Weak Opening Weaker Closing

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

Existing-home sales surpassed market expectations and reached another record in June as low mortgage interest rates drove June sales to 7.33 million homes and median home price rose to $216,000 from $209,000.Asian benchmarks closed mostly higher. Japan

U.S. MARKET AVERAGES

The lackluster morning trading got strong boost from the housing market data. June housing market suggested dynamic housing market across the country with the median single-family home prices rising 14% from a year ago to $219,000. Merger news from Teva Pharma and Ivax and over the weekend revised offer from Whirlpool gave some interest to buyers but for the most parts buyers remained on the sidelines. The falling oil price in the morning supported the market averages but in the final hour jump in oil and nervousness related to tech earnings to be released at the close led averages to sell-off.

The earnings releases before the market opening showed Xerox still lagging in its restructuring efforts and released earnings well below market expectations. Other earnings negative surprises from the notable companies this morning include, Arch Coal, Bell South and Valero LP. Fording Canadian Coal Trust this morning reported earnings jump of nine fold to $123 million in the second quarter. Market is awaiting earnings from American Express.

In the merger news Teva Pharmaceuticals is offering $7.4 billion in cash and stock for Ivax Inc. and create the largest generic drug manufacturing company. Whirlpool has raised its bid by a dollar to $18 to acquire Maytag. Maytag is in talks and agreed to be acquired by Ripplewood Holdings at $14 per share. Maytag management is interested in talking to the company but not ready to share financial data yet.

American Express reported 2Q earnings of 81 cents per share up 19% from a year ago and topping the estimates of 78 cents on 11% rise in revenue to $8 billion. The soon-to-be spun off financial advisory business reported 19% decline in earnings to $140 million.

Despite few weak earnings market internals suggest strong undertone to today’s trading. 273 stocks on NYSE and 74 stocks on NASDAQ are trading at new highs. New lows on the exchanges were 25 and 95 respectively.


ECONOMIC NEWS

Existing-home sales surpassed market expectations and reached another record in June as low mortgage interest rates and favorable market conditions continued to attract buyers, according to the National Association of Realtors.

Total existing-home sales – including single-family, townhomes, condominiums and co-ops – rose 2.7 percent in June to a seasonally adjusted annual rate of 7.33 million from an upwardly revised pace of 7.14 million in May. Sales were 4.4 percent above the 7.02 million-unit level in June 2004; the previous record was 7.18 million in April of this year.

The national median existing-home price for all housing types was $219,000 in June, up 14.7 percent from June 2004 when the median price was $191,000; this is the strongest increase since November 1980 when annual appreciation was 15.6 percent.

Existing condominium and cooperative housing sales hit a fourth consecutive monthly record in June, rising 4.5 percent to a seasonally adjusted annual rate of 960,000 units from a pace of 919,000 in May. Last month’s sales activity was 12.4 percent above the 854,000-unit level in June 2004. The median condo price was $223,500, up 14.8 percent from a year earlier. Condo/co-op sales accounted for a 13.1 percent market share.

Single-family home sales increased 2.4 percent to a record seasonally adjusted annual rate of 6.37 million in June from 6.22 million in May, and were 3.2 percent above the 6.17 million-unit pace in June 2004. The median single-family home price was $218,600 in June, up 14.5 percent from a year ago.


INTERNATIONAL MARKET NEWS

Asian benchmarks closed mostly higher. Japan’s Nikkei rose 0.6%, lifted by top domestic companies ahead of the new-week earnings reports and U.S. markets gains Friday. Among the gainers were energy companies benefiting from strong crude-oil prices and commodity-based firms, such as Teikoku Oil which gained 1.6% and Nippon Mining which added 3.3%. Australia’s All Ordinaries advanced 0.3%, South Korea’s Kospi climbed 1.4%, and Taiwan’s Taiex was up 0.6%. Averages in China and Singapore ended down.

European markets closed up boosted by U.S. stocks gains and gains in the oil and gas sector which offset losses from technology companies and from Groupe Danone. The U.K.’s FTSE 100 ended up 0.6% as a top gainer, helped by oil majors with investors digesting earnings reports from important companies such as Vodafone, Reckitt Benckiser and Pearson. Averages in Germany and France added 0.1% and 0.2% respectively.

European stocks traded mixed at mid-day, reflecting positive corporate news and losses from tech companies and food producers which offset gains made by the oil and gas sector. U.K.’s FTSE made the strongest performance, climbing 0.4% as markets continue to recover from last week’s terrorist attacks and traders are in the process of digesting earnings updates from Vodafone and Pearson. The German DAX 30 was flat, trading amid a rise in import prices of 1.6%. The French CAC 40 added 0.1% with traders’ attention focused on France Telecom which is likely to win the auction for Spanish operator Amena and Danone which slid 8.3% after PepsiCo reported it wasn’t planning to bid for the French dairy company.

ENERGY, METALS AND CURRENCIES MARKETS

In the early trading crude-oil futures dropped after Friday’s intense rally as supply fears eased and are further expected to decrease and slip below $55 a barrel in the last quarter. Light sweet crude for September delivery declined 69 cents to $57.96 in electronic trading on the NYMEX after it gained $1.52 Friday. At close in NY crude oil jumped 35 cents to $59 per barrel.

In the morning trading gold changed little after falling Friday as the dollar gained against the euro but at closed settled higher by a dollar at $426.20. China’s yuan gained against the U.S. dollar after currency limits were relaxed for the first time in a decade. The yuan ended trading at 8.1097 against the dollar, up from 8.11. Against other currencies the greenback was firm, trading at 111.55 yen and $1.2052 per euro.

EARNINGS AND CORPORATE NEWS

Pilgrim’s Pride, poultry producer, reported 2Q earnings jump of $1.28 per share compared with 15 cents a year earlier , beating expectations of $1.20 per share.

Veeco Instruments, semiconductor equipment maker, posted 2Q net loss of 2 cents a share vs. a loss of 6 cents a year ago on revenue growth of $103.4 million. Excluding non-recurring items earnings would have been 9 cents a share, beating estimates of 6 cents a share.

Quest Diagnostics, diagnostic services provider, reported 2Q profit increase of 72 cents a share vs. 59 for the comparable quarter last year on revenue of $1.38 billion, meeting analysts’ expectations.

BellSouth, telecommunication services provider, posted 2Q profit decline of 43 cents a share vs. 51 cents last year. On a normalized basis including the company’s share in the performance of the Cingular Wireless joint venture with SBC Communications, the company earned 46 cents a share on revenue of $8.52 billion.

Xerox, copier and printer maker, reported 2Q net income growth of 40 cents a share compared with 21 cents a year ago, boosted by a tax benefit of 33 cents a share.

Volvo, truck maker, posted 2Q 40% profit rise of SEK3.9 billion on sales increase of SEK61.1 billion. Earnings rose 45% to SEK9.67 per share.

Triad Hospitals, health care services provider, posted 2Q profit of 72 cents a share, reversing a year-ago loss of 7 cents a share on revenue growth of $66 million. The company lifted its 2005 outlook to $2.82 and $2.90 a share.

Silicom, server adapters maker, reported 2Q swung to profit of 7 cents a share vs. last-year net loss of 13 cents on sales increase of $2.64 million.

Smith International, oil and gas industry services provider, posted 2Q earnings rise of 67 cents per share against 27 cents last year on revenue growth of $1.35 billion. The company raised its full-year guidance to $1.40 and $1.45 per share.

Vodafone, U.K. mobile phone operator, announced 2Q 8.6% organic growth in mobile phone revenue and an increase in the total number of customers to 165 million.