Sharp Rebound in Stocks, Metals and Oil

123jump.com Staff
06 Mar, 2001
New York City

U.S. stocks rebounded after solid gains in overseas markets, despite shaky economic data that posed a new threat to the dollar against the yen and raised the specter of inflation once again. The Fed Chairman Bernanke in prepared remarks called for stronger regulation of Fannie Mae and Freddie Mac. Fannie rose 3.2%, and Freddie gained 1.6%. Treasure Secreatry Paulson comments on housing loans supported a rally in Citigroup, Lehman and Bear Stearns.

[R]4:00PM NY; 10:00PM Frankfurt; 2:30AM Mumbai - GLOBAL MARKETS[/R]
Investors in New York, Europe and Asia shrugged off recent declines and crawled back at buying stocks. Asian markets rally led the European and American investors to return and comments from the Fed officials and U.S. Treasury Secretary supported a mild rally in the financial stocks in New York trading. Tech stocks surged in a broad based rally.

Yield on 10-year bond closed at 4.530% and the 30-year bond closed at 4.656%.

Gold increased $9.100 to close at $648.300 a troy ounce, silver advanced 29.5 cents to end at $13.045 a troy ounce and copper declined $132.500 to close at $5880.500 per ton.

Oil gained 64 cents to close at $60.710 a barrel and heating oil increased 2.620 cents to finish at 175.100 cents a gallon. Natural gas advanced 22.7 cents to close at $7.481 per MMBtu. Gasoline went up 0.830 cents to end at 185.300 cents a gallon.

Asian markets closed higher after Japan''s blue-chip average notched its first positive finish in six sessions Tuesday, and regional indexes ended broadly higher, as investors snapped up shares of Softbank, Sony and others that were battered by last week''s upheaval. The advancers were led by India with a gain of 2.27%, Hong Kong with an increase of 2.11% and South Korea with an advance of 1.95%. There were no decliners. Australia gained 1.91%.

European markets finished higher broke a five-session losing run, with investors buying up shares in companies such as German steelmaker Salzgitter that have been hurt by the recent reduction in risk appetite. The advancers were led by U.K. with an advance of 1.32%, Switzerland with an increase of 1.14% and Norway with a gain of 1.06%. There were no decliners.

Latin America markets finished higher as part of a global rally, following a weeklong selling frenzy sparked by declines in overseas markets. The advancers were led by Brazil with a gain of 3.40%, Argentina with an increase of 3.12% and Mexico with an advance of 2.45%. There were no decliners. Canada gained 1.37%. Oil and gold futures rose, aiding Canada''s resource-rich market.

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

ABM Industries Inc. ((ABM)) shares rose 5% after the company, which provides facility services including cleaning, engineering and maintenance, said that its first-quarter net earnings increased to $8.7 million, or 18 cents per share, compared with $4 million, or 8 cents per share, in the year-ago period. Revenue climbed 5.5% to $703.5 million versus $666.6 million in the same period a year earlier.

Accuride Corp. ((ACW)), which manufactures parts for commercial vehicles, said that its fourth-quarter profit fell 4%, as brisk demand could not rise above higher expenses. Earnings decreased to $14.3 million, or 41 cents per share, from $14.9 million, or 43 cents per share during the same period in 2005. Revenue increased 16% to $344.9 million from $297.7 million during the same period a year earlier. Based on quarterly results, shares of the company climbed 6.1%.

ADC Telecommunications Inc. ((ADCT)), swung to a fiscal first-quarter profit of $9.4 million, or 8 cents per share, compared with year-ago losses of $1.3 million, or a penny per share. Wall Street expected the telecom-equipment maker to earn 6 cents per share on $262.8 million in revenue, according to a Thomson Financial survey. Shares of the company were 5.4% up.

Countrywide Financial ((CFC)) CFO said that some sub-prime lenders will likely go belly up as a result of the current turmoil in the sector, but he stressed that the mortgage giant will pull through because of its broader business mix. Shares rose 5.6%.

Datatrak International Inc. ((DATA)) shares gained 11.5% after the company announced that it has been selected as the exclusive clinical trial technology platform by an unnamed multi-billion dollar North American pharmaceutical company. Cleveland-based Datatrak said the company was not previously a customer. Specifications and budgets related to the pending projects are not yet finalized, but Datatrak said multiple clinical trials are expected to begin in 2007.

Fuel Tech Inc. ((FTEK)), which makes air pollution control equipment, said that its fourth-quarter net profit declined to $1.46 million, or 6 cents per share, compared with $2.62 million or 11 cents per share, in the year-ago period. Revenue increased 11% to $18.1 million versus $16.3 million in the same period last year. Shares climbed 8.4%.

International Securities Exchange ((ISE)) was upgraded to buy from neutral at Banc of America Securities. The broker raised volatility trading volume forecast to 24% in 2007 and 25% in 2008. Shares of the company rose 7.1%.

Maidenform Brands Inc. ((MFB)) shares rose 8.7%, after the maker of bras and underwear reported it swung to a fourth-quarter profit and an analyst upgraded the company. Maidenform said it earned a fourth-quarter profit of 13 cents per share, compared with a year-ago loss. That beat analyst expectations of earnings of 8 cents per share. The company said same-store sales, or sales in stores open at least one year, a key retail industry measure of performance, rose 4.2% during the quarter and offered stronger-than-expected fiscal 2007 guidance.

New Century Financial Corp. ((NEW)) shares rose 27.9% after U.S. Treasury Secretary Henry Paulson told reporters in Tokyo that a weakened U.S. housing market would not have a major impact on U.S. financial companies generally.

Sykes Enterprises Inc. ((SYKE)) reported fourth-quarter net earnings of $8.14 million, or 20 cents a share, down 5% from $8.6 million, or 22 cents a share, during the year-ago period. The Tampa, Fla.-based provider of customer management products and services posted revenue of $158.6 million vs. $128.8 million. Shares were up 23.9%.

InfoSonics Corp. ((IFON)), wireless handset distributor, said that its fourth-quarter net earnings declined to $560,958, or 4 cents per share, compared with $811,179, or 6 cents per share, in the same quarter a year ago. Revenue rose 74.1% to $60.9 million versus $35 million in the same period a year earlier. Shares declined 11.8%.

Frozen Food Express Industries Inc. ((FFEX)) shares fell 4.1% perishable goods carrier said that its fourth-quarter net earnings declined to $4.32 million or 24 cents per share, compared with $6.36 million, or 34 cents per share, in the year-ago period. Revenue fell to $113.5 million versus $141.9 million in the same period a year earlier. Shares fell 5.9%.

[R]1:00PM NY - European markets finished notably higher.[/R]
European stocks closed notably higher, ending a five-session losing streak. European gains followed a global markets rebound, with investors buying shares in companies that have been hurt by the recent reduction in risk appetite. Salzgitter shares rose 5.6% after Credit Suisse upped its rating to outperform from neutral. Other companies which have been pressured over the past week included miner Xstrata which rose 3%, and building materials firm Vinci, climbing 3.5%. Among other companies in focus, Novartis advanced 4.8% after the Swiss drug maker said it won U.S. FDA clearance for its high-blood-pressure treatment Tekturna. Smaller drug maker Speedel Holding surged 26%. Shares of International Power rose 6.9% after it reported a 44% profit rise on higher power prices in the U.K. and lifted its dividend 75%. The German DAX Xetra 30 closed up 0.9% at 6,595, the French CAC 40 rose 1% to 5,437.13 and the U.K. FTSE 100 advanced 1.2% to 6,138.50.


[R]11:30AM Stock averages remained in the positive. Google and Apple boosted tech stocks.[/R]
U.S. stocks pulled off their best trading levels but remained in the positive. A report which showed a bigger-than-expected drop in factory orders erased some of the earlier gains. The Dow was led higher by financial stocks which bounced back after heavy losses. Citigroup ((C))gained 1.5%, as the company plans to buy a majority stake in Japan''s troubled Nikko Cordial brokerage. J.P. Morgaan ((JPM)) gained nearly 1% ahead of the company''s presentation to investors. Blue-chip company Altria Group ((MO)) rose 1.8% after Deutsche Bank upgraded its stock to buy, noting opportunities to unlock value through a restructuring. Google helped push the tech-heavy Nasdaq higher on the back of news that the company is working together with Apple on new projects. Google ((GOOG)) shares rose 2.2%, while Apple ((AAPL)) added 1.5%.

By sector, real estate investment trusts, gold and oil service stocks were leading gainers. Financial stocks were notable advancers, recovering from weakness brought by subprime mortgage lenders. New Century Financial Corp. ((NEW)) rose 25% on Tuesday after its stock plummeted nearly 70% yesterday. Fremont General Corp. ((FMT)) rose 13%. Homebuilders joined the overall recovery, led by gains in the likes of Beazer Homes USA ((BZH)), rising 2.7%, Centex Corp. ((CTX)), up 2.9% , Ryland Group ((RYL)), higher by 2% and Toll Brothers ((TOL)), up 1.8%. The Dow rose 47.66, or 0.40%, to 12,098.07. The Standard & Poor''s 500 index was up 8.02, or 0.58%, at 1,382.14, and the Nasdaq composite index, especially hard hit over the past week, rose 21.24, or 0.91%, to 2,361.92.

[R]Factory orders fell more than expected in January.[/R]
The Department of Commerce released its report on new orders for manufactured goods in the month of January on Tuesday, showing that orders fell even more than economists had been expecting following two consecutive monthly increases. The report showed that new orders for manufactured goods fell 5.6 percent in January following an upwardly revised 2.6 percent increase in December. Economists had expected orders to fall 4.0 percent compared to the 2.4 percent increase originally reported for the previous month. The decrease in orders reflected a drop in orders for both durable and non-durable goods. The report showed that orders for durable goods fell 8.7 percent, while orders for non-durable goods fell 2.0 percent. The report also showed that shipments of manufactured goods fell 1.2 percent in January following a 1.3 percent increase in December. Shipments of durable and non-durable goods both fell during the month. The Commerce Department also said that inventories of manufactured goods fell 0.2 percent in January following ten consecutive monthly increases. The inventories-to-shipments ratio edged up to 1.23 in January from 1.22 in December.


[R]9:45AM U.S. stock markets opened sharply higher, led by financial shares.[/R]
U.S. stock markets rallied at opening, with the three major indexes pushing higher after five sessions of massive losses. A rebound in Asian markets and strengthening dollar boosted market sentiment. The Dow Jones industrials gained over 100 points before edging back. 29 of the 30 Dow components traded in the positive, including Alcoa Inc. ((AA)), up 1.3%, American Express ((AXP)), also up 1.3%, and Hewlett-Packard Co. ((HPQ)), rising 1.5%. Another blue-chip company, Altria Group ((MO)) gained 1.6% following an upgrade by Deutsche Bank, which noted opportunities to unlock value through a restructuring.

Financial stocks led market higher, recovering from steep losses. Century Financial Corp. ((NEW)), which plunged 70% on Monday, rose 14.9% in early morning. Shares in Citigroup ((C)) rose 1.5% after the financial services company announced plans to buy a majority stake in Japan''s Nikko Cordial brokerage in wjhat would be the largest acquisition of a Japanese brokerage by a foreign company. J.P.Morgan ((JPM)) supported the blue-chip average with a gain of 1% ahead of the company''s presentation to investors later in the day.

The tech-heavy Nasdaq was led higher by Google ((GOOG)), which rose 2% after its CEO said on Monday that Google and Apple ((AAPL)) are involved together in ''many more'' new projects, which he did not identify. In economic news, the Labor Department said that Q4 productivity was revised was revised down to a 1.6% annual growth rate from the 3.0% estimate a month ago. Unit labor costs rose to 6.6% annual pace in the quarter, revised higher from a 1.7% increase. The Dow rose 72.98, or 0.61%, to 12,123.39. The Standard & Poor''s 500 index was up 10.84, or 0.79%, at 1,384.96, and the Nasdaq composite index, especially hard hit over the past week, rose 24.91, or 1.06%, to 2,365.59.

[R]Labor productivity revised down 1.6% in Q4. Costs revised sharply up.[/R]
Tuesday morning, the Department of Labor released its revised report on productivity and unit labor costs in the fourth quarter. While productivity growth was revised down roughly in line with estimates, the report also showed a significant upward revision to unit labor cost growth. The report showed that non-farm productivity growth was revised down to 1.6 percent for the fourth quarter compared to the previously reported 3.0 percent growth. Economists had been expecting productivity growth to be revised down to 1.7 percent. The downward revision to fourth quarter productivity growth came as the pace of output growth was revised down to 2.5 percent from 4.2 percent. The pace growth in hours worked was also revised down to 0.9 percent from 1.2 percent.

Despite the downward revision, the productivity growth that was seen in the fourth quarter still represents an improvement from the 0.5 percent decline in productivity that was reported for the third quarter. The Labor Department said that the downward revision to productivity growth combined with a large upward revision to compensation to produce a rate of unit labor cost growth in excess of six percent. The report showed that unit labor cost growth for the fourth quarter was revised up to 6.6 percent from the previously reported 1.7 percent. The upward revision came in well above economist estimates of 3.2 percent growth. The revised increase in unit labor costs in the fourth quarter marked the biggest increase since a 9.1 increase in the first quarter of 2006, although the increases in were both periods were due in large part to big bonuses paid to high-income workers.


[R]9:30AM London market gains ground Tuesday with miners helping the advance.[/R]
The UK market advanced in early trade on Tuesday. The FTSE 100 was 53.4 points higher at 6,112.1 at mid-day.

Advancers

Miner Xstrata was higher 4.4%, topping forecasts with a 119% increase in underlying profits last year, supported by strong copper and nickel prices. Net profit soared to $4.89 billion, including a full year from acquisitions, compared with forecasts of $4.6 billion. The news supported other miners, which rose in sympathy. Antofagasta rose 2.6% and Anglo American was 2.5% stronger.

International Power led the gainers, up 6.2%, as the power generator raises its dividend by 75% and reported a 44% growth in operating profit of 773 million pounds. Takeover speculation sent Royal & Sun Alliance 2.6% higher on talk that the insurer final exit from the US had left it vulnerable to a bid. Sampo of Switzerland was the likely bidder. Legal & General, the life assurer, was also lifted by bid rumours. It gained 2.5%.

Decliners

British Airways, which lost 6.6% in the previous session, fell a further 0.7% on continued concerns about the possible introduction of liberal aviation services between the US and Europe.

Debt Free Direct plunged 4.9% as it warned that profits for 2007 are now expected to be around 10% to 15% below current estimates of between 9.7 million pounds to 10.3 million pounds.


[R]9:00AM U.S. stock futures pointed higher, as overseas markets rebounded and the dollar gained ground.[/R]
U.S. stock market futures were indicating a higher opening on Tuesday, boosted by a recovery in overseas bourses after the steep global decline registered in recent sessions. Asian stock markets advanced, with the Nikkei 225 gaining 1.2% and the Hang Seng climbing 2.1%. European stock markets also moved higher. Investors were optimistic that the various worries have already been priced in. The U.S. dollar gained some ground against the rallying yen and helped provide further support to the pre-market sentiment. Oil and gold futures, hurt by the recent stock market drop, also rose in electronic trade. On the economic news front, January factory orders, statistics on January pending-home sales and Q4 productivity are due for release.

Among companies in the spotlight today, Citigroup ((C)) gained 1.1% in pre-market trading after the U.S. financial services company said it plans to buy Japanese brokerage Nikko Cordial in a deal worth around $11 billion. Topps Co. ((TOPP)) jumped 10% in the pre-open after it agreed to be acquired for $385.4 million by investment company Tornante Co. and private equity firm Madison Dearborn Partners. In other deal news, aircraft braking equipment maker K&F Industries Holdings ((KFI)) surged 9.2% as Britain''s Meggitt agreed to buy it in a deal worth $1.1 billion, or $27 a share, which represents a 10% premium to Monday''s close. Dow component Altria Group ((MO)) gained 1.2% ahead of the open after the tobacco company was upgraded to buy from hold at Deutsche Bank. S&P 500 futures climbed 14.70 points to 1,386.90 and Nasdaq 100 futures hiked up 17.50 points to 1,731.25. Dow industrial futures rallied 97 points to 12,133.


[R]8:30AM Asia ended mostly higher on Tuesday with Japan leading the way.[/R]
Asian markets closed mostly higher on Tuesday. In Tokyo, the Nikkei 225 benchmark index advanced 1.2% to 16,844.50. Japanese Internet and cellphone operator Softbank gained 3.5%, while Sony added 4.6%, as investors returned to shares as the yen eased. Brokerage firm Nikko Cordial advanced 13.7% after Japan''''s third-largest brokerage said it was in advanced talks with Citigroup on a possible deal. Toyota rose 3.5%, leading broad gains among automotive shares.

Hang Seng Index in Hong Kong gained 2.1% to 19,058.56. Shares of China Life Insurance and other mainland financial stocks led the rebound. China Life surged 6.7%, while Industrial & Commercial Banking added 5.3% and China Construction Bank gained 4%. PetroChina, the listed entity of Chinese largest oil producer, ended 2.1% higher after oil prices recovered from a nearly two-week low in Asian electronic trading. HSBC Holdings advanced 2%, after the third-largest bank in the world posted a net income rise of 4.7% to $15.79 billion in 2006 from $15.79 billion.

Shanghai Composite Index in China finished 1.8% higher at 2,840.18. Australian S&P/ASX added 2.1%, while New Zealand NZSX-50 traded flat. Singapore Straits Times Index advanced 1.8% and Malaysia KLSE Composite gained 1.8%. Taiwan Weighted Price Index advanced1.5 % and South Korea''s Kospi Index rose 2%. Indonesia JSX Composite added 2%. Thailand SET Index bucked the broader trend, shedding 0.7% to 672.43.


[R]8:00AM NY-7:00PM Mumbai Sensex bounces back on a rally in IT stocks, Reliance.[/R]
The Sensex on BSE finished 282.05 points, or 2.27%, higher at 12,697.09. The market-breadth was stronger than Monday’s, but still negative. For every three decliners, there were two advancers. As 1,459 stocks declined, 1,080 advanced and 45 remained unchanged. Of the 30 stocks in the Sensex, 22 advanced while the rest declined. The turnover on BSE was Rs 3,807 crore, lower than Rs 3,996 crore on Monday. On NSE, the turnover was Rs 8,361.27 crore, compared with Rs 8,550.91 crore on Monday.

Economic news

Finance Minister Chidambaram told parliament that the government will continue to take fiscal and monetary measures to curb inflation and undertake steps to relieve supply side pressures.

The rupee was steady against the dollar at 44.40 after plunging yesterday as foreign funds sold equities to raise its level against the U.S. dollar.

Corporate news

GE Energy Financial Services, a unit of General Electric, announced on Tuesday it will lend $17 million to Indian cement maker Binani Cement Ltd. to construct a power plant in the western state of Rajasthan.

Trading highlights

Reliance was the most-active stock with a turnover of Rs 151.40 crore followed by Reliance Communications and Tech Mahindra.

Advancers

IT stocks surged as the recent fall of the rupee sparked renewed buying for IT shares. The rupee’s decline will ease pressure on their profit-margins Wipro soared over 8% to Rs 581. Infosys surged 5.5% to Rs 2,116. Satyam surged 4.9% to Rs 434, and TCS added 3.2% to Rs 1,199.

ICICI Bank surged 3.8% to Rs 851.6. The stock has 9.3% weightage in the Sensex. Reliance Industries also rallied 3.2% to Rs 1,299.4 and helped the overall recovery of the market. The stock advanced on bargain-hunting after a recent steep decline.

Cement shares rebounded as well from the lower level in volatile trade. ACC surged 5.1% to Rs 854.4, Grasim gained 1.4% to Rs 2,133 and Gujarat Ambuja Cements gained 1.7% to Rs 113.80. Steel large-caps came off from an intra-day decline. State-run Steel Authority of India gained 1.2% to Rs 98.20, off the session’s low of Rs 91.50. Tata Steel closed flat at Rs 421, off the session’s low of Rs 404.55.

Bharti Airtel surged 4% to Rs 718.5 and L&T gained 3.2% to Rs 1,427.6. The stock rose on bargain-hunting after a recent steep decline. Toshiba, biggest maker of nuclear power generation machinery in Japan, announced it is negotiating with Larsen to jointly manufacture coal-fired power equipment.

Decliners

Hindalco plunged 3% to Rs 130.10 and NTPC shed 2.7% to Rs 133.10. The board of NTPC approved a proposal for the entry of the company into nuclear power generation. Tata Motors declined 1.4% to Rs 726.30 and Hindustan Lever lost 1.2 % to Rs 171.40.


[R]6:30AM European stock markets advanced in early trade on Tuesday.[/R]
European markets were higher on Tuesday. In early trade, the German DAX Xetra 30 rose 0.7% to 6,579.76, the French CAC 40 rose 0.5% to 5,410.65 and the U.K. FTSE 100 advanced 0.3% to 6,077.90.

Advancers

Swiss drugmaker Novartis surged 3% after it announced it won U.S. Food and Drug Administration clearance for Tekturna, a high-blood-pressure treatment. International Power rallied 4.3% after reporting a 44% profit increase on higher power prices in the U.K. as well as an improved performance from U.S. assets and a contribution from acquisitions. It also lifted its dividend 75%. Xstrata added 3.5% after the nickel and copper mining company reported annual adjusted profit more than doubled to a stronger-than-forecast $4.89 billion, with revenue rising 56% to $26.88 billion.

Financial and resource stocks were also higher on broker comment, recovering some of the heavy losses of recent sessions. Danske Bank gained 1.4% after Goldman Sachs upgraded the stock from neutral to sell. Credit Agricole rose 2.1% after Citigroup raised its recommendation on the French bank from sell to hold. Belgium Fortis meanwhile, gained 1.9% after WestLB lifted its rating from add to buy. German steelmaker Salzgitter gained 4% after Credit Suisse upgraded the stock from neutral to outperform.

Decliners

France Telecom fell 0.7% after reporting slumping profits, saying that its 2007 dividend won''t be raised and not providing a sales outlook. Frankfurt airport operator Fraport dropped 3.8% after warning that its 2007 profit would fall below 2006 levels, saying its dividend will be stable and reporting a below-consensus 7% rise in operating profit for 2006.

Oil and gold

Oil climbed away from $60 on Tuesday, drawing strength from an increase in Asian and European stocks after five days of losses. U.S. crude gained 37 cents to $60.44 a barrel, having dropped $1.57 on Monday to touch a two-week low of $59.55. London Brent crude was up 55 cents to $61.09.

Gold rose the most in two weeks on expectations a decline in the dollar against the euro will revive demand for the metal as an alternative investment. Gold for immediate delivery gained $7.80, or 1.2%, to $644.40 in early trade in London.

Currencies

The dollar recovered against the yen Tuesday from the previous day in Asia but remained slightly lower than overnight New York levels. The dollar was trading at 116.27 yen, down from 116.37 yen late Monday in New York, but above the 115.60 yen it cost late Monday in Asia. The euro rose to $1.3106, from $1.3098. The U.K. pound rebounded from a four- month low against the yen. The pound gained 1.1% against the yen, trading at 224.42 yen in early trade in London, from 221.88 yesterday. Against the euro, it was at 68.06 pence, from 68.16, and traded at $1.9263 from $1.9205.