Lackluster Opening

albena
23 Aug, 2005
New York City

Stocks opened near the flat line as oil advanced toward $66 and the M&A development news wasn

U.S. AVERAGES

Stocks dropped Tuesday morning, while investors expected the data on existing home sales to give a focus to the market. Advancing oil prices also weighed on stocks. Crude oil rose to $65.97 on lingering worries about disruptions in global supply.

Google is getting ready to launch its own instant-messaging system, according to reports. The system is said to be named Google Talk and may be released this Wednesday.

Williams-Sonoma's 2Q profit climbed 12% on growth at the company’s catalog and Internet business and higher same-store sales at Pottery Barn.

CarMax lifted its 2Q outlook, saying it now expects to make about 37 cents per share on increased customer traffic, strong execution and its consumer-preferred market offer. Earlier the company had forecast a profit of 29-34 cents per share.

Toro reported a 3Q profit of 74 cents per share, beating views of 69 cents per share. Toro sees full-year sales growth at 9%-11%.

Pier 1 Imports cut its 2Q outlook due to worse-than-expected comparable store sales trends and heavy promotional activity. The company expects a loss for the period 12-14 cents per share.

Shares of Harrah's Entertainment Inc. ((HET)) will be also watched 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.

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

The housing market continues to fuel the economic expansion in the U.S. The July existing home sales were estimated 2.6% lower to 7.16 million from revised 7.35 million in June. The median existing-home price across all housing categories was $218,000.

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, while the October contract for Brent crude was up 4 cents to $64.54.

The dollar regained strength and was last up 0.4% at 110.06 yen, while the euro added 0.05% to $1.2228.

The benchmark Treasury 10-year note was last down 2/32 at 100-8/32 with a yield of 4.221%, ahead of the home sales data.

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.

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.
Williams-Sonoma, home products retailer, reported 2Q earnings of 26 cents per share, up vs. 23 cents per share for the year-ago period on 12.6% net revenue growth.

Weider Nutrition, label vitamins and nutritional supplements manufacturer, reported a 4Q net loss of 7 cents per share, down vs. a net income of 5 cents per share for the same period last year on sales decline.
Shoe Carnival, a leading retailer of value-priced footwear and accessories, announced 2Q earnings per share rose 33 % to 20 cents from 15 cents per share in the year-ago period on 39% net income growth.
Sanderson Farms, prepared food producer, reported 3Q net income of $1.19 per share, down from $1.69 per share for the year-ago period on slight sales decline and lower- than-experienced-last-year prices.
Brown Shoe, retail shoe stores operator, posted 2Q earnings of 22 cents a share, down vs. 40 cents a share a year-earlier despite strong sales, missing analysts’ forecasts of 28 cents a share.
The Toro Company, lawnmower maker, posted record 3Q net earnings of 74 cents per share, up vs. 66 cents per share for the year-ago period on strong sales growth.
Pier 1 Imports, home furnishings retailer, expects a larger-than-planned 2Q loss on decline in customer traffic and weak same-store sales. 2Q losses are forecasted in the range of 12 cents to 14 cents per share, missing analysts’ expectations of a loss of 6 cents per share.

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.