Earnings, Jobless Data to Drive Stocks Higher

albena
30 Nov, -0001
New York City

U.S. stocks are expected to trade higher at the open Thursday, as traders get ready for another flood of major corporate earnings results and jobless-claims data, seen rising in the latest week. DaimlerChrysler's 2Q net rose 28%, AstraZeneca's 2Q net profit rose nearly 50% on strong drug sales.

U.S. MARKET AVERAGES

U.S. stock futures were trading slightly higher Thursday U.S. amid another slew of earnings, despite some very good company performances after the heads of DaimlerChrysler and AstraZeneca said they would leave. Except for more major corporate earnings results, investors gear up for the weekly jobless-claims data, seen climbing in the latest week.

Among the flood of earnings scheduled for Thursday, investors will weigh the quarterly results from Exxon Mobil, which is expected to report soaring profits of more than 40% up due to higher oil prices in the three-month period.

Comments due from Microsoft executives when they meet with analysts at 11 a.m. will also be closely watched.

U.S. indexes finished higher after a late afternoon rally Wednesday, following reports from Federal Reserve banks around the country in the so-called Beige Book which said the central bankers saw the economy improving while inflation fears eased.

ECONOMIC NEWS

Weekly employment data are due to be released before the opening bell Thursday. Economists expect initial jobless claims to come in at 320,000 for the week ended July 23, reversing part of a decline in the previous week that took claims to 303,000.

INTERNATIONAL MARKET NEWS

In Asia, shares in Japan finished higher, and the regional markets were also strong, as currencies continued to bolster export-related stocks. Tokyo's Nikkei Average ended up 0.2%, to 11,858, not having reached above that point at the close since March. Hong Kong's Hang Seng Index was fractionally higher, while Seoul's Kospi Index added 1.1%. Singapore's Straits Times index gained 0.5% to 2,346 and in Taipei, the Weighted Index advanced 0.8% to 6,375. New Zealand and Australia’s markets closed lower, with Sydney's All Ordinaries Index declining 0.4%. China's Shanghai Composite slid 0.3%. Early Thursday in Tokyo the dollar was quoted at 811.28 yuan.

On Thursday European shares were higher in a day of heavy European earnings news. Carmakers advanced as DaimlerChrysler shares soared following the company’s second-quarter results release and the announced replacement of its chief executive. Germany's DAX 30 index gained 0.5% to 4,877, France's CAC 40 index added 0.6% to 4,461 and the U.K.'s FTSE 100 index rose 0.2% at 5,275. The Dow Jones Stoxx 600 index gained 0.3% to 284.60, while the euro declined 0.2% to $1.2045.

German-American automaker DaimlerChrysler ((DCX)) added 6.5% after 2Q profit jumped 28% to $892 million and revenue advanced 4% to $46.5 billion. The company targets a slight rise in unit sales for 2005, a slight increase in operating profit and higher revenue.

ENERGY, METALS AND CURRENCIES MARKETS

Oil prices were slightly higher in early trading Thursday. The September light crude futures contract for NYMEX added 18 cents to $59.29 a barrel in electronic trading, while the September contract for Brent crude gained 13 cents to $58.14.

Treasury prices remained little changed, leaving the yield on the 10-year note at the 4.25 percent level reached late Wednesday.

The dollar bought 112.63 yen late Thursday, down 0.07 yen vs. late Wednesday but up vs. the 112.37 yen it bought in New York late Wednesday. The euro jumped to $1.2047 versus $1.2004 late Wednesday.

EARNINGS NEWS

Among earnings investors will watch closely the results from Exxon Mobil, which is expected to see profits soar more than 40% on higher oil prices in the period. Also reporting today are Coca-Cola Enterprises Inc., Marathon Oil Corp., XM Satellite Radio Holdings Inc., Wendy's International Inc., KLA-Tencor Corp., Raytheon Co., Phelps Dodge Corp. and Loews Corp..

Watson Pharmaceuticals, generic drug maker, posted 2Q profit increase of 35 cents a share vs. 29 cents a year ago due to improved sales of its generic and branded products, exceeding estimates of 33 cents a share. The company sees its 2005 earnings between $1.35 and $1.43 a share.

McKesson, distributor of prescription drugs, reported 4% net income increase but flat earnings of 55 cents a share. The company is recovering from a damaging financial scandal, and excluding special charges it would have posted a quarterly income of 66 cents a share, beating estimates of 53 cents.

HCA, hospital operator, posted 2Q earnings of 90 cents per share vs. 72 last year on one-time gains, including office building sales and higher revenue of 46.07 billion. Excluding special items earnings per share would have been 74 a share, missing expectations of 76 cents a share.

Computer Associates International, posted more-than-doubled 1Q net income of 15 cents a share, compared with 7 cents for the same period last year, boosted by a tax benefit and higher revenue. Excluding one-time gains the company would have posted earnings of 22 cents a share, in line with analysts’ estimates.

Applied Micro Circuits, chip maker, announced 1Q narrower net loss of a penny per share vs. a loss of 7 cents a share a year ago on revenue of $64.7 million. The company is planning to restructure its operations, cutting 5% of its workforce.

DaimlerChrysler, autocar maker, posted 2Q earnings of 88 cents a share, up from last year the same period, on net profit increase.

Alcatel, telecom equipment maker, posted 2Q earnings of 60 euro cents a share, beating forecasts by 14 euro cents a share on net profit growth.

Pernod Ricard, alcoholic drinks groups, reported a 2Q sales increase of 6.5% to 101.9 billion pounds compared with the same period last year on organic operating profit growth.

France Telecom, telecommunications company, posted 2Q net profit rise of up to 3.4 billion euros vs. 1 billion euros the year-ago period on growth in its mobile services base and consumer broadband Internet, well ahead of forecasts.

Dow Chemical, chemicals company, posted a 2Q earnings rise of up to $1.30 a share, missing expectations of $1.22 a share, after adjusting for a 10 cent a share benefit.

Hearst-Argyle, television and radio stations company, posted 2Q earnings of 68 cents a share, up vs. 37 cents a share in the same period last year, matching analyst expectations.

Marvel Enterprises, comic book and toy company, reported net profit for 2Q was down 24 cents a share, from 25 cents a share the year-ago period on sales losses.

EDO, electronic systems producer, posted 2Q earnings increase of 31 cents a share, beating analyst predictions by a penny on sales growth.

Beazer Homes, single family homes designer, reported 3Q net income of $2.50 a share, up vs. $1.42 a share in the year-ago fiscal period on revenue growth.

Precision Drilling, drilling and service rigs provider, reported 2Q earnings increased to 21 cents a share from 14 cents the same period last year on revenue growth, beating analyst expectations.

Elan ((ELN)) posted a 2Q loss 35 cents per share, wider than last year's loss of 30 cents per share due to costs associated with Tysabri. Adjusted EBITDA for 2Q was negative $58.7 million vs. to negative $45.7 million last year. The company is targeting breakeven adjusted EBITDA by the end of 2005, excluding Tysabri.

Aetna ((AET)) posted 2Q operating earnings of $1.20 per share, though excluding reserve development, the company met analysts' estimate with a profit of $1.08 per share. In the same period a year ago the company reported operating earnings of 89 cents per share, or 85 cents per share without favorable reserve development. The company reported total 2Q revenue of $5.5 billion vs. $4.88 billion last year.

Beazer Homes USA ((BZH)) posted a 3Q profit of $2.50 per share, up vs. $1.42 per share last year, beating expectations of earnings at $2.05 per share. The company raised its full-year guidance to $8.00-$8.25 per share vs. an earlier forecast of $7.00-$7.25 per share.

CORPORATE NEWS

DaimlerChrysler's 2Q net rose 28%, despite further restructuring costs at the company’s Mercedes Car Group division, which reported a surprise profit. The German-U.S. auto maker added Chief Executive Jurgen Schrempp will leave by the end of the year, to be succeeded by Chrysler head Dieter Zetsche.

China's Cnooc is thinking about an agreement to sell all of Unocal's U.S. assets to cushion criticism of its proposed purchase of the California-based company among U.S. lawmakers. Cnooc already accepted to exclude itself of any assets required by the committee on foreign investment, the U.S. government panel that would review a purchase of Unocal on national security grounds. But after a series of setbacks in Washington, Cnooc was feeling pressure to make additional concessions.

Computer Associates International posted in-line earnings and announced a restructuring plan aimed at reducing 800 jobs and saving $75 million a year.