Upgrade Drives Apple Higher

Elena
28 Nov, 2006
New York City

Stock markets opened in the red for a third consecutive session, following weaker-than-expected durable goods data in October. Shares of oil companies rose as crude oil prices climbed above $60 a barrel. Exxon Mobil shares rose 0.7%, while shares of Chevron gained almost 1%. Shares of lawn care service provider ServiceMaster jumped 6.7% after the company said it plans to explore strategic alternatives, including a possible sale.

[R]9:45AM Stocks opened lower. Oil stocks gained. Apple rose on UBS upgrade[/R]
Stock markets opened in the red for a third consecutive session, following weaker-than-expected durable goods data in October. Investors were also awaiting reports on consumer confidence and existing home sales later in the session. A speech by Federal Reserve Chairman Ben Bernanke that could provide clues on the outlook for interest rates was also expected.

Shares of oil companies rose as crude oil prices climbed above $60 a barrel. Exxon Mobil Corp. ((XOM)) shares rose 0.7%, while shares of Chevron Corp. ((CVX)) were up almost 1%. Shares of lawn care service provider ServiceMaster Co. ((SVM)) jumped 6.7% after the company said it plans to explore strategic alternatives, including a possible sale. Among other early movers, Apple Computer Inc. ((AAPL)) rose 1.3%to $90.83 after UBS raised its price target on the company. Again on the Nasdaq, shares of Palm Inc. ((PALM)) fell 6% to $14.43 a day after the handheld device maker slashed its Q2 profit and revenue forecasts. In the first hour of trading, the Dow Jones industrial average fell 30.05, or 0.25%, to 12,091.66, after falling 158 on Monday. The Standard & Poor's 500 index was down 3.55, or 0.26%, at 1,378.35, and the Nasdaq composite index was down 14.72, or 0.61%, at 2,391.20. Bonds rose, with the yield on the benchmark 10-year Treasury note falling to 4.50%from 4.53% late Monday.

[R]Durable goods orders hit a six-year low in October.[/R]
Tuesday morning, the Department of Commerce released its report on durable goods orders in the month of October, showing that orders for goods meant to last at least three years fell much more than economists had expected. The report showed that new orders for durable goods fell 8.3 percent in October, marking the biggest one-month decline since July of 2000. Economists had expected orders to fall 5.0 percent compared to the 8.7 percent increase reported for September. The drop in durable goods orders was largely due to a significant decline in orders for transportation equipment, which fell 21.7 percent in October after surging up 29.9 percent in September. A drop in orders for commercial aircraft contributed to the decline in orders for transportation equipment. The report showed that orders for non-defense aircraft and parts fell 44.5 percent in October after rising 198.2 percent in September. Excluding orders for transportation equipment, durable goods orders fell by a more modest 1.7 percent in October compared to a 0.5 percent increase in the previous month. The report also showed a notable decline in orders for computers and electronics products, which fell 10.2 percent in October following a 2.3 percent increase in September. The decrease reflected a notable drop in orders for computers and related products. The Commerce Department also noted that shipments of durable goods rose 0.6 percent in October after falling 2.7 percent in September. Inventories of durable goods rose 0.8 percent in October following a 1.1 percent increase in the previous month.


[R]9:30AM London was lower in early trading Tuesday on US markets close.[/R]
By late morning, the FTSE 100 was down 14 points, or 0.2%, to 6,036.1.

Advancers

ITV led the gainers, up 1.3%. The commercial broadcaster has pulled off a coup by luring Michael Grade, chairman of the BBC, to become its new executive chairman. Grade is very well-known and has a strong broadcasting CV at the BBC, LWT, Channel 4 etc. Given the management vacuum at ITV, this should be taken well by the market.

Still with media, EMI Group jumped 6.5% on reports that the company was in talks with private equity groups about a possible bid worth 2.5 billion pounds or more.

Telecoms firm Kingston Communications posted a three-fold increase in half year pre-tax profit and is confident about trading in the second half. Kingston Communications rose 1.12%.

Tobacco group Gallaher was a leading advancer, up 1.6%. Yell Group firmed 1.3% as Goldman Sachs upgraded the directories company from neutral to buy.

Decliners

Scottish Power was flat despite it agreeing a deal with Iberdrola of Spain, which will buy the company for 11.6 billion pounds in cash and shares.

Old Mutual lost 3.8% as the life assurer said the market and exchange rate factors that had affected third-quarter results were likely to continue into the fourth quarter. Barclays bank dropped 1.7% as bad debts at its Barclaycard credit card unit continued to rise.

British Energy fell 1.5%, Drax Group slid 1.3% and Scottish & Southern Energy was lower by 1.3%. Kelda Group was also lower, down 1%, despite announcing plans to return 750 million pounds to shareholders following the completion of its Aquarion disposal.

BAE Systems lost 1.3% after Saudi Arabia suspended negotiations over the 10 billion pounds purchase of a new fleet of Eurofighter Typhoon jets.


[R]9:00AM Stocks futures were dragged down by a decline in durable goods orders.[/R] U.S. stock market futures were sent lower by data, showing a larger-than-expected decline in demand for durable goods orders. As another sign of a slowing economy, the Commerce Department reported that orders for manufactured goods dropped in October by the largest amount in more than six years, following an 8.7% surge in September. Durable goods orders fell a larger-than-expected 8.3% to a seasonally adjusted $210 billion, reflecting a big drop in demand for commercial airplanes, a category that had soared in September. The 8.3% drop in orders for durable goods was the largest one-month decline since a 14% plunge in July 2000.

Among the companies in the spotlight, Palm Inc. ((PALM)) shares dropped 6% in pre-open trade after it slashed its earnings forecast on a delay in rolling out its Treo 750 handheld device in the US. Nokia ((NOK)) slipped 0.9% after it said it was cutting its operating margin forecast due to the merger of its network arm with that of Siemens ((SI)). Hilton Hotels ((HLT)) dropped 5% after it said it plans to create a joint venture in India with DLF Ltd. to develop and own up to 75 hotels and serviced apartments over the next 7 years.

The dollar advanced vs. the yen but fell against the U.K. pound and the euro. The pound was particularly strong after Spain''s Iberdrola agreed to buy Scottish Power ((SPI)) for $22.5 billion in a deal that would create one of Europe''s biggest utilities. Crude oil futures rose 36 cents to $60.66 a barrel, while gold futures slipped $1.70 an ounce to $638.90. Standard & Poor''s 500 futures were down 1.8 points, below fair value. Dow Jones industrial average futures were down 9 points, and Nasdaq 100 futures were down 6 points.

[R]8:00AM Air Berlin is planning to order 60 Boeing planes.[/R]
Air Berlin Plc announced on Tuesday it is planning to place an order of 60 planes with Boeing Co. The airline said it''s ordering 60 Boeing ((BA)) 737-800, with deliveries starting in November 2007. It will receive a total of 85 new Boeing planes worth $5.7 billion at list price between 2007 and 2011, including an earlier order for 25 jets. Joachim Hunold, CEO of the airline, said that the airline is ‘exploring alternatives’ for financing the order. A decision whether to bolster the Boeing order and exercise options for 40 Airbus A320s, will be taken the following year.

Europe''s third-largest budget airline also issued a detailed Q3 profit report, showing that earnings advanced 26%. Net income at the airline improved to 38.7 million euros ($50.8 million), up from 30.6 million euros a year earlier, but missed analysts'' expectations. Revenue rose 28% to 510 million euros.

Company’s shares fell 14.3% in Frankfurt midday trading on concerns over a vague outlook and the financing of the fleet expansion.


[R]7:30AM Asian markets decline sharply Tuesday following US markets fall.[/R]
Asian markets finished sharply lower on Tuesday. Tokyo''s Nikkei 225 Index pared sharp losses to end 0.19% lower at 15,855.26, as export shares such as Honda Motor and Matsushita Electric Industrial retreated on concerns that a stronger Japanese yen will have an impact on earnings derived from overseas. Honda Motor third largest automaker by sales in Japan, fell 1.7%, while Matsushita Electric Industrial Co. maker of the Panasonic brand of consumer electronics, fell 0.9%.

Australian S&P ASX/200 slipped 1.3% to 5,384.30, led lower by weakness in BHP Billiton and other natural-resources shares. Shares of BHP Billiton fell 1.6%, while fellow Australian miner Rio Tinto shed 2.2%. The Kospi in South Korea sank 1%. In Seoul, Samsung Electronics skidded 1.9% and Hynix Semiconductor fell 1.7%.

The Hang Seng Index plunged 564.48 points, or 2.9%, to 18,639.53. Hong Kong-listed Li & Fung Ltd fell 4.1%. Shares of China Shipping Container Lines Ltd plunged 8.6%. The China Enterprises Index, a gauge of China-incorporated stocks listed in Hong Kong, dipped 4.5%. Malaysia KLSE Composite was lower by 1%. Indonesia Jakarta Composite fell 2.2% and Thailand SET Index ended down 1%. Singapore Straits Times Index fell 1.9%.


[R]6:30AM European markets fell in early trading Tuesday on dollar-sensitive sectors.[/R]
European markets were lower in early trading on Tuesday. The U.K. FTSE 100 index lost 0.48% to 6,020.80, the German DAX Xetra 30 index declined 0.43% to 6,270.60, while the French CAC-40 index lost 0.64% to 5,274.64.

Decliners

The FTSE 100 traded lower weighed down by financials such as Barclays, down 1.5%, after a recent strong performance. Insurance group Old Mutual was losing 4.1% after its adjusted embedded value per share, a measure of the company asset value and the present value of future profits, eased 1.7% from the second quarter.

Scottish Power shares lost 0.9% after it agreed to a $22.5 billion cash-and-shares takeover bid from Iberdrola of Spain. Akzo Nobel shares dropped 1% in Amsterdam after its Organon unit and Pfizer ended their joint effort to develop asenapine, a new-drug candidate to treat schizophrenia and acute mania associated with bipolar I disorder.

DaimlerChrysler fell 2.8%, Peugeot shed 2.5% and Volkswagen closed 1.6% lower. Michelin, the tyremaker, fell 4% and Continental slipped 3.5%. Among other big dollar earners, Siemens fell 2.9%. Chip maker Infineon Technologies lost 0.7% in Germany.

Advancers

Music company EMI Group rose 7.4% in London after the Financial Times reported that the company is in talks with private-equity groups about a possible bid for the company. Pharmaceutical company Bayer rose 2% after it reported a forecast-beating rise in third-quarter operating profits, largely due to a strong showing from its healthcare division.

Oil and gold

Oil was steady above $60 a barrel on Tuesday after rising more than $1 the previous session, partly on forecasts of a cold spell in the U.S. Northeast. U.S. crude was down three cents at $60.29 a barrel by 0929. London Brent crude was up seven cents to $60.51.

Gold declined for the first day in eight in London after a rally earlier this month deterred jewelry buyers, the biggest consumers of the precious metal. Gold for immediate delivery in London fell $3.40, or 0.5%, to $637.20 an ounce at 9:45 a.m. local time.

Currencies

The euro held steady against the U.S. dollar on Tuesday ahead of U.S. economic data that could offer new direction to markets. The euro bought $1.3131 in morning European trading, marginally above the $1.3128 it bought in New York late Monday. The British pound rose to $1.9432 from $1.9371. The dollar rose to 116.30 Japanese yen from 116.08 yen.