Stocks, Oil and Metals Slide

123jump.com Staff
02 Mar, 2007
New York City

U.S. stocks moved lower, sinking gradually throughout the day as traders fretted about the possibility of a prolonged period of weakness in equities, as major indexes are now about 5% below their recent closing highs. Declining consumer confidence Technology stocks were among the most heavily traded, and some lost substantial ground. Advanced Micro Devices lost 4.1%, Intel fell 1.3% and Cisco Systems was down 1.6%. Gap reported a 35% decline in Q4 profit.Gold fell 5%, silver dropped 6%.

[R]4:00PM NY; 10:00PM Frankfurt; 2:30AM Mumbai - GLOBAL MARKETS[/R]
Markets around the world felt the sting of changing investor sentiment, worries of economic slow down and rising commodities prices. Europe, Asia, Latin America and the U.S. fell for the week dragging major country based indexes into losses for the year to date performance.

Yield on 10-year bond closed at 4.516% and the 30-year bond closed at 4.653%.

Gold decreased $18.700 to close at $646.000 a troy ounce, silver lost 61 cents to end at $13.040 a troy ounce and copper advanced $108.000 to close at $6100.000 per metric ton.

Oil lost 53 cents to close at $61.470 a barrel and heating oil decreased 0.810 cents to finish at 176.820 cents a gallon. Natural gas declined 6.7 cents to close at $7.221 per MMBtu. Gasoline went down 1.060 cents to end at 189.950 cents a gallon.

Asian markets closed mostly lower, with Japan''s Nikkei shedding more than 1%, as shares extended their losses after a week of declines, but Hong Kong and Shanghai bucked the trend as investors hunted for bargains. The decliners were led by India with a decrease of 2.08%, Philippines with a loss of 1.56% and Japan with a decline of 1.35%. The advancers were Hong Kong with a gain of 0.49% and Indonesia with an increase of 0.03%. Australia declined 0.40%.

European markets finished mostly lower failed to retain early gains for the second session in a row and turned in their worst weekly performance since the start of the Iraq war four years ago on a host of concerns, ranging from China''s economy to U.S. mortgage lending. The decliners were led by France with a decrease of 0.62%, Germany with a decline of 0.56% and Spain with a loss of 0.47%. The advancers were Norway with an increase of 0.69%, Switzerland with an advance of 0.19% and Belgium with a gain of 0.10%.

Latin America markets finished lower on worries about equity valuations and the pace of global growth. The decliners were led by Brazil with a decrease of 2.3%, Argentina with a decline of 2.01% and Mexico with a loss of 0.76%. There were no advancers. Canada lost 0.80% as investors remained cautious on resource stocks after this week''s sell-off.

[R]2:30PM NY, U.S. Market Movers[/R]

Bristol West Holdings ((BRW)) soared 36% after the auto insurer agreed to be acquired by Farmers Group, a subsidiary of Zurich Financial Services, for about $712 million in cash. As part of the agreement, Bristol will be allowed to solicit other bidders until March 31. If another deal is reached, though, Bristol would have to pay Farmers a break-up fee of $14 million. If Bristol accepts another deal after March 31, it would have to pay Farmers a break-up fee of $21 million.

Dendrite International ((DRTE)) jumped 22% after the company, which provides technology products to the pharmaceutical industry, agreed to be acquired by France-based Cegedim for about $751 million in cash. The French software company will pay Dendrite shareholders $16 per share, representing a 25% premium over Dendrite''s closing price of $12.79 on Thursday. The deal is expected to close within the next few months.

Immersion Corp. ((IMMR)) soared 22% after the technology developer settled a patent-infringement suit with Sony. As part of the settlement, Immersion will receive $97.2 million in damages and 12 quarterly licensing payments totaling $22.5 million through December 2009.

Kohl''s Corp. ((KSS)) rose 5% after the retailer posted better-than-expected fourth-quarter results and issued in-line 2007 earnings guidance. For the quarter the company earned $484.6 million, or $1.48 per share, on revenue of $5.43 billion. During the year-earlier period, the company earned $374.9 million, or $1.08 per share, on revenue of $4.65 billion. Looking ahead, Kohl''s sees 2007 earnings of $3.68 to $3.84 a share on revenue growth of 9% to 11%, or revenue of $16.94 billion to $17.25 billion.

KongZhong Corp.''s ((KONG)) shares dropped more than 8% after the Chinese wireless service provider posted solid fourth-quarter results but issued a disappointing outlook. The company said it expects first-quarter sales between $20 million and $21 million, below the $21.6 million. KongZhong''s American Depositary shares fell 68 cents, or 8.5%.

Pall Corp. ((PLL)), a maker of filtration and separation systems, said its fiscal second-quarter profit grew 72%, aided by strong growth in sales to municipal water, energy and other markets. Quarterly earnings rose to $55.8 million, or 45 cents per share, from $32.4 million, or 26 cents per share, in the prior-year period. Excluding certain items quarterly earnings per share climbed to 43 cents from 28 cents. Sales grew to $544.9 million from $478.4 million in the same period a year earlier.

Palm Inc. ((PALM)) shares rose 8.3%, again fueled by speculation that the maker of the Treo phone may be a takeover target.

Scottish Re Group Ltd. ((SCT)) shareholders approved a takeover of the life reinsurer by MassMutual Capital Partners and Cerberus Capital Management. The expected approval came at a shareholders meeting in Bermuda, where Scottish Re is based. Insurance regulators had threatened to shut it down if the sale did not go through, Scottish Re said in recent federal filings. Shares climbed 7.6%.

Advocat Inc. ((AVCA)), rehabilitation center operator, said that its fourth-quarter net earnings declined to $2.28 million, or 37 cents per share, compared with $12.9 million, or $1.99 per share, in the year-ago period. Revenue climbed 3.8% to $55.8 million versus $53.7 million in the same period a year earlier. Shares fell 29.8%.

AMN Healthcare Services Inc. ((AHS)) projected next-quarter earnings of 21 cents to 23 cents a share, which would miss the consensus by at least 3 cents; full-year profits are pegged at $1.10 to $1.14 a share, at least a nickel under the mean. Fourth-quarter and full-year revenue estimates, respectively at $282 million to $284 million and $1.18 billion to $1.2 billion, are about in line. In its most recent quarter the health-professional recruiter posted per-share income of 29 cents, which, stripping out a 5-cent one-off benefit related to its professional liability insurance reserve, flat-lines with last year''s 24-cent profit. Revenue was up 28% from last year to $283.5 million, scraping past the $279.6 million estimates. Shares lost 13.8%.

Credence Systems Corp. ((CMOS)) surged 23% after the semiconductor equipment maker posted first-quarter results that fell short of expectations and warned that second-quarter results would be lower than expected. For the quarter the company reported a loss of $11,000, or less than a penny a share, on revenue of $118.8 million. Results included charges of $1.4 million and a one-time gain of $3 million.

Focus Enhancements Inc. ((FCSE)), video production company, said that its fourth-quarter net loss narrowed to $3.01 million, or 4 cents per share, compared with $3.26 million, or 5 cents per share, in the year-ago period. Revenue climbed to $10.3 million versus $6.08 million in the same period a year earlier. Shares fell 7.4%.

Gulf Island Fabrication Inc. ((GIFI)), a fabricator of offshore oil platforms, said that its fourth-quarter net earnings increased to $3.73 million, or 26 cents per share, compared with $2.7 million, or 22 cents a share, in the year ago period. Revenue climbed to $76 million versus $41.4 million in the same period a year earlier. The company also said it discovered an error regarding estimated revenue on the Tahiti contract, and determined that it had overstated both revenue and net income in the first three quarters of 2006. Shares fell 24.4%.

World Fuel Services Corp. ((INT)), aviation and marine fuel products and services firm, said that its fourth-quarter net earnings increased to $17.3 million, or 60 cents per share, compared with $12 million, or 42 cents per share, in the year-ago period. Revenue climbed to $2.62 billion versus $2.53 billion in the same quarter a year ago. Shares fell 9.6%.

[R]1:00PM European markets finished lower. Adecco, Deutsche Telekom dropped.[/R]
European stocks closed down on Friday, failing to sustain earlier gains for the second session in a row. Markets turned in their worst weekly performance in 4 years, depressed by various concerns, including China''s economy and U.S. mortgages. Among companies in focus, Adecco, the world''s largest staffing company, fell 4.6% on revenue coming in slightly below forecasts. Italy’s Mediaset was another notable decliner, falling 5% after the firm''s surprise announcement that annual gross advertising revenue dropped, followed by a brokerage downgrade. Deutsche Telekom fell 2.4% after Merrill Lynch downgraded its stock, citing deteriorating results. The German SAP slipped 2.2%. In France, Lagardere was the biggest loser, dropping 5.5% as the markets corrected Thursday''s late spike in the share price. Airbus owner EADS dropped 4% as UPS formally cancelled its order for A380 freighter planes. The French CAC 40 dropped 0.6% at 5,424.70 and the German DAX 30 slipped 0.6% at 6,603.32. The U.K. FTSE 100 index closed a fraction of a percentage point higher, at 6,116.20.


[R]11:30AM Stocks gained some ground, helped by computer hardware stocks.[/R]
U.S. stock markets showed willingness to stabilize and gained some ground in late morning trading after heavy losses at opening on the back of surging Japanese yen. The recovery by the major averages was largely contributed by strength in the computer hardware, airline, and retail sectors. Palm ((PALM)) rose 8.3% on acquisition speculations, while Dell ((DELL)) shares gained 1.7% even after posting Q4 earnings drop of 33% and issuing a downbeat outlook. Financial stocks were among the worst performers. J.P.Morgan ((JPM)) slipped 1.4%, Citigroup ((C)) lost 1.4%, and American Express ((AXP)) fell 0.8%. New Century Financial Corp. ((NEW)), one of the largest U.S. lenders, dropped 3% after it said it is delaying filing its annual report with the SEC. The Dow, which has lost more than 400 points this week, was supported by 3.4% gain for the world''s largest insurer AIG ((AIG)) on the back of eightfold earnings increase. The Dow Jones industrial average was down 10.25 points, or 0.08%, at 12,224.09. The Standard & Poor''s 500 Index was down 2.76 points, or 0.20%, at 1,400.41. The Nasdaq Composite Index was down 7.19 points, or 0.30%, at 2,397.02.


[R]9:45AM Wall Street opened steeply lower. Subprime lenders weighed.[/R]
U.S. stocks started trading in the negative, dragged by the rallying Japanese yen vs. the dollar and more unfavorable news for supbrime lenders. American International Group ((AIG)) helped limit losses, rising 2% after the insurance giant reported a jump in net income, an $8 billion share buyback and dividend plan. Fueling jitters about the subprime mortgage market, New Century Financial Corp. ((NEW)) fell 2.5% as it delayed the filing of its quarterly profit.

In the tech sector, Dell ((DELL)) erased pre-market losses to gain nearly 1% as investors looked past a disappointing earnings report from the personal-computer maker. Novel ((NVL)) was a notable decliner in the sector, falling 4.5% after reporting an unexpected quarterly loss and a 5% revenue decline. Immersion ((IMMR)) soared 36% after the maker of touch sensation technology settled a patent dispute with Sony in a deal that will have its products used in PlayStation products. In the retail sector, Gap Inc. ((GPS)) fell 3% after the company posted Q4 earnings drop of 35%. In the first hour of trading Friday, the Dow Jones industrial average was down 19.62, or 0.16%, to 12,214.72. The Standard & Poor''s 500 index was down 3.72, or 0.27%, at 1,399.45 and the Nasdaq composite index was off 6.80, or 0.28%, at 2,398.41. Bonds rose, with the yield on the benchmark 10-year Treasury note falling to 4.54% from 4.55% late Thursday.


[R]9:00AM U.S. stock futures turned sharply lower on weak dollar.[/R]
U.S. stock futures pointed to a steeply lower opening on Friday, hurt by concerns over the dollar''s weakness versus the Japanese yen, and a downbeat outlook from Dell. Overseas markets made a mixed performance. The Shanghai Composite climbed 1.2%, recovering from the heavy drop, while the Nikkei 225 slipped 1.4% in Tokyo. European stock markets reversed from earlier gains to turn negative.

Among pre-market highlights, computer maker ((DELL)) traded 3% down after reporting 33% profit decline in Q4. Again in the tech sector, Novell ((NOVL)) shares dipped 3.9% in the pre-open after posting an unexpected quarterly loss and a 5% revenue decline. The retailers are expected to come under pressure, as Gap ((GPS)) reported a 35% profit decline, reflecting weak sales and executive shake-ups. The company lowered its earnings forecast. On the side of the gainers, Dow component American International Group ((AIG)) added 1% after the insurance giant reported higher net income. The company also announced a buyback plan which will allow AIG to repurchase up to $8 billion in stock. AIG said it will lift its common stock dividend nearly 20% a year. S&P 500 futures dropped 9.50 points to 1,395.40 and Nasdaq 100 futures slumped 22.75 points to 1,735.00. Dow industrials futures slid 77 points to 12,175.


[R]8:30AM Asia finishes lower on Friday with Japanese stocks continuing the slide.[/R]
Asian markets finished mostly lower on Friday. The Nikkei 225 stock index lost 1.35%, to finish at 17,217.93. Sony dived 5.5% on weakness in the dollar versus the yen. The electronics company agreed overnight to end a $100-million patent battle with U.S. Immersion over vibration technology for game controllers and other products. Sanyo Eletric fell 2.6% on news that Lenovo Group and the Japanese consumer-electronics maker are recalling about 205,000 batteries used in Lenovo ThinkPad notebook computers.

The benchmark Shanghai Composite Index in China gained 1.2% to close at 2,831.53. Among the most actively traded companies, property developer China Vanke advanced 2.7% after shedding 5% in the previous session. Citic Securities, which was down 5.6% Thursday, surged 5.5% and Air China added 4%, regaining most of the 5.2% loss a day earlier.

The Hang Seng Index in Hong Kong rose 0.49% to 19,442.01. China Mobile rose 0.5% after investment bank UBS raised its target price for China biggest mobile operator by subscribers. China Unicom was up 1.6% and China Netcom climbed 1.7% after both fell 8% during the past four sessions.

The Korea Composite Stock Price Index, or Kospi, slipped 0.2% to 1,414.47, the Weighted Price Index of the Taiwan Stock Exchange shed 0.1%, to close at 7,670.77, while Australian stocks suffered their fourth straight day of losses as the benchmark S&P/ASX200 index dropped 0.4% to 5,786.0.


[R]8:15 AM Dell reported 33% profit drop in Q4.[/R]
Dell Inc. ((DELL)) reported disappointing Q4 results, blaming weak sales of laptops and notebooks. The computer maker posted 33% net income drop to $673 million, or 30 cents per share, compared with $1.01 billion, or 43 cents per share a year earlier, as revenue fell 4% to $14.4 billion. The biggest revenue shortfall was in mobility products and desktop PCs, accounting for 58% of Dell''s revenue. Mobility products, including notebook computers, fell 2% to $3.8 billion. Desktop PCs posted an 18% drop in units year-over-year. However, quarterly earnings beat analyst expectations for earnings of 29 cents per share. Although Dell once again released weak financial results, it looks determined to solve the numerous problems and gain its once strong positions back, as well as its customers’ confidence. Dell also mentioned several turnaround plans, including streamlining operations, shortening product development cycles and developing new approaches to manufacturing and distribution. The computer giant still faces an accounting SEC probe, customer service complaints, several shareholder lawsuits and stiff competition from rivals. Dell’s shares slipped 3.1% in pre-market trading.


[R]8:00AM NY-7:00PM Mumbai Sensex loses over 2% in a large-cap sell-off.[/R]
The Sensex on BSE finished 273.42, or 2.08%, lower at 12,886.13. The market-breadth was very weak as there were almost two decliners for every gainer. For 922 stocks that advanced, 1668 stocks declined and 48 stocks were unchanged. Of the 30 stocks in the Sensex, seven advanced and 23 declined. The turnover on BSE was Rs 4,006.94, lower than Rs 4,397.01 crore on Thursday, while on NSE, the turnover was Rs 8,960.58, compared with Rs 10,061.04 crore on Thursday.

Economic news

Annual wholesale price inflation rate at the end of February 17 declined to 6.05%. In the previous week it was at 6.63%. In the week until February 3, inflation hit a two-year peak of 6.73%, forcing the RBI to increase the Cash Reserve Ratio by another 50 basis points to 6%.

The Cabinet on Thursday approved the merger of the public sector carriers Indian Airlines and Air India. The new airline company will be among the top 10 airlines in Asia and almost three times the size of its nearest rival, Jet Airways. The new entity will also have six different business units comprising maintenance, repair and overhaul, Jet shop, ground handling, engineering, cargo and low cost air services.

Trading highlights

Reliance Industries was the most-active stocks with a turnover of Rs 186.15 crore followed by Tata Steel and Tech Mahindra.

Advancers

Hero Honda led the gainers rallying 3.7% to Rs 692. Hindustan Lever surged 1.7% to Rs 179, and Ranbaxy advanced over 1.2% to Rs 347. Rising global prices for sugar futures boosted sugar stocks. Bajaj Hindustan gained 2.4% to Rs 178.80, Balrampur Chini Mills rose 2.6% to Rs 62.10, and Bannari Amman Sugar gained 2.2% to Rs 680.

Hindalco advanced 0.5% to Rs 137.9, ahead of the company board meeting on Friday to consider a preferential issue of shares.

Decliners

Reliance Industries dipped 3.6% to Rs 1,317. The company today called a board meeting on March 10 2007, to consider the payment of interim dividend for fiscal year 2007 - year ending 31 March 2007. The company has also set March 22 2007, as a record date for paying interim dividend. The announcement comes after the finance minister lifted dividend distribution tax to 15% from 12.5% in Union Budget 2007-08. Paying dividend before the end of this financial year will ensure that Reliance will pay the existing 12.5% tax on dividend distribution.

L&T led the decliners, off nearly 5% to Rs 1,464.6. Other decliners included power equipment company BHEL shedding 3.3% to Rs 2,099.6. Cigarette large-cap ITC lost 3.5% to Rs 167. The recent Budget did not bring cigarettes under value added tax regime as expected by the market but excise duty on cigarettes was increased by 5%.

Cement shares closed lower. Grasim lost 3.9% to Rs 2,070, ACC lost 2.4% to Rs 855 and Gujarat Ambuja Cements shed 1.1% to Rs 111. Telecom stocks, too, ended lower. Bharti Airtel lost 2.7% to Rs 707 and Reliance Communications shed 3% to Rs 415.30. M&M finished down 3.7% to Rs 775, although the company today launched the new Bolero, a sports utility vehicle.

Banking stocks bounced back in mid-day trade following lower inflation but the recovery was short-lived. State Bank of India plunged 4.2% to Rs 999, Oriental Bank of Commerce declined 1.9% to Rs 175.10 and Bank of India fell 1.3% to Rs 163.15. HDFC Bank dipped 3.4% to Rs 947.7.


[R]6:30AM European markets were lower Friday on Adecco, Mediaset.[/R]
European markets were lower on Friday. Frankfurt Xetra Dax was 0.5% lower at 6,609.7 the CAC 40 in Paris fell 0.6% to 5,425.07 and London FTSE 100 slipped 0.2% to 6,102.

Advancers

Philips, the Dutch electronics group, led technology stocks higher. The company shed more than 8% over the previous three sessions after a trade dispute with Taiwan over recordable compact disc patents. The shares surged 2.5%.

UK supermarket Tesco gained 0.9% after investment group Berkshire Hathaway said it had taken a 2.9% stake. Air Liquide, the French industrial gases group, gained 1.7% after ING raised its price target following the group strong five-year outlook.

Decliners

Mediaset, the Italian broadcaster, fell 5.9% after downgrades from Deutsche Bank, Merrill Lynch, JPMorgan and Citigroup after reporting on Thursday that its 2006 net income profit fell on lower advertising revenues. Merrill Lynch lowered its rating to neutral.

Staffing company Adecco declined 4% after it posted revenue growth a bit below forecasts, with a 23% increase in Q4 net profit to 212 million euros largely due to a one-time tax benefit. Lagardere shed 5 % as investors corrected a 6.7 % rise in the previous session, on what was thought by dealers to have been an erroneous trade.

Oil and gold

Oil prices gained Friday on concerns about tightening gasoline supplies. Crude oil for April delivery rose 21 cents to $62.21 a barrel in electronic trading on the New York Mercantile Exchange by noon in Europe. Brent crude for April gained 37 cents to $62.48 a barrel on the ICE Futures exchange in London. Gold opened Friday at a bid price of $662.30 a troy ounce, down from $670.10 late Thursday.

Currencies

The euro lost a little more ground Friday against the dollar, which built on gains made as positive U.S. economic data helped calm traders in US. The euro bought $1.3164 in morning European trading, down from $1.3198 in New York late Thursday. The British pound fell to $1.9542 from $1.9605. The dollar edged up to 117.69 Japanese yen from 117.58 yen.