Conflicting Supply Data and Mixed Corporate News

albena
30 Nov, -0001
New York City

Stocks moved lower pressured by fluctuating oil and weaker dollar. Weaker-than-expected earnings at Time Warner and Adidas-Salomon's $3.8 billion acquisition of Reebok International were also in the spotlight. Bond prices climbed as the Treasury Department announced the return of the 30-year bond, to be issued after a five-year interval. The Energy Department reported an unexpected rise in weekly U.S. crude supplies but a bigger-than-expected drop in gasoline supplies.

U.S. AVERAGES

Bond prices climbed as the Treasury Department announced the return of the 30-year bond, to be issued after a five-year interval. The yield on the benchmark 10-year Treasury note dropped to 4.30% vs. 4.34% late Tuesday.

Investors also were disappointed with the latest reading of the Institute for Supply Management's services index. The ISM index, which measures growth in the service sector of the economy, fell to 60.5 in July, lower than the 61 reading expected by economists and down from 62.2 in June.

Rising oil ahead of fuel inventory report weighed on stocks and dragged them off their 4-year highs hit Tuesday. As many as 21 named storms and 11 hurricanes are forecast for the 2005 hurricane season, matching a record set in 1933, according to U.S. government forecasters.

The euro surged versus the dollar on speculation that Middle Eastern oil producers were shifting revenue away from dollars.

On the earnings front, shares of Time Warner Inc. ((TWX)) fell 2.1% to $17.05 after the media giant posted a 2Q loss of $321 million as it set aside $3 billion to cover legal reserves for a settlement.

The gold sector is currently up about 2.2%. The utility segment is among the best performers in the early session, extending Tuesday's gain with the report of PG&E's earnings, fueling the advance.

The airline sector is among the worst performers on the day, down about 1.7%. The housing segment is also weak.

Abatix ((ABIX)) leads the advancers in the early dealings after it posted a profit for the second quarter vs. a loss last year. The company’s stock is currently up nearly 60%.

Overland Storage ((OVRL)) is a significant decliner following the news that HP has decided not to buy the firm's next-generation mid-range tape automation product line. The stock is currently down 21%.

ECONOMIC NEWS

The Department of Energy's Energy Information Administration said that crude oil inventories rose by 200,000 barrels for the week ended July 29, advancing to 318.0 million barrels vs. the 317.8 million barrels the previous week.

Gasoline inventories posted a week-over-week drop of 4 million barrels. Stocks of distillate fuel oil rose by 1.5 million barrels.

According to the report from the Institute for Supply Management business activity in the service sector saw continued growth in the month of July, although the pace of growth slowed more than economists had estimated. The report also marked a sharp increase in prices that may result in to some inflation worries.

The ISM’s index of business activity in the service sector fell to 60.5 in July from 62.2 in June. Economists had expected a decline to 61.5.

The drop in the pace of business activity growth comes in spite of continued improvement in new orders, with the new orders index advancing to 61.9 in July vs. 59.5 in June. The backlog of orders index also grew to 53.5 in July versus 52.5 in June.

The pace of employment growth in the service sector slowed, with the employment index falling to 56.2 in July from 57.4 in June.

Prices saw a sharp rise in July, with the prices index climbing to 70.3 vs. 59.8 in June.

Mortgage application volume declined in the most recent week, according to industry report released Wednesday, with a rise in purchase activity not quite overcoming a fall in refinancing.

The Mortgage Bankers Association reported that its market composite index of mortgage loan application volume declined 0.3% for the week ended July 29. The 4-week moving average for the market index, which flattens out week-to-week volatility, slid 3.2% The index of purchase activity advanced by 1.9%, while the index of refinancing activity declined by 3%. The refinance share of total applications dropped to 41.7% versus 42.9% in the previous week.

INTERNATIONAL MARKET NEWS

European stocks ended mixed after several days of gains on mixed earnings news from several important companies, but upbeat news, provided by activity in mergers and acquisitions with Adidas-Solomon and Atlanta in the focus. Averages in Germany dropped 0.2%, in France lost 0.2%, and in the U.K. fell 0.01%.

Asian-Pacific markets closed mixed after higher early trading, following Wall Street gains. The Nikkei advanced 0.4% led by auto makers, mining and steel stocks. As crude-oil prices rose above $62 a barrel, Nippon Oil jumped 4.4% to become the biggest gainer in the index. The other regional markets ended mostly down. Hong Kong’ Hang Seng lost 0.1%, South Korea’s Kospi fell 0.2%, and Singapore’s Straits Times dropped 0.5%. The dollar traded at the lower end of 111-yen range in early Tokyo trading.

European markets traded lower at mid-day after several consecutive gaining sessions, reflecting mixed earnings reports from major companies, although deal news provided some upside. The German DAX 30 lost 0.3%, the French CAC 40 declined 0.4%, and London’s FTSE 100 dropped 0.3%

ENERGY, METALS AND CURRENCIES MARKETS

Crude-oil futures kept hovering over the $62-a barrel level on U.S. Department of Energy report and global demand concerns. Light sweet crude September delivery rose 32 cents to trade at $62.20 a barrel in early trading on the NYME after reaching as high as $62.50. London Brent gained 51 cents to trade at $61.13.

U.S. gold futures advanced reaching a record high on the back of the strengthening euro. In early trading on the NYME gold for December delivery traded as high as $441.50 per ounce, $3.80 higher, but later eased back to trade within the range of $436.40 to $441.50. Silver for September delivery was trading at $7.295, up from $7.262.

The dollar kept falling against other major currencies and thus pushing gold higher. The euro was quoted at $1.2311, up from $1.2199. The dollar stood at 111.14 yen, down from 111.38. The British pound traded at $1.7794, up from $1.7705. In London gold closed at $435.90 per ounce, up from $432.10.

EARNINGS NEWS

Toyota Motor, car maker, reported 1Q net profit decline of 6.9% to $2.38 billion, reflecting rising investment which offset record sales growth of $44.5 billion.

Credit Suisse Group posted 2Q profit drop of 79 francs against 1.20 francs a year earlier, reflecting litigation charges, missing forecasts.

GeoPharma, drug maker, posted 1Q profit increase, but flat earnings of 6 cents a share on 70% higher revenue.

Overstock, online discount retailer, reported 2Q wider net loss, translating to 13 cents a share vs. a breakeven a year ago, beating estimates of a quarterly loss of 22 cents a share.

Bruker Biosciences, life sciences developer, posted 2Q breakeven loss of 5 cents a share on revenue growth of 11%.

Mediacom Communications, developer of cable television systems, posted 2Q net loss of 5 cents a share compared with a profit of 25 cents last year, missing estimates of a net loss of 2 cents.

Danka Business Systems, office equipment supplier, reported 1Q wider net loss of 40 cents against a loss of 7 cents in the last-year same period, reflecting dividend payments.

Calpine, electricity generator, posted a 2Q loss of 66 cents a share, down from a loss of 7 cents a share in the year-ago period despite revenue growth, missing analyst estimate of a loss of 29 cents a share.

Omnicare, pharmaceutical care provider, posted 2Q net income rise of 59 cents a share vs. 55 cents a year ago on revenue growth of $1.12 billion. Excluding non-recurring items, earnings would have been 50 cents a share, matching analysts’ expectations.

Per-Se Technologies, healthcare solutions company, reported 2Q net income jump of 23 cents per share compared with 7 cents last year on higher revenue of $93.3 million.

Littelfuse, circuit products maker, reported 2Q profit decline of 19 cents a share, down from 46 cents a year ago on 4% lower sales with decrease in electronic sales on weakness in telecom markets. The quarterly results missed expectations of 20 cents a share.

All American Semiconductor, electronic distributor, announced 2Q net income fell to 8 cents a share, down from 25 cents a share for the same period last year despite an increase in net sales.

Gerdau Ameristeel, steel mini-mills operator, said net income dropped to 24 cents a share, from 48 cents a share in the year-ago period despite sales rise.

Kansas City Southern, railroad operator, posted a 2Q widened net loss of 32 cents a share, down from a loss of 11 cents a share in the same period last year on railroad acquisition.

Cox Radio, radio stations operator, announced 2Q net income was 20 cents a share compared with 20 cents, or breakeven a year ago on revenue growth, matching analyst estimate.

Hecla Mining, precious and nonferrous metals company, posted a 2Q loss of 5 cents a share, from a profit of 2 cents a share in the same period last year, owing to a strike at the company's Mexico operations, missing expectations of a penny a share profit.

Sunoco, petroleum refiner and chemicals manufacturer, posted 2Q earnings of $1.75 a share, up vs. $1.53 a share in the same period last year on revenue growth.

Apartment Investment and Management, investment trust, announced 2Q funds from operations, a key profitability measure for real estate investment trusts, was up to 67 cents a share vs. 63 cents in the same period last year, missing analysts’ expectations of 69 cents.

Domino's Pizza, pizza delivery stores operator, posted 2Q earnings of 35 cents a share, up vs. 24 cents a share in the same period last year on revenue growth, topping analysts’ forecasts of 32 cents a share.

Sinclair Broadcasting, programming services provider, posted a 2Q net income increase on asset sale gain. Earnings per share from continuing operations were up to 22 cents, from 16 cents a year ago, beating analyst estimate of11 cents a share.

Dominion Resources, gas and electric energy provider, posted 2Q profit of 97 cents a share, up from 76 cents a share in the year-earlier period, beating analyst estimate of 99 cents a share.

Aqua America, water or wastewater services provider, posted 2Q net income of 23 cents a share, up vs. 19 cents a share in the year-ago period on revenue growth, beating analysts’ forecasts by a penny.

Nice Systems, Web, radio and video communications company, announced 2Q net income went up to 33 cents a share, vs. 24 cents in the year-ago period on strong revenue, missing analysts’ forecasts by a penny.

Dean Foods, dairy products distributor, posted 2Q earnings of 55 cents a share, up vs. 47 cents a share in the same period last year on flat revenue, matching market expectations. Apart from non-recurring items, earnings would have risen to 53 cents a share from last year's 39 cents, and topped analyst forecast of 51 cents.

Duke Energy, integrated energy services provider, posted 2Q earnings of 32 cents a share, down vs. 45 cents a share in the same period a year earlier despite revenue growth, missing expectations of 38 cents a share.

CVS, pharmacy and drugstore chain, announced 2Q net income climbed to 33 cents a share, up vs. 28 cents a share in the year-ago period on strong sales growth, beating estimates of 31 cents a share.

Speedway Motorsports, marketer and promoter of motor sports entertainment, posted 2Q net income of $1.26 a share, up vs. 92 cents in the year-ago period on revenue growth, beating forecasts by a penny.

Hanson, building materials company, posted first-half 28% pretax income rise, or 172.3 million pounds on 9.3% sales growth, good performance and high property profits.

Allied Irish Banks reported firs-half earnings of 71.7 euro cents vs. 63.8 euro cents a year ago on loan and deposit growth. The company raised its 2005 outlook to earnings in the range of 1.40 to 1.42 pounds, up from earlier forecast of 1.38 to 1.40 pounds.

Rio Tinto, Anglo-Austrian miner, posted first-half net income increase of $2.17 billion, up from $1.61 billion a year ago, beating estimates of $1.95 billion. The company raised its interim dividend to 38.5 cents from previous 32 cents.

Marconi, telecom equipment maker, reported 1Q wider net loss of 36 million pounds compared with a loss of 10 million pounds last year on 15.9% sales decrease.

Swift Energy, oil and gas properties operator, posted 2Q net income of 96 cents a share, up vs. 46 cents, gained in the same period last year on strong revenue growth, beating analysts’ forecasts of 90 cents a share.

Las Vegas Sands, casino operator, announced 2Q net income declined to 24 cents a share, down from $1.42 a share in the year-ago period despite revenue growth. Adjusted net income was up at 27 cents a share from 12 cents a share a year earlier.

Time Warner, Internet services and high-speed broadband services provider, posted 2Q loss of 7 cents a share after agreeing to settle litigation for $3 billion. It would've missed consensus forecasts of 19 cents a share after the 25 cents a share charge impact is taken away on declines from film and AOL divisions.

Ritchie Bros, industrial equipment auctioneer, posted earnings for the first half of $1 a share, up from 63 cents a share for the same period last year on an increase in gross auction sales.

Citadel Broadcasting, radio stations operator, posted 2Q net income rise of up to 16 cents a share, or breakeven a year ago, on revenue growth, matching analysts’ estimate.

Earle M. Jorgensen, metal products distributor, announced 1Q profit fell 48 cents vs. 58 cents in the same period last year, due to a rise in the number of diluted shares and despite an increase in net income and strong revenue.

Cigna, health care provider, posted a 2Q net income rise of up to $5.48 a share, up vs. $3.59 a share last year on strong results and related benefits businesses.

Commerzbank, commercial bank, posted a first-half net profit rise of up to 570 million euros, up from 486 million euros last year in the same period, after encouraging developments in net interest and net commission income trends.

BMW, car maker, announced 2Q pre-tax profit declined to 916 million euros on higher raw material prices and stiffer competition. Net profit fell 1.2% to 663 million euros despite good performance from new models, matching analysts’ expectations of between 606 million and 714 million euros.

Havas, French advertising group, announced sales were up to 370 million euros in 2Q on strong recovery and sales growth outside France.

Westlake Chemical, basic chemicals manufacturer, posted 2Q net income rise, with earnings reaching 74 cents a share, up from 69 cents in the year-ago period on higher sales, missing expectations of 80 cents a share.

Gildan Activewear, active wear apparel manufacturer, posted third quarter net earnings of 57 cents a share, up vs. 44 cents, gained in the same period in fiscal 2004 on increased sales, beating analysts’ expectations by a penny.

CORPORATE NEWS

Atlanta AG, German chemicals and pharmaceuticals group, agreed to acquire specialty-chemicals maker Eckart GmbH for $768.4 million in cash and then spin off its chemical and pharmaceutical businesses into independent companies.

FuelCell Energy Inc. ((FCEL)) said that it has been awarded a subcontract by Air Products ((APD)), under a United States Department of Energy Cooperative Agreement to evaluate, design and demonstrate a next-generation Hydrogen Energy Station. The Hydrogen Energy Station would build upon FuelCell's ultra-clean Direct FuelCell power plants and Air Products' advanced gas separation technologies.

Popular Inc. ((BPOP)) and E-LOAN Inc. ((EELN)) disclosed the signing of a definitive merger agreement under which Popular would buy E-LOAN for $4.25 per share in cash or about $300 million. E-LOAN will maintain its brand identity and become a subsidiary of Popular Financial Holdings, Inc. and will also retain substantially all its employees. The deal is planned to be completed in the fourth quarter.

Adidas-Salomon AG said Wednesday that it has agreed to buy Reebok International ((RBK)) for $3.8 billion. Under the deal, which could be completed during the first half of 2006, the German shoe and apparel maker will acquire its U.S. rival for $59 per share.

Time Warner announced that it has reached an agreement in principle to resolve its primary securities class action litigation and established reserves of $3 billion related to this and other related securities litigation matters.

XM Satellite Radio reached a deal to carry news, information and music programming from New York Times Co.'s newly established radio unit. Under the agreement, XM will place news, features, reviews and commentary from newspaper and radio employees of the Times company on its satellite channels.

OTHER NEWS

The Japanese economy seems to be in the final stage of overcoming its deflation as ‘special factors weighing on prices dissipate’. The central bank will continue supporting the economy through its easy policy, as consumer prices are still in mid declining trend.

Japan’s Prime Minister Junichiro Koizumi has threatened to dissolve parliament for a snap election if the upper house fails to pass postal privatization legislation before the current session ends on August 13th. A vote on the bill could be held as soon as Friday, according to reports.