Lehman To Buy 20% of Float

Elena
01 Feb, 2007
New York City

U.S. stocks traded moderately higher, helped by optimism about corporate profits and data showing strong consumer spending. Tech stocks got a boost from Dell, rising 4% on management change. Meanwhile, Google weighed on the sector with a drop of 2.6%. Among brokerage stocks, Lehman rose 3% after it said it will buyback up to 100 million shares. The company also boosted its dividend by 25%. Investment adviser W.P. Stewart fell 18% on news Chairman W.P. Stewart retakes CEO position.

[R]11:30AM U.S. stock averages traded moderately higher.[/R]
U.S. stocks traded moderately higher, helped by optimism about corporate profits and data showing strong consumer spending. Technology stocks got a boost from Dell ((DELL)), rising 4% on management change. At the same time Google ((GOOG)) weighed on the sector with a drop of 2.6%. Rival company Hewlett-Packard Co. ((HPQ)) pressurd the blue-chip average with a decline of 2%. Comcast Corp. ((CMCSA)) also contributed to the tech weakness, falling 3% as the nation's largest cable television operator's Q4 profit missed forecast, despite tripling on 30% revenue increase. Among brokerage stocks, Lehman Brothers ((LEH)) rose 3% after it said it will buyback 100 million shares. The buyback program supersedes the previous share repurchase authorization. The company also boosted its dividend by 25%, with the annual dividend rising to 60 cents a share from 48 cents.

Housing stocks showed significant strength on the heel of a report from the National Association of Realtors that showed that its Pending Home Sales Index rose 4.9% in December, marking the biggest monthly gain since March of 2004. Among companies, driven by analyst comments, shares of Hovnanian Enterprises ((HOV)), homebuilder, climbed 5.7% after Banc of America upgraded its rating on the stock to buy from neutral. On the other hand, shares of Sepracor ((SEPR)) dropped 3.6% after Lehman Brothers downgraded its rating on the pharmaceutical company.

By sector, biotech, transportation and gold stocks advanced, while computer technology and oil serviced moved to the downside. In late morning trading, the Dow Jones industrial average was up 11.69, or 0.09%, at 12,633.38. The Standard & Poor's 500 index was up 2.20, or 0.15%, at 1,440.44, and the Nasdaq composite index was down 2.77, or 0.11%, at 2,461.16. Bonds were little changed, with the yield on the benchmark 10-year Treasury note unchanged from late Wednesday at 4.82%.

[R]ISM index fell 49.3% in January.[/R]
Thursday morning, the Institute for Supply Management released its report on business activity in the manufacturing sector in the month of January, showing that activity unexpectedly contracted after seeing growth in the previous month. The ISM said that its purchasing managers index fell to 49.3 in January from 51.4 in December, with a reading below 50 indicating contraction in the sector. Economists had been expecting the index to edge up to 51.5. The contraction in the sector was partly due to a decline in the pace of production, as the production index fell to 49.6 in January from 52.4 in December. The new orders index also fell to 50.3 from 51.9, although it still indicated modest growth. The report also showed a continued drop in employment, with the employment index rising to 49.5 in January from 49.4 in December but remaining below 50. At the same time, the report showed that prices grew in January after falling in the previous month, as the prices index rose to 53.0 from 47.5.

[R]Initial jobless claims fell 20,000.[/R]
The Department of Labor released its report on initial jobless claims in the week ended January 27 on Thursday. The report showed that jobless claims fell by even more than economists had been expecting. The report said that jobless claims fell to 307,000 from the previous week''s revised figure of 327,000. Economists had expected jobless claims to fall to 315,000 from the 325,000 originally reported for the previous week. The less volatile four-week moving average also fell, slipping to 304,750 from the previous week''s unrevised average of 309,250. The Labor Department added that continuing claims in the week ended January 20 rose to 2.553 million from the preceding week''s revised level of 2.482 million. The data may shed some light on the strength of the January employment report that is due to be released on Friday. Economists currently expect the report to show that payrolls increased by about 150,000, while the unemployment rate is expected to hold at 4.5 percent.


[R]9:45AM Market opened higher on tame inflation and corporate news.[/R]
Wall Street advanced at opening, boosted by a tame reading on inflation, and corporate news at Dell Inc. The Dow was driven higher by over 1% gains in the shares of Alcoa Inc. ((AA)), Boeing Co. ((BA)), Caterpillar Inc ((CAT)) and Dupont ((DD)). Exxon Mobil Corp. ((XOM)) fell slightly as crude oil prices receded, after the company posted a drop in earnings but still managed to beat expectations. Energy company Royal Dutch Shell rose 1.3% after posting a 21% increase in Q4 profit. Dell ((DELL)) provided a boost to the technology sector, rising 4.7% after news that its founder Michael Dell will take back the role of CEO.

Google Inc. ((GOOG)) shares slipped 0.5%, while solid earnings helped lift shares of some internet companies. VeriSign ((VRSN)) rose 7% after the company reported $412.6 million in quarterly sales. WebEx ((WEBX)) climbed 18% after reporting Q4 earnings increase of 23%. Shares of Amazon.com Inc. ((AMZN)) were up 1.7%, ahead of earnings report.

In merger-and-acquisition news, insurance broker Marsh & McLennan Cos. ((MMC)) agreed to sell its Putnam Investments division to Great-West Lifeco, a unit of Montreal''s Power Financial, in a cash deal worth $3.9 billion. The deal is expected to complete in the middle of the year and will dent 2007 earnings by 5 cents a share. Marsh & McLennan’s stock added 1%. In the first hour of trading, the Dow Jones industrial average was up 40.69, or 0.32%, at 12,662.38, moving further into record territory. The Standard & Poor''s 500 index was up 5.07, or 0.35%, at 1,443.31, and the Nasdaq composite index was up 15.92, or 0.65%, at 2,479.85. Bonds rose, with the yield on the benchmark 10-year Treasury note falling to 4.79% from 4.82% late Wednesday.

[R]Both personal income and spending rose in December.[/R]
Thursday morning, the Department of Commerce released its report on personal income and spending in the month of December, showing that both income and spending growth came in line with economist estimates. The report showed that [personal income rose 0.5 percent in December following an unrevised 0.3 percent increase in November. The increase came in line with economist estimates of 0.5 percent income growth. The income growth came as private wage and salary disbursements increased by $36.7 billion in December compared with an increase of $19.6 billion in November. Supplements to wages and salaries also increased at a faster rate than in the previous month. The Commerce Department also said that personal spending grew 0.7 percent in December after an unrevised 0.5 percent rate of growth in the previous month. Economists had been expecting spending to increase by 0.7 percent. With spending continuing to outpacing income, personal saving as a percentage of disposable personal income came in at a negative 1.2 percent in December compared with a negative 1.0 percent in November. The report also showed that consumer prices rose 0.4 percent in December after coming in unchanged in the previous month. Excluding food and energy prices, consumer prices edged up 0.1 percent after coming in flat in November.


[R]9:30AM NY-2:30PM London UK stocks rallied, boosted by US Fed decision.[/R]
The UK market was higher on Thursday. The FTSE 100 added 89.3 points, or 1.4%, at 6,292.4 by mid-session trade.

Economic news

UK manufacturers started the year on an upbeat mood. The latest poll from the Chartered Institute of Purchasing Supply and the Royal Bank of Scotland on Thursday showed that its main index of manufacturing activity rose to 52.8 in January, higher than the upwardly revised 52 in December. Production growth was evident across most sectors, with intermediate goods particularly strong.

Advancers

Royal Dutch Shell announced Q4 earnings were $6 billion compared to $5.4 billion a year ago and production rose to 3,645 thousand barrels of oil equivalent per day compared to 3,500 a year ago. Shares in Shell rose 2.8%, as the rest of the sector also advanced. BG Group gained 1.6% and BP was 0.8% stronger.

BSkyB surged 4% after Lehman Brothers upgraded the media stock from equal-weight to overweight. Miners were stronger with Xstrata up 1.9% after announcing it had reached an agreement with a union representing workers at its Canadian mine, to avoid strike action. The property sector was also in focus. Shares in British Land added 2.6% and Hammerson by 2.1%. Slough Estates put on 1.7%.

Balfour Beatty shares surged 9.3% following its acquisition of Centex Construction, a US building company, for $362 million in cash. AstraZeneca, drug company, climbed 3.2% after posting strong full-year gains. Profits rose 28% but the company announced plans to cut 3,000 jobs and predicted slower growth this year.

Decliners

There were only a few decliners. Rio Tinto traded 1% lower after second-half net profits advanced but failed to meet market expectations. The mining company issued a cautious trading outlook and said it expects some moderation of global economic growth. F&C Asset Management, the fund manager, plunged 5.56% further after the dismal trading statement on Wednesday.


[R]9:00AM Market futures pointed higher, helped by gains for Dell and Exxon Mobil.[/R]
U.S. stock futures pointed to a positive opening Thursday, driven higher by computer maker Dell and oil giants Exxon Mobil and Royal Dutch Shell. Exxon Mobil ((XOM)) posted record-high annual profit of $39.5 billion. The oil giant posted the largest yearly income in U.S. history, despite a 4% decline in Q4 profit, citing lower natural gas realizations and refining margins. The company earned $10.25 billion, or $1.76 a share, helped by revenue of $90.03 billion. This net income figure includes a special tax-related gain of $410 million. In the same period a year ago, the oil and gas giant posted net income of $10.71 billion, or $1.71 a share on revenue of $99.34 billion. On an adjusted basis, excluding special items, the company earned $9.84 billion, or $1.69 a share in Q4, beating estimates for a profit of $1.51 a share. Of other companies in focus, Dell ((DELL) shares climbed 4.3% after Kevin Rollins stepped down as chief executive, allowing founder Michael Dell to re-take control over the computer maker. Google ((GOOG)) dropped 1.1% in pre-market trade after the internet giant reported a tripled Q4 profit, but investors noted concerns about higher expenses. S&P 500 futures rose 2.1 points at 1,445.10 and Nasdaq 100 futures added 3.5 points at 1,806.00. Dow industrial futures rose 18 points.


[R]8:00AM NY-7:00PM Mumbai Sensex surges on a rally in SBI, telecoms.[/R]
The Sensex on BSE finished 176.26 points, or 1.25%, higher at 14,267.18. The market-breadth was positive. As 1,333 shares advanced on BSE, 1,319 declined and 41 shares were unchanged. Of the 30 stocks in the Sensex, 24 advanced, while the rest declined. The turnover on BSE was Rs 3,569 crore, lower than Rs 5,099 crore on Wednesday. On NSE, the turnover was Rs 8,033.66 crore, compared to Rs 10,330.87 crore on Wednesday.

Economic news

The government decided to ban the export of skimmed milk powder in order to keep the prices of both milk and milk products low, but the decision could affect payment to farmers.

Four workers were killed and sixteen injured in a fire that broke out in a pipeline of Essar Oil Vadinar terminal in Gujarat early on Thursday. Total damage to the site is not known.

Trading highlights

Tata Steel was the most active stock with a turnover of Rs 203 crore followed by Shree Ashtavinayak and Pyramid Saimira.

Advancers

State Bank of India rallied in afternoon trade on the decision of the government to buy 59% stake of the government in State Bank of India by June of this year at a market price. The stock ended nearly 6% higher, to Rs 1,204. HDFC Bank gained 2.9% to Rs 1,109, and ICICI Bank added 1.2% to Rs 952.

Hindalco jumped nearly 4% to Rs 183 on a recovery in global commodity prices. Tata Motors advanced 3.6% to Rs 909.45. The largest cell phone service company Bharti Airtel advanced 3.6% to Rs 732.95.

Reliance Communications gained 2.7% to Rs 473.50. The company reported yesterday third quarter profit of Rs 924 crore. The company also approved a foreign listing of its unit, Flag Telecom. Reliance Energy gained 2.3% to Rs 525.50, after it announced on Wednesday it had won two contracts worth Rs 4,157 crore. Reliance Industries added nearly 1% to Rs 1,377.55.

Cement large-cap ACC advanced 1.4% to Rs 1035, after the release of third quarter earnings in the afternoon. Net third quarter profit surged to Rs 358.46 crore nearly 100% jump from a year ago. Gujarat Ambuja Cements also rose nearly 2% to Rs 139.70, after posting 6.4% growth in sales.

Tech stocks gained too. Wipro added1.6% to Rs 623, Infosys advanced 1.2% to Rs 2,273 and TCS ended 0.8% higher to Rs 1,290. Motorcycle maker Hero Honda advanced 0.8% to Rs 723.95. The company posted 19% growth in sales in January 2007 compared to a year ago. Maruti edged up even as the company posted strong sales figures for January 2006. The stock gained 0.2% to Rs 939.

Decliners

Tata Steel lost 0.9% to Rs 459.50, as company stock faced sell-off on short covering. Bajaj Auto shed 0.2% to Rs 2,755. Total vehicle sales of Bajaj Auto in January 2007 grew 13% compared to a year earlier. Other large-cap decliners included Hindustan Lever which fell 0.82% to Rs 206.50, BHEL shed 0.76% to Rs 2,498 and HDFC declined 0.34% to Rs 1,665.


[R]7:45AM Dell shares rose 5.7% on management change.[/R]
Dell ((DELL)) shares climbed 5.7% to $25.65 in pre-open trading as investors cheered a management shake-up at the company, expressing belief that the move will block negative sentiment and bring about a turnaround for the struggling computer maker. Kevin Rollins announced he will quit as chief executive and founder Michael Dell will re-take control over the company in an attempt to regain eroding market share and to deal with an ongoing federal accounting investigation. Dell''s return overshadowed the PC maker''s warning that Q4 results would miss expectations. Investors anticipate more aggressive approach to lower cost structure, margin and sales improvements. Following the news, Dell was upgraded at Merrill Lynch, with the brokerage lifting its rating on the company to ‘Buy’ from ‘Neutral’. JPMorgan Securities also lifted rating on the company to ‘Neutral’ from ‘Underweight,’ citing the management change.


[R]7:30 AM Asian stocks finished higher on Thursday with Japan and HK rallying.[/R]
Asian markets ended higher on Thursday. Japanese Nikkei Index finished 0.8% higher at 17,520. Daiichi Sankyo rallied 5.1%, Asahi Kasei surged 4% and All Nippon Airways soared 4.3%. Nikko Cordial plummeted 16%, however, as investors remained worried about a potential delisting on abuse of venture capital by former executives.

The Hong Kong Hang Seng Index surged 1.6% to 20,430. Retail store supplier Li & Fung advanced 4.7%. Sun Hung Kai Properties rose 2.2%, while Sino Land gained 3.7%. South Korean Kospi Index added 1.7% to close at 1,383. Korean car makers advanced in line with the market despite new data showing weak car sales in January. Hyundai Motor gained 1.3% and Kia Motors climbed 2.2%.

The Shanghai Composite Index bucked the upward trend and shed 0.03% to close at 2,785 after falling 4.9% Wednesday. China Minsheng Banking rose 2.3% after plummeting 9.3% Wednesday and Citic Securities gained 2.3% after plunging 7.2% in the previous session. Daqin Railway, however, fell 5.2% and Hua Xia Bank dropped 2.7%.

Australian S&P/ASX 200 gained 0.7% to 5,814. Miner Rio Tinto advanced 2.2%, making the biggest contribution to strength in the market, ahead of its earnings report. Alumina jumped 5.6% after posting a 62% increase in full year profit. Adelaide Bank also rose 4.2% after posting its results. The index in Taiwan ended 0.02% higher at 7,702.


[R]7:00AM European markets advanced Thursday supported by financial shares.[/R]
European markets were higher on Thursday. By mid morning, the FTSE 100 in London climbed 1.1% to 6,269.3, Frankfurt Xetra Dax added 0.9% to 6,846.57, and the CAC 40 in Paris gained 1.1% to 5,671.68.

Advancers

Deutsche Bank, the biggest bank in Germany, posted a forecast-topping record full-year net profit of 6 billion euros on strong growth in investment banking and trading income. The stock rose just 0.1%. UBS, the Swiss investment bank, rose 1.2%, while Société Générale of France and BNP Paribas, whose price targets were upgraded on Wednesday by Oddo Securities, gained 1.4% and 1.6% respectively. Axa, the second-biggest insurer in Europe, gained 2.7% after reporting that full-year sales rose by nearly 10%.

Oil stocks were led by Royal Dutch Shell, which rose 2.1% in Amsterdam after reporting a forecast-topping 2.6% rise in underlying Q4 profits. European peers were buoyed by the news and Total of France rose 1.5%, while Austrian OMV added 2.3%.

Novo Nordisk, the Danish drugs company which posted strong earnings in the previous session, rose 2.8%. Novartis, the Swiss drugmaker, gained 1.1% after JPMorgan upgraded the stock from neutral to overweight and raised its price target.

Decliners

Henkel, the German household goods group, fell 3.9% after its 7.3 % rise in Q4 earnings fell short of expectations, while improvements in profit margins also disappointed.

Oil and metals

The front-month March crude oil contract on the New York Mercantile Exchange rose $1.17, or 2.1%, to $58.14 a barrel, the highest settlement of crude futures since Jan. 3. Gold for immediate delivery was little changed at $653.40 an ounce in early trade in London. Silver rose 4 cents to $13.565 an ounce today, palladium gained $1 to $339.50 an ounce and platinum advanced $3 to $1,183 an ounce.

Currencies

The dollar advanced against the euro, stopping a three-day drop, before a U.S. report expected to show manufacturing grew in January at the fastest pace in four months. The currency traded at $1.3010 versus the euro in early trade. in London, from $1.3032 late yesterday in New York. The dollar traded at 120.59 yen, from 120.70 yen. The pound was at 66.21 pence per euro in London from 66.31 pence late yesterday. It was also at $1.9645 versus the dollar from $1.9655.