Large Caps Lead the Averages

Elena
19 Aug, 2005
New York City

Light sweet crude bounced back to $64.40 rising $1.13 on refinery fire in Venezuela, Ecuador Protests and Iran

U.S. MARKET AVERAGES

U.S. market averages are on the upswing primarily due to Coca Cola and IBM which rose 2.1% and 2.4% after being upgraded by UBS. No economic data is due for release today and little corporate news is expected.
Another factor driving the market is the rising crude-oil. Blue-chip shares were boosted by analyst upgrades of Coca Cola and IBM. Market is also attentive to cautious retailer guidance.

Oil prices advanced more than $1, recuperating from lows this week as markets responded to a fire at a refining complex in Venezuela and slowing production protests in Ecuador. Traders remained also cautious about Iran's nuclear ambitions, with expectations that the situation could get worse. Light sweet crude for September delivery rose $1.13 cents to $64.140 a barrel in electronic trading on the NYMEX and gasoline gained nearly 3,5 cents to $1.8959 a gallon, while heating oil rose by nearly 4 cents to $1.8285.

The U.S. dollar made its biggest gain against the euro since June on speculations of further interest rate increases. This week the dollar has advanced 2.2%. Against the euro it stood at $1.2176.

Investors were also digesting disappointing quarterly earnings reports from retailer companies.

AnnTaylor Stores, women's clothing retailer, reported a sharp decline in 2Q profit of 10 cents per share from 41 cents the year earlier on weak sales and one-time costs from moving its corporate headquarters.Excluding relocation costs, adjusted earnings were 18 cents per share, a penny higher than analysts’ forecasts. Same-store sales were down 6.1%.

Gap, retailer company, posted 2Q 39% net income rise of $272 million, or 30 cents a share vs. $195 million, or 21 cents a share after a record gain of $58 million. Due to lower sales in the second quarter, the company lowered its 2005 earnings forecast to the range of $1.30 to $1.34, down from $1.44 to $1.48.

Shares of teen apparel retailer Bebe Stores Inc.fell 5 percent in extended hours of trading on Thursday after the company offered a profit forecast for the current quarter that was at the low end of market expectations. Bebe shares slid to $23.50 on the Inet electronic brokerage screen from their Nasdaq close of $24.72.

Software company Autodesk Inc. shares rose 6 percent to $40.65 after its net profit nearly doubled and it raised its outlook for the year. Autodesk closed at $38.35 on Nasdaq.

Shares of Advanced Digital Information Corp jumped 12 percent to $9.67 from a Nasdaq close at $8.63 after its quarterly revenues surpassed analysts' forecast.

Ditech Communications Corp. stock dropped 9.3 percent to $7.05 on Inet from a Nasdaq close at $7.77 after it posted a first-quarter loss.

Shares of children's apparel retailer Gymboree Corp. fell 4.5 percent in extended hours of trading on Thursday after the company's quarterly revenues just met analysts' forecasts. Gymboree shares slid to $15.90 on the Inet electronic brokerage screen from their Nasdaq close of $16.65.

Shares of Sharper Image Corp. fell 2.5 percent to $12.70 on Inet after the retailer posted an unexpectedly deep second-quarter loss. The shares closed at $13.02 on Nasdaq.

The stock of ScanSource Inc. , a reseller of bar-code scanner-related products, dropped nearly 13 percent to $45.26 after it lowered its first-quarter revenue outlook. ScanSource closed at $52.01 on Nasdaq.

Marvell Technology Group reported its profit nearly tripled from a year ago and retailer Aeropostale Inc. projected third- and fourth-quarter earnings that missed the Wall Street peg by a wide margin.


INTERNATIONAL MARKET NEWS

Asian-Pacific benchmarks finished the session mixed, deprived of fresh trading news as crude-oil steadied and U.S. stocks ended mixed overnight. Traders were selling steel, real estate and banking issues to take profit from recent gains. The leading decliners were Nippon Steel, Mitsubishi Estate and the automotive sector. The Japanese Nikkei lost 0.13%, Hong Kong’s Hang Seng ended down 0.7%, South Korea’s Kospi lost 0.3%. Markets in Australia, Thailand, and Singapore closed higher. The dollar stood at 110.82 yen.

European markets gained ground after seven consecutive trading sessions in the red. Regional markets were boosted by higher opening of U.S. markets, oil and mining stocks gains and positive expectations for the telecom sector. The German DAX 30 added 1.62%, the French CAC 40 climbed 1.31%, and London’s FTSE 100 rose 0.82%. The euro fell 0.3%.

ENERGY, METALS AND CURRENCIES MARKETS

Oil prices advanced more than $1 on international news. Light sweet crude for September delivery rose $1.13 cents to $64.40 a barrel in electronic trading on the NYMEX and gasoline gained nearly 3.5 cents to $1.8959 a gallon, while heating oil rose by nearly 4 cents to $1.8285.

Gold futures have dropped 2% since last week’s levels. The precious metal has declined $7 in the last two sessions. Gold for December delivery fell $2.10 to trade at $442.60 per ounce on the NYMEX. Silver fell 0.8 cents to $6.99.

Copper for September delivery lost 0.2 cents to $1.657 a pound. cent at $1.6590 per pound.

The U.S. dollar rose against most of the other major currencies. The euro was quoted at $1.2143, down from $1.2180. The dollar bought 110.60 yen, up from 110.51. The British pound traded at $1.7921, down from $1.7935.


EARNINGS NEWS

Bebe Stores, teen apparel retailer, announced 4Q profit more than doubled as earnings advanced to 21 cents per share, up from 9 cents per share in the year-ago period driven by improved gross margin resulting from higher same-store sales.

Autodesk, software company, reported its 2Q profit advanced to 30 cents a share, up vs. 16 cents a share a year earlier on strong revenue growth, beating analysts’ forecasts of 24 cents a share.

Advanced Digital Informations, hardware and software-based data storage solutions provider, reported fiscal 3Q net earnings of 11 cents a share, up vs. a loss of 2 cents a share for the same period last year on revenue growth

Ditech Communications, telecommunications equipment provider, posted a fiscal 1Q net loss of 6 cents a share, down vs. 30 cents a share in the same period last year on decline in revenue growth.

Gymboree, children's apparel retailer, posted a 2Q net loss of 11 cents a share, up vs. a net loss of 13 cents a share for the same period last year on revenue growth.

Sharper Image, specialty electronics retailer, posted a 2Q net loss of 45 cents a share, down vs. a profit of 1 cent a share for he same period last year on revenue decline. Same-store sales fell 9%.

ScanSource, a reseller of bar-code scanner-related products, posted 4Q net earnings of 73 cents a share, up vs. 69 cents a share in the year-earlier period on revenue growth, beating analyst estimate of 68 cents a share.

AnnTaylor Stores, women's clothing retailer, reported a sharp decline in 2Q profit of10 cents per share from 41 cents the year earlier on weak sales and one-time costs from moving its corporate headquarters.Excluding relocation costs, adjusted earnings were 18 cents per share, a penny higher than analysts’ forecasts. Same-store sales were down 6.1%.

CORPORATE NEWS

Intelsat Ltd., the second-biggest satellite operator, is in talks with New Satellites Holdings Ltd about acquiring it for $1.3 billion.

DanaherCorp. confirmed termination of its bid for the Swiss measuring equipment maker Leica-Geosystems Holdings AG as HexagonAG offered a higher bid for the company of $1.15 billion, or CHF573 per share, exceeding Danaher’s offer of CHF500 per share.