Economic Data to Drive Opening

albena
30 Nov, -0001
New York City

After 3 days of declines in a row, on Tuesday the futures point to a slightly higher open ahead of the word from the Federal Reserve on future interest rate hikes. Corporate news is likely to give direction to individual stocks and sectors. Oil eased back from the $64-per-barrel level it hit overnight. Second-quarter non-farm productivity and June wholesale-inventories data are also expected today.

U.S. AVERAGES

Oil rose to a record high above $64 a barrel early Tuesday as traders were worried about the potential for Middle East supply disruptions that could add tension to a market already hit by refinery problems.

U.S. Treasury notes were little changed before the Federal Reserve's meeting on interest rates, at which policy makers will probably raise their benchmark rate for the 10th straight time.

The yield on the benchmark 10-year note was 4.42%. The yield has climbed from 3.92% at the end of June. The price of the 4 1/8 percent security due May 2015 gained 1/32, or 31 cents per $1,000 face amount, to 97 11/16. Yields move inversely to bond prices.

Ford Motor Co. ((F)) late Monday said it would cut an unspecified number of jobs in North America. According to reports, as many as 20% to 25% of sales and marketing staff could be cut.

Before the start of trading, King Pharmaceuticals ((KG)) is expected to see its quarterly profit rise to 22 cents per share. Clear Channel Communications ((CCU)), El Paso ((EP)) and Progressive Corp. ((PGR)) are all expected to announce their quarterly results Tuesday.

Investors also expect earnings reports from two high profile companies after the closing bell Tuesday - tech bellwether Cisco Systems and media and entertainment conglomerate Walt Disney. Both are seen to post double-digit percentage jumps in earnings.

ECONOMIC NEWS

No surprises are expected when Federal Reserve policy makers meet Tuesday, as they are likely to raise short-term interest rates another quarter of a percentage point, to 3.5%. The word in the statement is seen a bit more hawkish on the outlook for inflation. An announcement from the Fed is expected at about 2:15 p.m.

Second-quarter non-farm productivity and June wholesale-inventories data are also expected today.

Economists expect a moderate increase in nonfarm productivity to have taken place in the second quarter. Their estimates center on a 2% annual rate of increase after a 2.9% rate of jump in 1Q. Unit labor costs - equal to hourly compensation growth less productivity – are expected to increase at a 2.7% rate vs. a 3.3% pace in 1Q.

The Labor Department is set to release the productivity and costs report today at 8:30 a.m.

The Commerce Department is due to report on wholesale inventories at 10 a.m.

INTERNATIONAL MARKET NEWS

Asian-Pacific markets ended mostly higher on regional oil and energy stock gains after the markets shrugged off record-high crude-oil prices of nearly $64 a barrel. The Nikkei advanced 1%, boosted by better-than-anticipated economic data. Among the gainers in the regional markets, South Korea’s Kospi added 1.2% and China’s Shanghai Composite rose 1.2%. Stocks in Hong Kong declined 0.4%; markets in Singapore were closed for a national holiday.

European markets traded up at mid-day on resource stocks and drug maker Elan, ahead of Fed Reserve interest rate decision later in the day. The new record high of crude-oil prices, $64.24 in electronic trading, sent shares of BHP Billiton and Royal Dutch Shell higher. Averages in Germany rose 0.13%, in France added 0.17%, and in the U.K. advanced 0.10%. Crude-oil was recently traded at $63.75 a barrel.

ENERGY, METALS AND CURRENCIES MARKETS

Crude-oil futures hit historic record prices on terror fears and supply concerns, caused by unusually stormy weather forecasts. Light sweet crude for September delivery rose 17 cents to $64.11 a barrel in New York trading. London Brent gained 10 cents to trade at $62.80.

Gold futures declined in the company of the mixed U.S. dollar. In London gold traded at $434.70 per troy ounce, down from $435.65. In Hong Kong gold fell $2.30 to close at $434.75 per ounce. Silver opened unchanged at $7.06.

The U.S. dollar was mixed against its major counterparts. The euro traded at $1.2372, up from $1.2357. The greenback bought 112.03 yen, up from 112.00. The British pound was quoted at $1.7845, down from $1.7858.

EARNINGS NEWS

KPN, Dutch telecommunications operator, said 2Q net profit was down to 10 euro cents a share, from 16 euro cents a share in the year-ago period due to the amortization of third-generation UMTS licenses.

Bradford & Bingley, U.K. mortgage lender, reported that first-half pre-tax profit increased 17 pence a share, compared to the same period last year, while underlying pre-tax profit was up to 150 million pounds, beating analysts' expectations of 145.7 million pounds.

Beiersdorf, the maker of Nivea hand cream, announced that its 2Q net income increased to 87 million euros, with sales up to 1.26 billion euros. It held to 2005 sales and margin forecasts.

Scottish & Newcastle, breweries operator, reported that first-half pre-tax profit rose 6.5% on 4.5% revenue growth, matching analyst estimate. The company will lift its dividend by 2.5% to 7.04 pounds a share.

Retalix, front- and back-office software provider, posted 2Q net income of 20 cents per share vs. 8 cents per share last year, beating market estimate of 17 cents per share for the quarter. 2Q revenue climbed 76.5% vs. 2Q last year.

NDS, provider of smart cards and set-top box software, reported 4Q net income of 38 cents per share vs. breakeven last year, beating analysts’ estimate of 22 cents per share.

Dampskibsselskabet TORM, operator of nearly 100 product tankers and bulk cargo carriers, reported 2Q net profit of $2.3 per share vs. restated $1.4 per share in the same quarter last year. Quarterly net revenues jumped to $132.1 million vs. $98 million last year.

Converium, treaty and facultative risks coverage provider, reported 2Q net profit of 48 cents per share vs. a net loss of $8.32 per share in 2Q last year.

IsoTis OrthoBiologics, reported 2Q net profit of 4 cents per share vs. a net loss of 13 cents per share in the same quarter last year. Revenues for the quarter rose to $7.53 million vs. $6.43 last year. The company backed its guidance of 20% revenue growth over 2004.

Sanders Morris Harris., institutional and retail brokerage company, posted 2Q earnings of 12 cents per diluted share vs.16 cents last year. 2Q revenue for the quarter was $30.5 million vs. $28.7 million last year.

MCI, facilities-based network operator, posted 2Q earnings of 19 cents per share vs. a loss of 22 cents per share a year ago. Revenues for 2Q fell 10% to $4.7 billion, but operating expenses decreased by 11%.

Silicon Image, chip maker, posted 2Q earnings of 12 cents a share vs. 0 cents a year ago on 17% higher revenue.

NTL, cable TV services provider, reported 2Q net income of 86 cents a share, up from a net loss of $2.87 a share on revenue of $482.5 million, beating expectations of a net loss of $1.20 a share.

Hypercom, electronic payment solutions provider, posted 2Q net loss of 32 cents a share compared with a loss of 20 cents a share last year on 1.5% higher revenue, missing expectations of earnings of 3 cents a share.

Rita Medical Systems, medical devices manufacturer, reported 2Q net loss of 3 cents per share, up from a loss of 11 cents a year ago on 156% revenue growth.

Constar International, supplier of PET plastic containers, reported 2Q net loss of 63 cents per share compared with a loss of 32 cents a year earlier on sales increase of 17.4%.

EchoStar, direct broadcast satellite TV provider, reported basic earnings per share of $1.89 vs. 18 cents last year on an 18% increase of revenue, beating expectations of earnings at 44 cents per share.

CORPORATE NEWS

Bombardier Aerospace revealed that Global Wings, Inc., of Tokyo has placed a firm order for a new Bombardier Learjet 45 XR business jet. This new sale comes after the recent orders for an additional three Bombardier business aircraft placed by Asian operators. The actual list price of these four transactions combined is valued at over US$80 million. Bombardier also added that the customer deliveries of its ultra long-range business jet, Global Express XRS are due to start in 1Q 2006, offering even more range at higher speed.

The Boeing Company ((BA)) confirmed that Turkish Airlines has exercised options for 8 Boeing Next-Generation 737-800s. The airplanes are due for delivery in 2008 and are worth an estimated $542 million at list prices. The options were part of an order placed by Turkish Airlines in 2004 for 15 Boeing 737s.

Goodyear Tire & Rubber Co. ((GT)) revealed the completion of the sale of its stake in Goodyear Sumatra Plantations to Bridgestone Corp. for approximately $62 million. The decision to sell the 95% stake was in accordance with the company's strategy to focus on core business activities. The transaction, which is subject to post-closing adjustments, is not seen to significantly affect the company's ability to buy natural rubber for its operations.

Cardiac Science Inc. ((DFIB)) disclosed the settlement of its patent infringement lawsuit it had brought against privately held Defibtech, in the U.S District Court. As per settlement, Cardiac Science would receive a cash payment of $925 thousand. Cardiac Science added that the allegations of infringement by Defibtech of United States Patent and all of Defibtech's assorted counterclaims have been fully resolved. Other terms and conditions of the settlement remain confidential.

Ford Motor Co. ((F)), expanding a broad cost-reducing measure in its unprofitable North American auto segment, said it plans to restructure and cut staff in its North American sales and marketing operations. Ford didn't reveal how many jobs would be cut by the moves. Ford earlier announced its plans to cut up to 2,700 salaried jobs in North America this year.