Lower Opening

Elena
15 Aug, 2005
New York City

Market opened lower in contrast to expectations of high opening on government Key inflation figures release due this week. The Labor Department is releasing a consumer and producer price reports this week. Crude futures opened down 49 cents at $66.37 a barrel on eased refinery concerns. Retail companies release quarterly reports.

U.S. MARKET AVERAGES

Market opened lower Monday despite retreating oil prices.

Bonds fell, with the yield on the 10-year Treasury note rising to 4.26 percent from 4.25 percent late Friday. The U.S. dollar was down against the euro in European trading. Gold prices were lower.

Wall Street has been fluctuating for weeks on healthy economy assurances and soaring crude-oil prices. Last week investors were soothed by strong corporate earnings and upbeat Fed. Reserve report, but constantly rising crude prices, which surpassed $67 a barrel, undermined their confidence.

The market is more relaxed about the outlook as there were no outages over the weekend.

The Labor Department is releasing a consumer and producer price reports this week and Wall Street could face another streak of volatility.

Crude futures opened the week lower on eased refinery concerns without reports of new refinery breakdowns.

Crude-oil opened down 49 cents to $66.37 a barrel on the NYME.

Gasoline fell nearly 2 cents a share to $1.9858 a gallon, while heating oil lost a cent to $1.8965.

Demand for gas will remain high in August but is expected to drop after the Labor Day.

Retail prices have risen 70 cents since the beginning of 2005 and are up 62.7 cents from last August.

Wal-Mart Stores are expected to report a profit rise of 65 cents a share, up from 62 cents a year ago. The company previously warned that earnings would be below forecasts, blaming the impact of cool weather and soaring gas prices, but a moderate gain in same-store sales brightened the outlook. The earnings report is due Tuesday before market open.

Wal-Mart expects August sales increase to meet forecasts of 3to 5% rise, but its shares fell 2 cents to $48.68.

Home Depot, home improvement shop, is expected to post quarterly income of 80 cents a share, up from 71 cents a year ago on improved sales due to do-it-yourself spending. The earnings report is due Tuesday morning.

Hewlett-Packard, computer and printer maker, is due to release a quarterly report Tuesday afternoon. According to analysts’ expectations earnings will be 31 cents a share vs. 24 cents last year. The company announced its decision to cut another 10% of its 150,000 workers on rivalry with Dell Inc. and IBM Corp.

Apple Computer was named by Piper Jaffray a top recommended large capitalization stock for the rest of 2005. The stock rose $2.10 to an all-time high of $46.10.

British Airways rose 7 cents to $62.74 after announcing that it resumed 80% of its scheduled international flights and 85% of its domestic flights.





ECONOMIC NEWS

On Tuesday morning, the Department of Labor will report the Consumer Price Index, which tracks the change in retail prices for a fixed group of consumables. The index was flat in June, but is forecast to increase a slight 0.4 percent for July.

Setting aside the volatile costs of food and energy, the 'core' CPI for July is estimated to inch up 0.2 percent compared with a 0.1 percent increase the month before.

The Labor Department will also publish the Producer Price Index, which measures wholesale prices and is sometimes considered a meter of future inflation. The index, to be released Wednesday, is expected to increase 0.5 percent in July after coming in unchanged for June. 'Core' PPI is projected to rise 0.2 percent after declining 0.1 percent the month before.

Also Wednesday, the Department of Commerce reports on housing construction and building permits. Economists see July housing starts growing by 1.5 percent, while permits are forecast to decline about 1.1 percent.

Lastly, the Fed on Wednesday will release data on the nation's monthly industrial output, with production estimated to be 0.5 percent higher after rising 0.9 percent in June.


INTERNATIONAL MARKET NEWS

Asian-Pacific markets traded mixed in the morning session but closed mostly lower. The Nikkei erased early-session losses to finish morning session up 0.22% after hitting a four-year high last week on positive economic data, but eventually fell in the negative territory 0.04%. The trade is expected to slow down this week as Japan begins its summer ‘obon’ holiday to honor the dead. Among the other regional markets, Singapore dropped 1%, while South Korea added 0.6%. The dollar bought 109.40 yen.

European stocks traded broadly unchanged at mid-day with takeover talk being in the focus. Assumption Day holiday kept liquidity on the low side through much of Europe. The German DAX 30 fell 0.03%, the French CAC 40 lost 0.1%, while London’s FTSE 100 rose 0.05%. Front-month crude dropped 41 cents to $66.45 a barrel. The euro lost some ground against the dollar to trade at $1.2397.

ENERGY, METALS AND CURRENCIES MARKETS

Oil edged down from its $67 high on Monday, but pressure on the prices climb is still on due to Iran's nomination of an industry outsider to the post of oil minister and the United States' refusal to rule out force against OPEC's second biggest producer. U.S. light crude was trading at $66.41 a barrel, down 45 cents, from Friday’s record high of $67.10 and London Brent crude was down 28 cents at $66.17.

U.S. gold futures prices went down from last week's eight-month high in Europe on Monday, as a stronger dollar helped traders take in beefy gains at the end of last week.
Peaks at $449.30 a troy ounce on Friday, the highest since early December 2004, dipped to $442.30/443.10 an ounce for spot gold against New York's late quote last week at $446.30/447.10.

The U.S. dollar bounced back against the yen and euro in Asian trading. The dollar bought 109.65 yen on the Tokyo foreign exchange market, up 0.09 yen from late Friday, and above the 109.38 yen it bought in New York later that day. The euro fell to $1.2388, down from $1.2474.

EARNINGS NEWS

Electric City, developer, manufacturer and integrator of energy savings technologies, reported a 222% increase over revenue in the same quarter last year.2Q net loss was 5 cents per share, down vs.4 cents per share for the year-ago period.

Sysco, foodservice distributor, posted 4Q earnings rise of 44 cents a share vs. 43 cents a year ago on lower costs and expenses, meeting analysts’ estimates.

Cytori Therapeutics, a biotechnology company, announced a 2Q net loss of $5,359,000, down from $3,810,000 for the same period last year on increase in research and development related to the cell-based therapeutics and systems.

Channell Commercial, a designer and manufacturer of telecommunications equipment, posted 2Q net income of 13 cents per share, up from 10 cents per share for the same quarter last year on higher net sales and continued growth in the core telecommunications business.

Goodrich Petroleum, oil and gas company, reported a 2Q net loss of 2 cents per share, down vs. a profit of 15 cents per share for the same period last year despite strong revenue growth.

Lowe's Companies, home improvement retailer, posted 2Q net earnings of $1.05 per share, up from 87 cents per share for the same period last year on strong sales growth.

eMagin, OLED virtual imaging technology producer, announced a 2Q net loss of 5 cents per share, down vs. a net loss of 2 cents per share for the same period last year on decline of revenue growth.

Agilent Technologies, measurement company, posted 3Q earnings of 21 cents per share, up from 20 cents per share in the same period last year despite a slight decline in revenue growth.

Human Pheromone Sciences, mood enhancing compounds developing company, reported 2Q net loss of 6 cents per share, compared with a net loss of 7 cents a share for the same period last year on a decline in revenue growth.

Double Eagle Petroleum, oil and gas company, reported 2Q earnings of 9 cents per share, down vs. 16 cents per share for the same period last year despite strong revenue growth due to higher operating costs and certain non-cash expenses.

Radica Games, electronic games maker, reported 2Q net loss of 18 cents per share compared to a net profit of 1 cent per share in the year-ago period despite an increase in sales due to the decline of the VGA business.

iVOW, a provider of disease management services for the treatment of chronic and morbid obesity, posted a 2Q net loss of 5 cents share, up vs. a net loss of 10 cents per share for the same period a year earlier on revenue growth.

CORPORATE NEWS

Investing firm Kohlberg Kravis Roberts & Co. and Silver Lake Partners, have won an auction to acquire the semiconductor business of Agilent Technologies Inc. for about $2.6 billion.The deal finalizes months of bidding by private-equity firms for the Palo Alto, Calif., technology company's chip unit which designs and makes semiconductors used in fiber optics, computer storage and mobile phones.

Warburg Pincus LLC is expected Monday to announce a new private-equity fund with approximately $8 billion in capital, the latest in a line of big-ticket fund raising.

OTHER NEWS

China’s broadest measure money supply expanded to $3.42 trillion at the end of July, up 16.3% compared with last-year same period. The increased figures followed the decision of the central bank to let growth exceed its target ahead of a move to revaluation of the yuan. Meanwhile foreign-exchange deposits declined compared with the previous month.