Market Rebounds After Fed Report

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

Market puts belief in Fed Beige report indicating favorable economic climate and contained inflation. Strong Earnings from manufacturing sector and healthy gains in durable orders and single family home sales for the month of June and higher weekly distillate inventory for the last week put the economic picture on a firmer foundation.

U.S. AVERAGES

The averages lifted from the narrow trading range when Fed released the survey of the economic climate around the country. According to the report economy appears to have been rebounded and measured inflation is contained. Early market gains were built on strong earnings, better-than-anticipated manufacturing activity and rising distillate inventory.

The mid-day recovery in indexes was broad across various sectors including wireless services, restaurants, consumer durables, technology and home builders.

June durable orders jumped 1.4% compared to estimated 1% decline and May orders were revised to 6.4% upwards. New home sales jumped in June to 1.37 million, 4% increasing from May and 14% from a year ago. Weekly Petroleum report suggested that the gasoline and crude production has increased and distillate inventory last week had increased substantially.

Parade of earnings continues to flood the market with positive surprise. Boeing, Centex, Amazon, Conoco Philips, Sprint, Corning are few notables with significant gains.

Shares of Infospace, P F Chang, Anheuser Busch, Alliance Capital, Yankee Candle, CEC Entertainment, Tupperware, and Trimble Navigation were among the significant decliners.

ECONOMIC NEWS

New Manufacturing Orders

New orders for manufactured durable goods in June were $215.4 billion, up
1.4% from May. Overall shipments were $207.9 billion, down 0.1%, while
non-defense capital goods shipments were $69.3 billion, virtually unchanged
from May.

Existing Home Sales

Sales of new one-family houses in June 2005 were at a seasonally adjusted annual rate of 1,374,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 4.0 percent above the revised May rate of 1,321,000 and is 14.0 percent above the June 2004 estimate of 1,205,000.

The median sales price of new houses sold in June 2005 was $214,800; the average sales price was $267,400. The seasonally adjusted estimate of new houses for sale at the end of June was 454,000. This represents a supply of 4.0 months at the current sales rate.

Weekly Petroleum Report

U.S. crude oil refinery inputs averaged nearly 15.8 million barrels per day during the week ending July 22, up 173,000 barrels per day from the previous week's average. Refineries operated at 93.5 percent of their operable capacity last week. Gasoline and distillate fuel production increased substantially, averaging over 8.7 million barrels per day and 4.3 million barrels per day, respectively.

U.S. crude oil imports averaged over 9.9 million barrels per day last week, down 885,000 barrels per day from the previous week. Over the last four weeks, crude oil imports have averaged over 10.2 million barrels per day, a decrease of 117,000 barrels per day from the comparable four weeks last year.

U.S. commercial crude oil inventories dropped by 2.3 million barrels for the week of July 22nd. At 317.8 million barrels, U.S. crude oil inventories remain above the upper end of the average range for this time of year. Total motor gasoline inventories decreased by 2.1 million barrels last week, putting them in the upper half of the average range. Distillate fuel inventories rose by 3.1 million barrels last week, and are near the upper end of the average range for this time of year.

Total commercial petroleum inventories decreased by 2.3 million barrels last week, but they remain near the upper end of the average range for this time of year.

Total product supplied over the last four-week period has averaged nearly 20.9 million barrels per day, or 1.3 percent more than averaged over the same period last year. Over the last four weeks, motor gasoline demand has averaged 9.5 million barrels per day, or 2.4 percent above the same period last year.

Distillate fuel demand has averaged 4.0 million barrels per day over the last four weeks, or 3.5 percent above the same period last year. Kerosene-type jet fuel demand is up 3.3 percent over the last four weeks compared to the same four-week period last year. Comparisons to last year now reflect recent revisions to 2004 data.


INTERNATIONAL MARKET NEWS


European stocks finished up, helped by steel makers, while the chip shares dropped, reflecting disappointing results in the sector. The German DAX 30 added 0.2%, the French CAC 40 rose 0.3%, and the U.K.’s FTSE 100 was up 0.1%.

Asian markets closed mostly higher, boosted by exporter issues gains and hopes for positive corporate earnings news. The Nikkei advanced 0.8%, reaching its highest levels since April as strong U.S. tech shares and weaker yen raised investors’ interest in major electronics and automotive issues such as Matsushita Electric Industrial and Honda Motor. Hong Kong’s Hang Seng added 0.2% ahead of earnings release and on the back of property and China-related stocks. In Taiwan stocks ended down 0.6% due to a lowered 3Q outlook by chip maker Taiwan Semiconductor Manufacturer. The dollar traded at 112.70 yen in Tokyo, up from 112.35 in late NY trading.

ENERGY, METALS AND CURRENCIES MARKETS

Crude-oil prices hovered around $59 a barrel for the day and closed at $59.10 down 10 cents on the weekly U.S. inventory reported suggested that crude inventory are down for the week of July 22 but distillate inventories were higher than estimated.

According to the Energy Department weekly gasoline demand is flat since the beginning of the year but was up by 2% for the last week. The demand for the year is likely to rise by one percent.

Gold futures head for a week’s decline on strengthening dollar against the euro, reducing the appeal of the precious metal as an alternative investment to the U.S. currency. Gold for immediate delivery traded at $424.80 up $1.30 per ounce; gold for December delivery dropped 50 cents to $428 per ounce in after-hours trading on the NYMEX. In India, the biggest consumer of gold, August delivery fell 17 rupees to 18.725 rupees, or $431 per ounce.

The Chinese yuan fell to its lowest levels against the U.S. dollar since the revaluation currency reform from July 21, reaching a 0.04% decline to 8.1128 per dollar, down from 8.1099.

EARNINGS NEWS

Getty Images, imagery company, posted 2Q earnings rise of 53 cents per share against 41 cents last year on revenue of $150.3 million, beating estimates of 49 cents per share.
The company sees its 3Q earnings in the range of 56 to 58 cents per share.

InfoSpace, provider of online directory services, reported 2Q earnings rise of 44 cents a share vs. 37 cents a year ago on 53% revenue growth. The quarterly results exceeded expectations of 38 cents a share, but 3Q and full-year results will widely miss Wall Street estimates.

United Microelectronics, supplier of made-to-order chips, posted 2Q 98% profit drop of NT299 million compared with NT12.7 billion in the prior-year same period on low demand for its products.

Canon, maker of printers and cameras, reported 2Q net income increase of 82.21 billion yen against 76.50 billion yen a year ago on reduced costs and 7.3% higher sales of color copiers, digital cameras and printers.

Honda Motor, car maker, posted 2Q profit fall of 111 billion yen, down fron 114 billion yen last year. The3.1% lower quarterly results are due to currency fluctuations and severe prices competition which offset the strong global sales.

European Aeronautic Defence & Space, defense contractor, posted 2Q net income rise of 488 million euros vs. 332 million euros a year ago on higher Airbus deliveries. The company lifted its 2005 earnings outlook to 1.5 euros, up from 1.36 euros on better-than-expected financial results and higher cash levels.

STMicroelectronics, chip maker, posted 2Q profit decline of 3 cents per share compared with 16 cents a year ago, citing falling prices, higher costs and restructuring charges.
HVB Group, German publicly traded bank, announced 2Q profit rise of 230 million euros, up from 211 million euros last year on considerable drop in loan-loss reserves, exceeding estimates of 225 million euros. The bank is a target of 16 billion euros bid by Italy’s Unicredito Italiano.

ConocoPhillips, oil and natural gas company, posted 2Q profit rise, or $2.21 a share on revenue, compared with $1.48 a share the year-ago period, beating expectations.

Hilton, hotel owner and developer, posted 2Q more-than-doubled net income of 49 cents a share vs. 19 cents a share in the same period last year on recurring earnings and revenue.

Royal Caribbean reported 2Q net income of 71 cents a share, up from 58 cents a share in the year-ago period on an increase in cruise ticket prices and onboard revenue, exceeding estimates by 15 cents a share.

Kellogg, food products maker, posted 2Q earnings of 62 cents a share, up vs.57 cents a share in the year-ago period, in line with forecasts.

Sprint Corp. reported 2Q profit jump of 40 cents a share compared with 16 cents a year ago, exceeding estimates of 36 cents a share.

PepsiAmericas, the second-biggest bottler of Pepsi beverage, posted 2Q earnings rise of 53 cents per share, up from 43 cents last year on 12% rise in revenue, beating estimates of 46 cents a share.

Colgate-Palmolive, household products maker, posted 2Q net income fall of 62 cents per share, down from 66 cents for the comparable last-year period.

WellPoint reported 2Q profit increase of 90 cents per share compared with 83 cents a year earlier on revenue growth of $11.3 billion.

International Flavors & Fragrances, flavor products maker, posted 2Q earnings of 60 cents a share vs. 59 cents a year ago on sales of $515.6 million. The company sees its 2005 earnings in the range of $2.08 to $2.18 per share.

Ipsco, steel maker, reported 2Q profit jump of $2.56 a share on 21.6% sales growth, beating expectations of $2.45 a share. Earnings in the 3Q are expected to be between $2.35 and $2.55 a share.

IT Group CGI, IT services provider, reported 3Q net income of 13 cents per share on sales increase of 11%. The company lowered its full-year guidance to a 17% rise in revenue and continuing operations profit.

Monaco Coach, manufacturer of recreational vehicles, posted 2Q earnings drop of 3 cents a share, down from 40 cents a year ago on sales decrease. Excluding one-time charge of 5 cents earnings would have been 8 cents a share.

Renault, French auto maker, reported first-half profit increase of 52% to 2.21 billion euros, supported by a rise in average interest-earnings loans outstanding and 3.8% revenue growth.

BG Group, natural gas company, posted 2Q net income jump of 43% to 275 million pounds on 18% revenue growth, key projects and company’s growth program.

B/E Aerospace, aircraft interior products maker, reported 2Q swung to profit of 14 cents per share on 12% revenue growth of $207.6 million, exceeding estimates of 12 cents per share. The company projected full-year earnings of 50 cents a share on $800 million revenue.

Puma AG, German sportswear maker, posted 2Q net income rise of 58.9 million euros on 12% sales increase. The company lifted its 2005 sales outlook up to 10% and earnings in the range of 264 to 274 million euros. Puma announced the formation of joint ventures in Japan, Hong Kong and China, and Taiwan.

Praxair, producer of industrial gases, reported 2Q profit rise to 63 cents a share, up from 53 cents in the prior-year same quarter due to 20% revenue growth, exceeding estimates of 62 cents a share. The company sees 3Q earnings between 61 and 64 cents a share.

CB&I, engineering & construction company, posted 2Q net income rise of 21 cents per share compared with 5 cents a year ago on 32% revenue increase.

CORPORATE NEWS

General Motors ((GM)) said it is to end its popular ‘employee discount’ program next week after two months of strong sales, and instead will concentrate on permanently lower sticker prices.

France Telecom ((FTE)) agreed to acquire 80% of Spanish mobile operator Amena for $7.7 billion. France Telecom shares climbed 1.6% in Paris.

OTHER NEWS

A big fire broke out at an offshore drilling platform in the Arabian Sea, owned by India’s state-run Oil & Natural Gas Corp. About 200 to 300 people could have been working there and a number of casualties are expected.