Market Wrapped in Earnings

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

Market remains cautious during the day despite most companies reporting better than anticipated earnings. So far S&P companies are reporting earnigs of at least 9% or better than a year ago and 74% of the companies have beathen the estimates. Drop in consumer confidence and rise in oil price did not bring new buyers to the market. GM agreed to sell $55 billion of financial aeests to BofAmerica over the next five years.

U.S. MARKET AVERAGES

Session’s trading for the day remained lackluster despite positive earnings from several companies, generally weak oil and commodities, rebounding dollar and bonds. Major averages did not post significant gains and stocks in general remained under pressure. At the opening the there are 31 news highs on NYSE and 27 on Nasdaq but there are also 29 new lows on Nasdaq.

The financing unit GMAC of General Motors announced that it has agreed to sell $55 billion worth of financial assets to Bank of America over the next five years. This will allow the company to finance more vehicles in the coming years. The GM’s shares were up as high as 3% during the day.

Earnings parade is at its peak. International Paper beat the estimates by 4 cents on low revenue growth, DuPont earnings doubled to 90 cents but failed to meet the estimates of $1.01 but Wrigley traded up 3% on strong earnings growth of 17% in second quarter to 72 cents beating estimates of 68 cents. Shares of Texas Instruments, Black & Decker, BP PLC, and Netflix traded higher during the session on strong earnings reports.

Lexmark shares dropped as low as 13% on lower earnings outlook for the current quarter and for the year. The company released 2Q earnings of 64 cents vs. $1.02 a year ago. The decline in earnings was related to the tax related to profit repatriation otherwise the earnings would have been at $1.06 meeting the estimates. The company guided 3Q earnings between 95 cents to $1.05 and predicated difficult market condition for the quarter.

US Steel reported 2Q earnings of $1.88 compared to $1.62 a year ago on revenue growth of 4%. The stock jumped as high as 4.9% during the day.

Medco Health Solutions reported 2Q earnings of 48 cents compared to 46 cents a year ago on 2% rise in revenue. The company expects to complete its acquisition of specialty drug distributor Accredo Health by the mid August.


ECONOMIC NEWS

Conference Board reported consumer confidence fell from 106.2 in June to 103.2 in July. “This month’s decline in Consumer Confidence is no cause for concern,” says Lynn Franco, Director of The Conference Board’s Consumer Research Center. “The overall state of the economy remains healthy and consumers’ outlook suggests no storm clouds on the short-term horizon. Even the steady upward tick of fuel prices at the pump has done relatively little to dampen consumers’ spirits. Yet, while there is little to suggest a downturn in activity, there is also little to suggest a pickup.”
The outlook for the labor market was mixed. Consumers expecting more jobs to become available in the coming months edged up to 15.8 percent from 15.4 percent, while those expecting fewer jobs also edged up to 16.8 percent from 16.4 percent in June. The proportion of consumers anticipating their incomes will increase in the months ahead declined to 18.6 percent from 19.9 percent last month.


The Chinese Central Bank said it has no plans to let the yuan rise sharply, pointing out that last-week’s 2% increase was part of an exchange-rate reform, not a prelude to a series of increases as some speculations say.

INTERNATIONAL MARKET NEWS

European stocks closed mixed, reflecting slightly disappointing earnings news from closely watched companies such as semiconductor Infineon Technology and auto maker Peugeot. Averages in Germany added 0.02% as investors were digesting data, stating that the business climate index rose to 95 in July, up from 93 in June. The French and the U.K. indexes ended down 0.03% and 0.3% respectively.

Asian-Pacific benchmarks ended mixed, trading amid Wall Street losses and crude-oil gains. Japan’s Nikkei lost 0.2% as investors remained cautious, awaiting important earnings reports later in the day from Nissan Motor and Advantest Group. Taiwan’s Weighted Index shed 0.9% after earnings from the chip giant Taiwan Semiconductor. The other markets in the region ended up, supported by optimism for domestic corporate profits. China’s Shanghai Composite climbed 2.6%, South Korea’s Kospi added 0.2%, and Singapore’s Straits Times rose 0.5%. The dollar traded in the upper half of 111-yen in early trading in Tokyo and fetched 810.97 yuan. Crude-oil for September delivery rose 37 cents to $59.02 a barrel on the NYME.

ENERGY, METALS AND CURRENCIES MARKETS

The oil remained volatile and at close was up 20 cents to $59.20.

The U.S. currency advanced as China announced it won’t revalue the yuan again soon. The dollar rose 0.8% against the yen and last traded at 112.30 in late-morning trading in the U.S. The greenback gained 0.4% against the euro and quoted at $1.2024; it was also up against the pound to trade at $1.7396.

Gold and other precious metals traded lower, pressured by the strong U.S. dollar after China said there won’t be another revaluation of its currency soon. Gold for August delivery fell $2.40 to $423.50 per ounce on the NYMEX. Silver for September delivery was down 12.5 cents to $7.018 per ounce. September copper fell by 1.2 cents to stand at $1.606 a pound.

The U.S. dollar climbed against the yen on fading expectations of further revaluation of the yuan, reaching 112.17 yen, up from 111.41. In early European trading the euro fell to $1.2016, down from $1.2062; the pound traded at $1.7373, up from $1.7464. In London gold futures traded lower at $424.60 per ounce, down from $425.40.

EARNINGS NEWS

Reuters, news and financial data provider, posted first-half net income fall of 56% to 133 million pounds, but posted 2Q revenue growth from sales of Reuters terminals for the first time since 2001. The company unveiled new growth strategy which focuses on bond and commodity trading networks, financial journalism, and operations in China and India.

Taiwan Semiconductor Manufacturing, supplier of made-to-order chips, posted 2Q 22% profit drop of 74 NT cents, down from 95 NT cents a year ago on revenue decrease of 9.5% to NT $58.52 billion. The company expects better financial results for the rest of the year.

Black & Decker, home products maker, announced 2Q net income growth of $1.88 per share compared with $1.50 for the last-year same quarter due to improved sales on revenue of $1.7 billion, exceeding estimates of $1.77 per share. The company forecast 3Q profit between $1.62 and $1.67 a share.

DuPont, chemicals company, posted 2Q more than doubled profit of $1.01 per share, yup from 50 cents last year on revenue of $8.12 billion. Excluding non-recurring items the quarterly earnings are 90 cents a share, missing estimates of 96 cents.

Verizon Communications, communication services provider, posted 2Q profit rise of 75 cents a share compared with 64 cents a year earlier on big gains in the wireless business and sales of phone operations in Hawaii. Excluding one-time costs and gains earnings would be 63 cents a share, missing estimates of 64 a share.

Lockheed Motor, Pentagon contractor, reported 2Q net income growth of $1.02 a share compared with 66 cents a year ago as sales rose 6% on strength in its systems and information technology group. The company sees 2005 earnings in the range of $3.60 to $3.75 per share on revenue of $36.5 to $38 billion. Lockheed is looking at acquisitions in the systems and IT sector.

Nissan Motor, auto maker, reported 2Q profit drop of 105.70 billion yen vs. 123.23 billion last year, but posted strong profit growth on an operating basis and backed its forecast of a record full-year income.

Omnicom Group, advertising holding company, reported 2Q net income growth of $1.24 per share, up from $1.10 last year on higher consumer spending and revenue increase.

Argo, agricultural equipment maker, posted 2Q lower profit of 47 cents a share, down from 50 cents a year ago. The company sees 3Q earnings between 30 and 33 cents a share and 2005 income flat with 2004.

7-Eleven, food retailer, reported 2Q higher net income of 45 cents a share vs. 38 cents last year on boosted demand and strong same-store sales.

AK Steel, steelmaker, announced 2Q earnings drop of 8 cents per share compared with 85 cents a year earlier. Excluding non-recurring charges quarterly profit would have been 35 cents, below estimates of 38 cents a share. The company expects 3Q average selling prices to be lower than in 2Q.

Infineon Technologies, German chip maker, posted 3Q fourfold wider loss of 240 million euros compared with 56 million euros last year, citing one-time charges and low computer memory prices. The quarterly results failed to meet estimates of a loss of 118 million euros.

BP PLC, oil company, reported 2Q profit rise of $4.981 billion, up from $3.873 billion a year ago on high oil prices and 24% revenue growth. The quarterly results include $700 million charge to settle claims from a deadly refinery explosion in Texas.

Netflix, online DVD rental services provider, posted 2Q net income rise of 9 cents per share, up from 4 cents a year ago on lower costs and fewer subscriber cancellations. The company raised its 2005 profit to $2.4 million to $11.9 million compared with earlier forecast of a loss between $5 million to $15 million.

Archipelago Holdings, stock-exchange operator, reported net income fall of 6 cents per share vs. 42 cents for the last-year same quarter, citing sharply higher expenses, including acquisition costs.

Starwood Hotels & Resorts Worldwide, hotel and leisure services provider, announced 2Q profit drop of 65 cents a share, down from 72 cents a year earlier, including after-tax charge of $11 million. The company projected full-year profit before special items to be $484 million.

Waddel & Reed, fund manager, reported 2Q net loss of 9 cents per share on legal, personnel and restructuring charges. Excluding these items the company posted earnings of 27 cents a share vs. 31 cents a year ago.

Mother’sWork, maternity-apparel retailer, posted 3Q income fall of $1.03 per share vs. $1.24 a year ago on 9% lower same-store sales. The company forecast 4Q net loss in the range of 52 to 72 cents a share and same-store sales from down 1% to up 1%.

OTHER NEWS

North Korean Vice Foreign Minister Kim Kye Wan said at the fourth six-nation disarmament negotiations that North Korea is ‘fully ready and prepared’ to work on eliminating atomic weapons on the Korean Peninsula after the U.S. reassurance that they have no intention of invading to end the nuclear standoff. The talks, including China, Japan, Russia, South Korea and the U.S., revived after a 13-month boycott by the North which cited “hostile’ U.S. policies.