Market Awaits Oil Report

albena
23 Aug, 2005
New York City

Futures were weaker Tuesday morning, pointing to a lower opening for stocks as climbing oil and the news of a possible acquisition by Wachovia Corp. attracted the most attention. Investors are expecting existing home sales report at 10:00 a.m., which is seen rising for July. The Nikkei fell after hitting an intra-day high.

U.S. AVERAGES

A slightly weaker market opening is expected on Tuesday as persistently high oil prices remained above $65 a barrel on concerns of global supply disruptions despite the recovering output from Ecuador and a modest increase in U.S. crude stocks.

WPT Enterprises Inc., the producer of the World Poker Tour television show, missed Wall Street estimates by reporting a second-quarter loss and forecasted third-quarter revenue below analysts’ expectations.

Williams-Sonoma is slated to report its second-quarter earnings Tuesday. Analysts estimate the retailer to earn 25 cents a share.

Also reporting quarterly results today are lawn-mower and sprinkler-systems maker Toro Co. and software and consulting firm Wind River Systems.

Myriad Genetics is expected to post a 33 cents a share loss for its fiscal fourth-quarter.

Shares of Harrah's Entertainment Inc. ((HET)) will be closely watched today after the world's No.1 casino operator announced on Monday that it plans to buy Imperial Palace Hotel & Casino in Las Vegas for $370 million.

The No. 2 U.S. discount retail chain Target Corp. ((TGT)) will also be in the spotlight after forecasting on Monday that its August sales at stores open at least one year are likely to be near the upper end of its earlier issued guidance.

INTERNATIONAL MARKET NEWS

Tokyo's Nikkei 225 added 20.42 points, 0.16%, at 12,472.93, but couldn't hold the 12,500 level it broke in the morning. Hong Kong's Hang Seng index declined 1.7%, the Seoul Composite fell 0.1% and Australia's All Ordinaries dropped 0.25%.

European stocks declined on Tuesday, dragged down by a narrowly higher close on U.S. equity markets and oil prices moving toward $66 a barrel, though the higher German ZEW economic-sentiment indicator offered some support.

The German DAX 30 lost 0.67% at 4,908, reviving from daily lows, after the forward-looking German ZEW indicator of economic sentiment recorded a reading of 50, up vs. 37 in July and above views of an increase to 38.8.

Other major European indices were also lower, with the French CAC 40 dropping 0.80% to 4,449 points and the British FTSE 100 down 0.33% at 5,300.

ECONOMIC NEWS

On the economic news front, at 10 a.m. ET the National Association of Realtors is sxheduled to release its monthly report on existing home sales. Economists expect that those sales declined slightly to a 7.25 million annual pace versus the record 7.33 million sales rate set in June.

ENERGY, METALS AND CURRENCIES MARKETS

Oil prices edged above the $65 a barrel mark. The October light crude futures contract for NYMEX advanced 16 cents to $65.81 a barrel in electronic trading early Monday, while the October contract for Brent crude was up 4 cents to $64.54.

On Tuesday the euro advanced against the U.S. dollar, which had rallied last week fueled by strong U.S. economic reports and expectations of higher interest rates. The euro was quoted at $1.22 in early European trading, up vs. $1.22 in late New York trading Monday.

The British pound declined, dropping slightly to $1.7992 vs. $1.7998 Monday, and the dollar gained ground vs. the Japanese yen, trading at 109.95 yen vs. 109.76, shrugging off reports that Japanese economic activity in June was up for the first time in two months on gains in industrial production and construction.

The Energy Department reported Monday that the retail price of gasoline climbed more than 6 cents last week to an average $2.61 a gallon nationwide, hitting a new record. The previous record high was $2.55 per gallon, set the previous week. Adjusting for inflation, retail gasoline prices topped $3 a gallon in March 1980.

In London gold was quoted at $439.85 bid per troy ounce, up vs. $438.10 on Monday. In Zurich, the bid price was $439.75, down vs. $440.15. Gold closed at $440.15 in Hong Kong.

Bond prices were lower Tuesday, raising the yield on the 10-year treasury to 4.22% vs. the 4.21% level late Monday.

EARNINGS NEWS

Myriad Genetics, biopharmaceutical company, posted 4Q net loss of 32 cents per share, up from 37 cents per share for the same period last year on 60% revenue growth.

Burlington Coat Factory Warehouse Corp. ((BCF)) after Monday's closing bell posted 4Q net earnings of 34 cents a share, down 41% vs. 48 cents a share a year earlier. Revenue at the clothing retailer climbed to $763.7 million vs. $684.8 million a year ago.

La-Z-Boy Inc. ((LZB)) after the closing bell Monday reported 1Q net earnings of 6 cents a share vs. a net loss of 7 cents a share in the same period a year ago. Sales at the furniture company dropped to $451.5 million vs. $455.1 million a year earlier. The company sees 2Q earnings in the range of 17 to 21 cents a share.

ResMed Inc. ((RMD)) after Monday's closing bell posted 4Q net earnings of 43 cents a share, down 1.7% vs. 45 cents a share in the year-ago quarter. On a pro forma basis, the company posted earnings of 60 cents vs. 45 cents a share last year. Revenue at the medical equipment company climbed to $125.4 million vs. $92.9 million last year.

WPT Enterprises Inc. ((WPTE)) after Monday’s closing bell posted a 2Q loss of 2 cents a share vs. net earnings of 6 cents a share, for the same quarter a year ago. The entertainment company reported revenue of $6.6 million vs. $4.7 million a year ago. Gross margins were 33.7% in 2Q of 2005 vs. 43.9% in 2Q of 2004.

Hughes Supply Inc. ((HUG)), wholesale construction materials distributor, posted late Monday 2Q 2006 net earnings of 59 cents a share, down vs. 63 cents a year ago. Revenue for the quarter ended July 31 was $1.33 billion, up 17% from $1.14 billion a year earlier. Analysts had expected the company to earn 58 cents a share on sales of $1.34 billion.

CORPORATE NEWS

Wachovia, U.S. No. 4 bank, is among the companies exploring a deal for the auto-finance firm WFS Financial, which has a market capitalization of $2.5 billion, according to reports Tuesday.

Research in Motion, the BlackBerry e-mail pager maker, has agreed to a joint development deal with Intel, the world's largest chipmaker, according to TV reports late Monday.

Hain Celestial ((HAIN)) said early Tuesday that it has agreed to buy Spectrum Organic Products ((SPOP)) for $0.705 per share, with the purchase price half in stock and half in cash. According to the company, the deal, which is expected to close in November, will be accretive to earnings. According to Hain, Spectrum recorded sales of $49.9 million in the last fiscal year.

Nokia announced that it has been chosen to develop India's Bharti Tele-Ventures, in a transaction value of US$ 125 million. Nokia would provide managed services and expand Bharti's Airtel networks in several cities over a three-year period, Nokia said.

The Defense Department awarded General Electric and Rolls-Royce a $2.47 billion contract to develop and manufacture an engine for the Joint Strike Fighter, a high-profile military project.

Northwest Airlines expects to complete 96% of its flights during the first seven days of the mechanics' strike although nearly 400 flights could be canceled over that period. During the same week last year, the airline canceled 125 flights. About 4,400 Northwest unionized mechanics, cleaners and custodians walked off the job. No new talks are scheduled between Northwest and the union as it is refusing to take pay cuts and layoffs that would have reduced their ranks by nearly half. Northwest has said it needs $1.1 billion in labor savings. Also Monday, Standard & Poors warned that it might downgrade Northwest's debt because of the strike. Shares of Northwest Airlines Corp. rose 28 cents, or 5.2 %, on the first day of trading since the strike began. Its shares have traded between $3.77 and $11.83 over the past 52 weeks.