Fall in Oil Takes Market Higher

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

Productivity rose 2.2% in the second quarter, down from 3.2% in the first quarter, and rose at an annual rate of 1.3%. Investors are expecting Fed to raise interest rate this afternoon. Wholesale inventories rose 0.7% more than expected.

U.S. AVERAGES

The falling oil prices, slower rise in productivity and faster build-up of inventories, and the expected rise in interest rate is all that investors are digesting this morning. At the end of the first hour of trading the averages are up close to 0.5% on Nasdaq and NYSE.

Techs and semiconductor stocks are trading higher led by advances in Cisco and Advanced Micro Devices upgrade. The Industrial sector stocks are gaining as well despite disappointing earnings from Fluor Corp.

Airline stocks are trading lower on rising fuel costs and led by a downgrade for Delta Airline stock. The stocks of biotech companies Elan Corp and BiogenIDEC are trading higher after the companies reported that they found no evidence of rare brain disease associated with TYSABRI drug.

Shares of LoJack are trading higher on better than expected earnings and Disney and Cisco are trading higher on the positive earnings expectations at the close.

ECONOMIC NEWS

The Bureau of Labor Statistics of the U.S. Department of Labor reported preliminary productivity data--as measured by output per hour of all persons--for the second quarter of 2005. The preliminary seasonally adjusted annual rates of productivity change in the second quarter were, 1.2 percent in the business sector and 2.2 percent in the non-farm business sector.

Productivity growth in the business sector reflected increases of 4.2 percent in output and 3.0 percent in hours. Output per hour increased more in the non-farm business sector because output grew more, 4.4 percent, and hours rose less, 2.1 percent, than in the business sector.

In manufacturing, the preliminary productivity changes in the second quarter were, 4.1 percent in manufacturing, 3.8 percent in durable goods manufacturing, and 5.0 percent in nondurable goods manufacturing.

Manufacturing productivity grew 4.1 percent in the second quarter as output increased 1.2 percent and hours declined 2.8 percent (seasonally adjusted annual rates). Output and hours in manufacturing, which includes about 13 percent of U.S. business-sector employment, tend to vary more from quarter to quarter than data for the aggregate business and non-farm business sectors.


The wholesale inventories in June rose 0.7% more than expected by economists. The text of the report from the U.S. Census Bureau is reported below.

Sales

The U.S. Census Bureau announced today that June 2005 sales of merchant wholesalers, except manufacturers’ sales branches and offices, after adjustment for seasonal variations and trading-day differences but not for price changes, were $297.3 billion, up 0.6 percent from the revised May level and were up 7.8 percent from the June 2004 level.

The May preliminary estimate was revised upward $0.1 billion. June sales of durable goods increased 0.3 percent from last month and were up 6.4 percent from a year ago. June sales of nondurable goods increased 0.8 percent from last month and were up 9.2 percent from last year. Sales of petroleum and petroleum products increased 3.5 percent from last month and sales of drugs and druggists’ sundries increased 2.1 percent.

Inventories

Total inventories of merchant wholesalers, except manufacturers’ sales branches and offices, after adjustment for seasonal variations but not for price changes, were $353.1 billion at the end of June, up 0.7 percent from last month and were up 10.2 percent from a year ago.

The May preliminary estimate was revised upward $0.6 billion or 0.2 percent. End-of-month inventories of durable goods increased 0.9 percent from May and were up 11.6 percent from last June.

Inventories of motor vehicle and motor vehicle parts and supplies increased 3.1 percent and inventories of machinery, equipment, and supplies were up 1.5 percent. End-of-month inventories of nondurable goods increased 0.3 percent from May and were up 8.0 percent compared to last June.

Inventories of drugs and druggists’ sundries decreased 0.8 percent from last month.

Inventories/Sales Ratio

The June inventories/sales ratio for merchant wholesalers, except manufacturers’ sales branches and offices, based on seasonally adjusted data, was 1.19. The June 2004 ratio was 1.16.

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 $6375 a barrel

ENERGY, METALS AND CURRENCIES MARKETS


Crude-oil retreated from a record price-level on security concerns in Saudi Arabia and Middle East tensions. Light sweet crude for September delivery declined 28 cents to $63.66 a barrel. London Brent slipped 29 cents to trade at $62.41.

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

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.

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

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%.

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.

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.

OTHER NEWS

Bank of China is involved in negotiations for four foreign partners to take a considerable share in its business, obviously aiming at reducing the investors’ risk and giving the bank access to a wide range of f financial know-how. At present the bank is negotiating with U.K.’ Royal Bank of Scotland, the world’s sixth-biggest bank by capitalization.