Market to Open Flat on Mixed Earnings

Elena
25 Jan, 2007
New York City

U.S. stock futures pointed to a flat market opening, as better-than-anticipated results at eBay and Nokia provided further strength to the tech sector, while Ford weighed on the broader market with a wider Q4 loss. EBay jumped 12% in pre-open trading after posting a 29% rise in quarterly sales. Nokia rose 5.3% after the handset maker posted 19% profit rise on 13% revenue increase. Qualcomm gained 3% after the company posted a 5% profit rise and confirmed its 2007 outlook.

[R]9:00AM Market futures were flat on mixed earnings reports.[/R]
U.S. stock futures pointed to a flat market opening, as better-than-anticipated results at eBay and Nokia provided further strength to the tech sector, while Ford weighed on the broader market with a wider Q4 loss. EBay ((EBAY)) jumped 12% in pre-open trading after posting a 29% rise in quarterly sales. Nokia ((NOK)) rose 5.3% after the handset maker posted 19% profit rise on 13% revenue increase. Qualcomm ((QCOM)) gained 3% after the company posted a 5% profit rise and confirmed its 2007 outlook. AT&T ((T)) reported a 17% rise in Q4 earnings, bolstered by strength in its wireless business, amid a 23% increase in revenue. Among other high-tech giants, Microsoft ((MSFT)), Apple Inc. ((APPL)) and Google ((GOOG)) moved to the upside. Microsoft is scheduled to report results after the closing bell.

Dow component Ford Motor ((F)) fell 1.2% in pre-open trading the automaker said its loss widened to $3.05 a share, from 4 cents a share a year earlier. Excluding special items, the company would have lost $1.10 a share, wider than the average analyst loss estimate of $1.01 a share. Among other early losers, Bristol-Myers Squibb ((BMY)) moved 0.2% lower, as the pharmaceutical company posted a quarterly net loss, citing special costs. However, earnings per share excluding special items surpassed the average analyst expectations. S&P 500 futures slipped 0.90 of a point to 1,445.30 while Nasdaq 100 futures climbed 2.25 points to 1,817.50. Dow industrial futures were unchanged at 12,661.

[R] Initial jobless claims rose above expectations.[/R]
Thursday morning, the Department of Labor released its report on initial jobless claims in the week ended January 20, showing that jobless claims increased by much more than economists had been expecting. The report showed that jobless claims rose to 325,000 from the previous week's revised figure of 289,000. Economists had been expecting a somewhat more modest increase to 310,000 compared to the 290,000 originally reported for the previous week. With the increase, initial jobless claims climbed back above 300,000 after claims were below that key level for the two previous weeks. The increase marked the biggest one-week rise since an increase of 96,000 claims in the week ended Sept. 10, 2005, which came after Hurricane Katrina. The Labor Department also said that the less volatile four-week moving average rose to 309,250 from the previous week's revised average of 307,750. At the same time, the report showed that continuing claims in the week ended January 13 fell to 2.484 million from the preceding week's revised level of 2.523 million.


[R]8:00AM Ford reported wider Q4 loss on huge restructuring costs.[/R]
Ford Motor Co. ((F)) said that its Q4 loss widened to $5.8 billion or $3.05 a share from a loss of $74 million, or 4 cents a share last year. The huge quarterly loss was contributed to weaker sales and high restructuring costs, pushing the automaker''s deficit for the year to $12.7 billion, the largest in its 103-year history. Restructuring in Ford''s North American operations cut quarterly earnings by $3.7 billion. Excluding special items, the automaker would have lost $2.1 billion, or $1.10 a share, wider than the average analyst estimates of a loss standing at $1.01 a share. Ford reported quarterly sales decline of 13% to $40.3 billion from $46.3 billion in the year-ago period.

The company posted annual loss which surpassed its previous record for a year of $7.39 billion set in 1992. Excluding special items, Ford lost $1.50 per share in 2006, missing expectations a loss of $1.35 per share for the year. Of all the special items, restructuring costs totaled $9.9 billion for the year. Ford predicts continued losses for 2007. It expects to burn up $10 billion in cash on automotive operations through 2009 and invest $7 billion in new products.


[R]7:30 AM Japan leads Asian stocks lower Thursday on falling exports.[/R]
Asian markets ended mostly lower on Thursday. The Nikkei 225 Index in Japan closed 0.3% lower at 17,458.30. Toyota shares fell 1.7%. Sony gained 1.6% as market talk is growing that the company will launch an IPO of its Sony Financial unit. Shares of shipping line Kawasaki Kisen Kaisha and other domestic-related issues such as Nippon Steel were higher, bucking the trend. In Tokyo currency trading the U.S. dollar was quoted at 120.40 yen, compared to 121.15 yen in late New York

Hong Kong Hang Seng Index fell 0.7% to 20,669.83. China Mobile, the second-biggest Hong Kong large-cap by market capitalization, declined 2% as investors took profits following recent gains. China Life Insurance shed 2.9%, tracking a 4.9% decline. The Shanghai Composite Index slipped 2.6%. The Chinese government announced that the economy expanded faster than forecast in Q4, bringing full-year growth to 10.7%, its fastest pace since 1995.

Taiwan Weighted Price Index dipped 0.15% to 7,923.77 and South Korean Kospi index shed 0.05% to 1,382.36. Australian ASX/S&P 200 rose 0.02%, New Zealand NZSX-50 rose 0.04% and the Composite Index in Malaysia declined 0.1%.


[R]6:30 AM European markets advance Thursday on strong tech sector.[/R]
European markets were higher Thursday. By mid morning, the FTSE 100 in London climbed 0.2% to 6,324.2, Frankfurt Xetra Dax added 0.2% to 6,761.93, and the CAC 40 in Paris gained 0.1% to 5,643.37.

Advancers

Nokia, the Finnish mobile phone maker, posted a better-than-expected 19% increase in Q4 net profit on strong growth in emerging markets.

Pernod Ricard, the French drinks group, advanced 6.2% after it reported a 7.3% growth in first-half net profit thanks to growth in its prestige brands.

Siemens posted a better-than-expected increase in sales and operating profit in its fiscal first quarter. The shares gained 6%.

Swedish clothing retailer Hennes & Mauritz rose 5.2% after it said that its Q4 pretax profit rose 27%, above the expectations of the analysts for a profit.

Decliners

Air Liquide fell 2.1% after a sharp drop in natural gas prices and the strength of the euro contributed to a 0.9% drop in Q4 sales.

U.K airline British Airways slipped 1.4% after the company said that cabin crew members of the Trade Union will stop work for 48 hours starting Jan. 30.

Oil and gold

Crude oil prices dropped in Asian trading Thursday after rising overnight to a two-week high. Crude oil for March delivery dropped 32 cents to $55.05 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude for March dipped 17 cents to $55.26 a barrel on the ICE Futures exchange in London. Gold opened Thursday at a bid price of $646.57 a troy ounce, up from $641.40 late Wednesday.

Currencies

The dollar fell against other major currencies in European trading Thursday morning. The euro traded at $1.2980, up from $1.2961 late Wednesday. The British pound was quoted at $1.9691, up from $1.9672. The dollar bought 120.56 Japanese yen, down from 120.95.