Lackluster Averages Despite Job Data

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

Trading in New York remained volatile in the face of weekly jobless and monthly trade deficit data. At the end of the previous week 95,000 jobs were added and Commerce Department said the January U.S. trade deficit narrowed by 3.8% to $59.12 billion. Fed Governor Beis cautioned on sub-prime loans. New Century Financial shares fell 12%. Yahoo dropped 5% but Big Lots gained 19%. Crude-oil prices declined $1.36 or 2.66% to $60.23 a barrel.

[R]5:00PM NY; 11:00PM Frankfurt; 3:30AM Mumbai - GLOBAL MARKETS[/R]
Yield on 10-year bond closed at 4.589% and the 30-year bond closed at 4.721%.

Gold declined $6.200 to close at $649.300 a troy ounce, silver decreased 15 cents to end at $12.970 a troy ounce and copper advanced $139.500 to close at $6276.500 per ton.

Oil declined $1.640 to close at $60.000 a barrel and heating oil lost 4.740 cents to finish at 171.390 cents a gallon. Natural gas decreased 16.9 cents to close at $7.070 per MMBtu. Gasoline went down 2.400 cents to end at 190.210 cents a gallon.

Asian markets closed mixed as Japanese shares advanced on upbeat economic data, while Hong Kong lost. The advancers were led by Philippines with an increase of 2.36%, Singapore with an advance of 0.68% and Japan with a gain of 0.43%. The decliners were led by India with a decrease of 1.26%, China with a loss of 0.27% and Hong Kong with a decline of 0.21%. Australia gained 0.18%.

European markets finished higher after fears about U.S. employment data proved largely unfounded, though a disappointing outlook from Airbus owner EADS and a negative broker note on the pharmaceutical sector contributed some selling pressure. The advancers were led by Spain with an increase of 0.45%, U.K. with a gain of 0.28% and Netherlands with an advance of 0.27%. The decliners were Norway with a decrease of 0.56%, Switzerland with a decline of 0.24% and Italy with a loss of 0.04%.

Latin America markets finished rising in tandem with U.S. stocks. The advancers were led by Brazil with an increase of 1.02%, Mexico with an advance of 0.97% and Argentina with a gain of 0.07%. There were no decliners. Canada ended flat.

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

AeroVironment Inc. ((AVAV)), maker of unmanned aircraft systems, said that its third-quarter net profit increased to $8.89 million, or 57 cents per share, compared with $4.39 million, or 29 cents per share, in the year-ago period. Revenue climbed to $46.3 million against $35.5 million in the same period a year earlier. Shares climbed 12%.

Air Methods ((AIRM)) results were above two analysts'' estimates by a penny, earning 10 cents per share in the fourth quarter. Shares went up 7.4%.

Blue Coat Systems Inc. ((BCSI)), Internet monitoring equipment maker, reported third-quarter net revenue of $47.1 million, compared with $35.5 million during the year-ago period. Net revenue in the quarter rose 32.6 percent to $47.1 million. Last month, the company had raised its forecast to $45.5 million to $47.5 million. Shares climbed 12%.

Big Lots Inc. ((BIG)), closeout retailer, said that its fourth-quarter net profit jumped to $104.3 million, or 94 cents per share, compared with $14.7 million, or 13 cents per share a year earlier due to an extra week in the quarter, higher same-store sales, an improved margin and a gain from discontinued operations. Net sales for the period increased 10.8% to $1.55 billion, with same-store sales rising 4.9%. Earnings included a $12.7 million profit from discontinued operations, compared to a loss of $23 million a year earlier. Earnings from continuing operations reached 83 cents a share from 33 cents a share. Shares climbed 18.5%.

Callon Petroleum Co. ((CPE)) said it agreed to buy an 80% working interest in the Entrada Field from oil company BP PLC for $150 million. Callon, which already owns the other 20% of the field, also agreed to pay another $40 million if the field reaches certain undisclosed production milestones. Callon plans to finance the purchase using a $200 million revolving credit line from Merrill Lynch Capital Corp. Shares climbed 6.2%.

Jones Soda Co. ((JSDA)), natural soda maker, said that its fourth-quarter net earnings increased to $2.06 million, or 8 cents per share, compared with $580,245, or 3 cents per share, in the year-ago period. Revenue climbed to $10.05 million against $8.75 million in the same period a year ago. Shares went up 21.7%.

La Jolla Pharmaceuticals ((LJPC)) shares soared 56.2% after it reported positive interim results from a late-phase study of a drug proposed to treat lupus, a chronic condition in which the immune system mistakenly attacks the body''s own tissues.

Middleby Corp. ((MIDD)) shares soared to 9.3% after the company reported its fourth-quarter net income increased 53%, beating analysts'' expectations. The company said it earned $11.1 million, or $1.34 per share, on $98.3 million in sales. Robert W. Baird analyst Peter Lisnic upgraded the stock to ""Outperform"" from ""Neutral,"" and raised his price target to $140 from $97. He praised the company''s market share and brand loyalty.

Winston Hotels Inc. ((WXH)) stock jumped 8.8% after the real estate investment trust said it received a $15-a-share buyout offer from Inland American Real Estate Trust.

Ashworth Inc. ((ASHW)), which designs golf sportswear, said its fiscal first-quarter loss widened on a drop in revenue. For the quarter Ashworth posted a loss of $2.5 million, or 17 cents per share, compared with $50,000, or no cents per share, for the same quarter in 2006. Revenue fell 5.8% to $38.3 million from $40.6 million in the year-ago period. Shares fell 4.6%.

Elong ((LONG)) posted a small loss for the period as revenue climbed 24% higher to $8.9 million. Analysts were expecting the company to earn $0.10 per ADS on $9.6 million in revenue. Even on a more favorable adjusted basis, eLong''s profitability was disappointing. Shares fell 21.1%.

Encysive Pharmaceuticals ((ENCY)), drug developer, said fourth-quarter losses widened to $25.8 million, 44 cents a share, compared with $19.4 million, or 33 cents per share, a year earlier, due primarily to costs related to the launch of Thelin tablets in Europe and maintaining its commercial infrastructure in the U.S. Revenue declined to $5.4 million versus $5.6 million in the same period a year ago. Shares fell 10.7%.

Gmarket Inc. ((GMKT)), electronic commerce merchant, said that its fourth-quarter net income increased to $6.8 million, or 13 cents per share, compared with $3.8 million, or 9 cents per share, a year earlier. Revenue jumped 67% to $51.6 million versus $30.9 million a year ago. The company''s gross merchandise value, which represents the total value of all items sold on Gmarket''s website, rose 53% to $737.4 million from $480.8 million. Shares fell 21.3%.

IDT Corp. ((IDT)), telecom service provider IDT Corp. said Thursday its fiscal second-quarter net loss narrowed as costs fell. For the quarter the company posted a net loss of $27 million, or 33 cents per share, compared with a loss of $55.6 million, or 58 cents per share, during the same period a year earlier. Sales fell 10% to $512.5 million from $567.3 million in the year-ago period. Shares fell 10%.

Lumera Corp. ((LMRA)), which makes polymer-based devices for the bioscience and electro-optics industries, widened its fourth-quarter losses to $3.13 million, or 17 cents per share, compared with $2.62 million, or 16 cents per share, in the year-ago period. Revenue climbed to $1.16 million versus $240,000 in the same period a year earlier. Shares fell 16.7%.

NovAtel Inc. ((NGPS)), maker of global positioning system receivers and components, reported fourth-quarter net income of C$5.14 million ($4.6 million) or 58 Canadian cents a share (52 cents), compared with C$5.13 million, or 58 Canadian cents a share, in the year-ago period. Revenues climbed to C$19.2 million versus C$16.2 million in the same period a year earlier. Shares fell 8.7%.

PeopleSupport Inc. ((PSPT)) tanked 38.1% on plunging fourth-quarter profits of $4.2 million, or 18 cents a share, including income tax benefits of 11 cents. Last year the Los Angeles-based outsourcer earned 65 cents a share with a 51-cent income tax benefit. Analysts at Friedman Billings, Piper Jaffray and JMP downgraded the stock.

[R]1:00PM NY European markets closed higher, helped by U.S. jobs data.[/R]
European stocks closed higher on Friday, reversing from earlier gains, as in-line-with-expectations U.S. jobs data offset a disappointing outlook from Airbus owner EADS and a negative broker note on the pharmaceutical sector. EADS was the most notable French large-cap decliner, falling 4.6% after saying 2007 operating profit may be flat following a 94% decline in 2006 net income. Shares of GlaxoSmithKline lost 1% after Goldman downgraded the U.K. drug giant, and Novartis shares fell 2.1% as the broker left its rating at neutral. Among other stocks in focus, French supermarket retailer Carrefour rose 2.7% higher after recent losses. Alliance Boots surged 14% after the U.K. pharmacy chain said it''s received a takeover bid. The French CAC 40 closed up 0.3 % at 5,537.84, the U.K. FTSE 100 gained 0.3% at 6,245.20, and the German DAX 30 rose 0.1% to 6,716.52.

Crude oil prices reversed from steep advance in the previous session, due to profit-taking. Light, sweet crude April delivery fell 52 cents $61.30. Heating oil slipped to $1.7642. Natural gas fell 15 cents to $7.220 per 1,000 cubic feet. London Brent dropped 64 cents to $61.86. The U.S. dollar gained ground against its major currency rivals. The euro was quoted at $1.3118, down from $1.3182. The dollar bought 117.42 yen, up from 116.36. The British pound was quoted at $1.9281, down from $1.9339. European gold prices rose. In London gold traded at $651.20 per troy ounce, up from $647.50. In Zurich, the precious metal traded at $650.40, down from $648.60. Silver rose to $12.97, up from $12.94.


[R]11:30AM Stock averages traded off earlier highs.[/R]
U.S. stocks came off earlier highs as investors cashed in on earlier gains made on the back of February jobs data. The government reported signs of strength in employment but also a jump in wholesale inventories that indicated a lower demand. The Labor Department said that U.S. employers added 97,000 nonfarm workers and unemployment rate fell 4.5% from 4.6%. The three major averages erased most of their gains after the Commerce Department reported a 0.7% increase in wholesale inventories. While stocks advanced on the jobs report, bonds fell sharply amid reduced expectations the Fed Reserve will need to cut interest rates.

Tech shares posted gains in morning trading, boosted by semiconductors. Texas Instruments ((TXN)) rose 2.1% on brokerage upgrade, while National Semi ((NSM)) climbed 3.7% despite a Q3 profit decline. The chipmaker predicted Q4 sales increase between 3% and 6% over the third quarter. The company also expanded its existing stock buyback plan by $500 million. gained 0.4%. Telecoms also contributed to the tech strength, benefiting from news that telecom company AT&T ((T)) and Yahoo Inc. ((YHOO)) are negotiating potentially sweeping changes that could scale back their partnership. Shares in AT&T advanced 0.4%, while Yahoo dropped 5.3%.

Housing stocks posted some weakness, with Hovnanian ((HOV)) helping to lead the sector lower after the luxury homebuilder reported a Q1 loss versus a year ago profit and forecast full-year earnings below its previous guidance. Shares of the company dropped 3.1%. Among stocks driven by analyst comments, VeraSun Energy ((VSE)), ethanol producer, rose 5% on broker upgrade. Host Hotels ((HST)) jumped 3.5% after Citigroup upgraded its rating on the hotel operator, citing the stock''s low valuation. Meanwhile, shares of EchoStar ((DISH)) fell 2.5% after Credit Suisse downgraded its rating on the satellite TV company. In late morning trading, the Dow Jones industrial average rose 17.87, or 0.15%, to 12,278.57. The Standard & Poor''s 500 index was up 1.99, or 0.14%, at 1,403.88, and the Nasdaq composite index rose 3.20, or 0.13%, to 2,390.93. The yield on the benchmark 10-year Treasury note shot up to 4.58% from 4.51% late Thursday.


[R]9:45AM U.S. stock markets opened firmly higher.[/R]
Wall Street opened notably higher Friday, driven by upbeat February jobs report which helped ease economic concerns and offset bad news for the subprime mortgage market. New Century Financial ((NEW)) tumbled 15% after the lender said that it stopped accepting loan applications because some of the subprime-mortgage specialist''s financial backers are refusing to provide access to financing. Industrial shares advanced, with Alcoa ((AA)) rising 1.5%, Boeing ((BA)), up 1.2%, and McDonald''s ((MCD)), gaining 1%. Procter & Gamble also supported the Dow, rising 0.3%, as it affirmed its previous Q3 earnings projection of 72 to 74 cents a share. Yahoo Inc. ((YHOO)) dropped 3.8% on news that the company and AT&T ((T)) are negotiating sweeping changes that could scale back their partnership. Among other companies in focus, Texas Instruments ((TXN)) rose 2.7% after a brokerage upgrade. The Dow Jones industrial average was up 58.16 points, or 0.47%, at 12,318.86. The Standard & Poor''s 500 Index was up 6.83 points, or 0.49%, at 1,408.72. The Nasdaq Composite Index was up 12.60 points, or 0.53%, at 2,400.


[R]9:00AM U.S. stock futures pointed higher on positive jobs data.[/R]
U.S. stock market futures shot steeply higher on Friday, boosted by in-line-with-expectations employment figures and continued narrowing in the trade deficit. Nonfarm payrolls rose 97,000 in February, in line with the average economist estimate of a gain of 100,000. The unemployment rate fell to 4.5%, vs. expectations of rate at 4.6%. According to another economic report, the U.S. trade deficit narrowed by 3.8% in January to $59.1 billion. The U.S. dollar rallied on the back of the economic data, rising 0.8% vs. the yen and 0.2% vs. the euro.

Positive news in the semiconductor sector also generated upward mood. National Semiconductor ((NSM)) rallied 4.8% in pre-open trading after its 45% profit drop came in above analyst estimates. Also in the sector, Texas Instruments ((TXN)) rose 2.4% to $32.45 following un upgrade to buy from hold on the belief that the chip industry''s inventory correction close to an end. Philips Electronics ((PHG)) said that it would make a staged exit from its 16% stake in Taiwan Semiconductor ((TSM)) through sales to Taiwan investors, U.S. shareholders and company share buybacks.

Outside the sector, New Century Financial ((NEW)) dropped 5.7%. The company said that it stopped accepting loan applications because some of the subprime-mortgage specialist''s financial backers refuse to provide access to financing. S&P 500 futures erased earlier losses to trade up 7.30 points at 1,424.50 and Nasdaq 100 futures climbed 9.00 to 1,784.00. Dow industrial futures ran up 49 points to 12,425.

[R]Non-farm payrolls increased 97,000 in February.[/R]
Friday morning, the Labor Department released its highly anticipated report on employment in the month of February, showing that job growth during the month came roughly in line with economist estimates. The report showed that non-farm payroll employment increased by 97,000 in February following an upwardly revised increase of 146,000 in January. Economists expected an increase of about 100,000 jobs compared to the increase of 111,000 jobs originally reported for the previous month. The Labor Department said that the increase in employment came as job growth in service-providing industries more than offset a sharp decline in construction employment and a continued drop in manufacturing employment. Service-providing industries added 168,000 jobs in February following an increase of 120,000 jobs in January. The increase reflected job growth throughout much of the sector.

At the same time, the report also showed that goods-producing industries lost 71,000 jobs in February after adding 26,000 jobs in the previous month. Construction employment fell by 62,000 jobs, while manufacturing employment fell by 14,000 jobs. The Labor Department also said that the unemployment rate unexpectedly edged down to 4.5 percent in February from 4.6 percent in January. The decrease came as a surprise to economists, who had expected the unemployment rate to remain unchanged. The unexpected drop in the unemployment rate was partly due to a decrease in the size of the labor force, which fell by 190,000 in February after increasing by 199,000 in January. The report also showed that average hourly earnings increased by $0.06 or 0.4 percent to $17.16 in February. This increase followed gains of $0.03 in January and $0.08 in December. Average hourly earnings were up 4.1 year-over-year.


[R]8:30AM Asian markets ended mixed with Tokyo higher and HK lower.[/R]
Asian markets closed mixed on Friday. Japan''s benchmark Nikkei 225 index added 0.43% to finish at 17,164.04. Daiei gained 9.8% and Aeon ended up 4.6% as the two retailers agreed on an alliance. Nikko Cordial advanced 3.1% on growing demand for Citigroup to raise its tender-offer price for the Japanese brokerage firm.

The benchmark index Hang Seng in Hong Kong shed 0.2% to 19,134.88. China Life added 0.5%. ICBC, China biggest lender by assets, finished 0.2% higher. China Mobile fell 1.7%. The Shanghai Composite Index, which tracks both Class A and Class B shares, closed up 0.3% at 2,937.91. Bank of China closed up 3.3%, Industrial & Commercial Bank of China rose 2.6% and midsize Shanghai Pudong Development Bank advanced 2.8%.

The Korea Composite Stock Price Index, or Kospi, settled down 0.02% at 1,423.58. The stock market finished flat after losses in banks and shipbuilders were countered by robust gains in transportation stocks. The Weighted Price Index of the Taipei Stock Exchange slid 0.07% to 7,568.20 and Australian benchmark S&P/ASX 200 index rose 0.1% to close at 5,830.2.


[R]8:00AM NY-7:00PM Mumbai; Sensex tumbles on higher inflation and cement prices.[/R]
The Sensex on BSE closed 164.36 points, or 1.26%, lower at 12,884.99. The market-breadth was negative as 1,308 stock declined, 1,098 advanced and 60 were unchanged. Of the 30 stocks in the Sensex 6 advanced, while the rest declined. The turnover on BSE was Rs 4,339.08 crore. The turnover on NSE was Rs 9,641.18 crore, higher than Rs 7,954.06 on Thursday.

Economic news

The annual inflation rate was just above 6% in late February, thus keeping alive the prospect of another hike in interest rates. Data on Friday showed wholesale price index rose 6.10% in the 12 months to Feb. 24, little changed from the previous week annual increase of 6.05%. Wholesale price-based index inflation rate stood at 4.18% during the corresponding week last year.

Morgan Stanley, Citigroup and Actis have agreed to buy a total of 6% in NSE for an undisclosed amount. While Morgan Stanley will purchase 3% equity stake in NSE, Citigroup and Actis will buy 2% and 1%, respectively. The Bombay Stock Exchange Ltd announced on Wednesday, February 7, that it was selling a 5% stake to Singapore Exchange at Rs 5,200 per share.

The cement companies today promised to keep prices stable for a year even if the costs of inputs go up. The companies, however, refused to roll back the recent hike which has been done because of rise in excise on 50-kg bags costing Rs 190 or more.

The government said that there is no ceiling on export credit given by public sector banks to small-scale companies. Finance Minister P Chidambaram said that banks usually sanction the working capital, including export credit, after assessing individual customer performance.

IPO

Idea Cellular, a leading mobile operator in India, made a strong debut on the bourses today, opening at Rs 85, with 13.33% premium and touched an intraday high of Rs 92 supported by strong buying interest from investors despite volatility in the markets. It ended at Rs 85.70, up 14.27%.

Trading highlights

New issues Idea Cellular was the most-active stock with a turnover of Rs 559.20 crore followed by Century Textiles and MindTree Consulting.

Advancers

NTPC led the gainers, up 2.7%, to Rs 140. The company is planning to float a subsidiary for its international operations and build a 700 Mw gas-based power plant in Nigeria and 500 Mw thermal power plant in Sri Lanka.

Hero Honda was up 2.5% to Rs 690, Tata Steel gained 1.5% at Rs 434.

Tata Steel surged after it acquired 100% stake in Rawmet Industries Private, a company having its registered office in Kolkata, for an enterprise value of Rs 101 crore.

Decliners

Cement shares were down sharply after India''s cement companies agreed to hold prices of the key building material for a year. Grasim slumped 7.5% to Rs 2,069, ACC tumbled over 6% to Rs 781, and Gujarat Ambuja shed 2.6% to Rs 110. India Cements plunged over 8% to Rs 153, and UltraTech Cement plummeted 4.8% to Rs 780.

Other decliners included BHEL and ITC declining around 3.5% each to Rs 2,095 and Rs 154, respectively. Cipla shed 3.2% to Rs 229 and Hindalco tumbled 3.1% to Rs 128.

Hindustan Lever was down 0.14% to Rs 183.55, after rallying close to 10% on significant volume on Thursday. Cigarette large-cap ITC was down 3.44% to Rs 154.35.

Index heavy Reliance Industries shed 2% to Rs 1,308.05. Reliance Communications lost 2.5% to Rs 423, L&T declined 2.5% to Rs 1,482 and Dr Reddey’s dropped to Rs 660.


[R]6:30AM Europe was lower Friday on weak metal, drug and mining sectors.[/R]
European markets were off to a weak start on Friday. By mid morning, Frankfurt Xetra Dax fell 0.5% to 6,677.11, the CAC 40 in Paris shed 0.8% to 5,482.19 and London FTSE 100 lost 0.4% to 6,203.8.

Advancers

Thales, the French defence electronics group, topped the earnings table after posting a better-than-expected 4.5% increase in full-year operating profit, while guiding strong revenue growth for the next two years. Thales shares added 4.1%. Sanofi-Aventis advanced 0.1% after Goldman upgraded it to buy, saying concerns over Plavix and Lovenox are now priced in. Ahold, the Dutch retailer, was up 1.6% as bids circulated in for the company US Foodservice division, valued at around $6 billion.

Decliners

EADS, the European aerospace group, fell 1.8% after losses at its Airbus unit were largely responsible for an 86% drop in 2006 operating profits. The pharmaceuticals sector was led lower after Goldman Sachs lowered its rating on the UK GlaxoSmithKline from neutral to sell. GlaxoSmithKline dropped 1.7%. Meanwhile Novartis, the Swiss drugmaker, fell 2.1% as investors took profits on its recent strong performance.