revenue was up 6% to $3.69 billion from $3.46 billion in last year's second quarter. The company failed to meet Wall Street expectations by a wide margin, mainly due to a greater-than-expected downswing in film sales - even in emerging markets such as China. Outside of restructuring and research charges, and $19 million in asset impairments from an investment in China's Lucky Film Co., Kodak announced earnings from continuing operations of 53 cents a share against analysts’ expectations of 80 cents a share.

Shares of Amgen Inc. ((AMGN)) soared to a new 52-week high Wednesday, after the company posted Tuesday a profit rise well above Wall Street forecasts for 2Q, and bettered its financial prospects for the year. Shares gained $10.65, or 15 percent, to finish at $81.17 Wednesday on the Nasdaq Stock Market.

Scholastic Corp ((SCHL)), children's book publisher, announced its quarterly profit almost doubled on gains in educational publishing and a boosted children's book business. Profit for its fiscal 4Q ended May 31 advanced to $42.8 million, or $1.04 per share vs. $22.5 million, or 56 cents per share, the same period last year. Revenue increased to $592.1 million against $587.4 million last year, slightly below analysts’ predictions of $1.06 on revenue of $607 million. Scholastic expectations for the full year come to earnings of $2.30 to $2.50 per share on revenue of approximately $2.3 billion to $2.4 billion, which meets analyst expectations of $2.40 a share on revenue of $2.4 billion.

The Ryland Group ((RYL)) reported 39% rise in 2Q earnings to $2.10 on 26.3% revenue growth. New home orders for the quarter increased 4.8% and backlog at the end of the quarter increased 17% to 10,534.

Qlogic ((QLGC)), data storage and communication company, reported fiscal 2006 1Q earnings of 45 cents vs. 34 cents a year ago on 22% revenue growth.

AT&T ((T)), Telecommunication Company, reported 2Q earnings of 38 cents vs. 14 cents a year ago on 11.5% decline in revenue. The company?s operating margin for the 2Q were at 12.1%.

Knight Transportation ((KNX)), short- to medium- haul trucker, reported 2Q earnings of 26 cents compared to 20 cents a year ago 20% revenue growth excluding fuel surcharges. The company plans to add 200 to 250 tractors for the remainder of the year.

Metris Companies ((MXT)), bank card issuer, reported 2Q profit of 20 cents vs. loss of $1.40 a year ago. New account originations for the quarter ended June 30, 2005 were 165,000. Gross active accounts were 2.2 million as of June 30, 2005, consistent with 2.2 million as of December 31, 2004, and June 30, 2004. The Company's managed credit card loans were $5.9 billion as of June 30, 2005, compared to $6.6 billion as of December 31, 2004, and $7.1 billion as of June 30, 2004. The managed two-cycle plus delinquency rate was 7.7% as of June 30, 2005, compared to 9.1% as of December 31, 2004, and 9.4% as of June 30, 2004. The managed net charge-off rate was 13.5% for the second quarter of 2005, compared to 14.5% in the previous quarter and 17.0% for the second quarter of 2004.

Qualcomm ((QCOM)), Wireless technology provider, reported 3Q profit of 33 cents vs. 29 cents a year ago on revenue $1.36 billion, beating the estimated of 25 cents earnings.

Oakley ((OO)), maker of sunglasses and accessories, reported 2Q profit of 30 cents vs. 23 cents a year ago on 11% revenue growth to $170.5 million. For the full year the company projected revenue growth of 10%to 15% and earnings growth of 25% to 30%. Analysts are looking for 73 cents per share earnings for the full year.

Allstate ((ALL)), the second largest property and casualty insurer, reported 11% increase in earnings to $1.71 on 6% rise in revenue to $8.8 billion. The company raised its full-year operating income guidance by 60 cents to a range of $6.00 to $6.40 per share.

AMR ((AMR)), parent American Airlines, reported 2Q profit of 30 cents compared to 3 cents a year ago and beating estimates of 15 cents. Passenger traffic rose 7.4% on available seat growth of 2.3% on occupancy of 79.5% compared to a year ago to 75.7%.

Washington Mutual ((WM)), home lender and largest savings and loan institution, reported 2Q profit of 95 cents vs. 76 cents a year ago. The home loan volume rose to $53.4 billion down from $63.1 billion a year ago.

CORPORATE NEWS

It was reported Thursday that several top executives and board members at Delta Air Lines have warned CEO Gerald Grinstein that a turnaround plan there isn't working and that a Chapter 11 bankruptcy filing for the nation's No. 3 airline is inevitable. Delta is also slated to post its quarterly results early Thursday.

Australian mining giant BHP Billiton ((BHP)) said Thursday it has reached a deal to sell more than $4 billion worth of iron ore to Japan's JFE Steel. Billiton also said Thursday it had reopened its Olympic Dam copper, gold and uranium mine in South Australia after an explosion Tuesday in which a worker was killed.

Dow Jones & Co. agreed to transfer its 50% equity interests in CNBC Europe and CNBC Asia, as well as its 25% interest in CNBC World, to General Electric's NBC Universal, ending its international television partnership with CNBC. Dow Jones will post a second-quarter charge of about $36.7 million on the move.