Markets Decline Worldwide

123jump.com Staff
23 Aug, 2005
New York City

Stocks declined. Existing home sales declined. 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, 14% higher than a year ago. Wachovia is exploring a deal to acquire WFS Financial. A joint venture between GE and Rolls-Royce has won a $2.47 billion contract to develop an engine for stealth jet fighter.

U.S. AVERAGES

Market averages trade in the negative for the entire day as summer lull, weaker housing market, and elevated oil prices kept buyers from the market. Market is still nervous when it comes to oil. Higher oil prices kept markets in Europe, Japan and India lower. Indian market saw its first 2% correction in six months. Markets in Brazil were down on tomorrow’s testimony from finance minister related to corruption charges. Mexico and Argentina also traded lower.

In the U.S. investors focused on the housing data and awaited oil inventory report to be released tomorrow. After the release of slower housing sales, even though the data suggested third most active monthly sales, housing sector stocks sold off.

Stocks in semiconductor, mining, and select tech sectors closed lower. Financial stocks also declined.

Eli Lilly, Amylin Pharmaceuticals and Alkermes rallied Tuesday after recording rosy preliminary results of a Phase II study on a type-2 diabetes treatment.

Merck continued to dip, with shares down 1.3% on jury decision against the company in a lawsuit related to the painkiller Vioxx.

WFS Financial advanced 13%. The automobile-financing company, which has a market capitalization of $2.5 billion, is reported to be a matter of interest to Wachovia which is among the companies exploring a deal. Shares of Wachovia lost 14 cents to 50.90.

Boston Scientific has declined hitting a new 52-week low on news that it has received an FDA warning letter.

Plumtree Software added 12% as BEA Systems offered $200 million in cash to buy the company. BEA’s stock rose 8 cents to 8.97.

Lucent Technologies added 4.2% following an upgrade to ""overweight"" from ""neutral"" by Prudential Equity Group.

Lawn maker Toro Company, Pier 1 Imports and Burlington Coat Factory and Brown Shoe are few of the retailers trimming or missing the earnings guidance.

Toro stock has declined by more than 20% in the last three months from its peak on the lowered earnings guidance and revised sales forecast. Pier 1 Imports have faced declining customer traffic same-store traffic for the last eighteen months. Stock has declined 20% in one year.

Pier 1 Imports shed 5% after cutting its 2Q guidance on a continued drop in customer traffic.

CarMax gained 13% after boosting its 2Q forecast on a higher sales growth and competitive wholesale auction prices. The used-car retailer now sees earnings of 37 cents a share, above analysts' estimate for 31 cents.

La-Z-Boy Inc. lost 94 cents to $13.05 after 1Q sales declined vs. the year ago period and it cut its quarterly outlook.

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.

INTERNATIONAL MARKET NEWS

Japanese stocks extended their rally Tuesday, while most other Asian-Pacific markets ended lower. In Tokyo, the Nikkei 225 Stock Average ended up 20.42 points, or 0.2%, at 12472.93, after hitting an intra-day high of 12612.16 early in the afternoon session.

Around the region, the Hang Seng Index fell 1.6%, to 14973.89, after trading between 14938.05 and 15244.90. The Shanghai Composite Index ended down 0.8%, while Kospi lost 0.1% to 1115.84. The Weighted Price Index of the Taiwan Stock Exchange closed down 0.2%, at 6195.18.

European stocks ended lower Tuesday, dragged down by weaker U.S. shares, though the strong German ZEW economic-sentiment indicator gave some boost. The German DAX 30 closed down 0.5% at 4,917.74. Other major European indexes also closed weaker, with the French CAC 40 closing down 1.1% to 4,436.56 points and the British FTSE 100 index dropping 0.3% to 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 up 14% from a year ago.

ENERGY, METALS AND CURRENCIES MARKETS

Bonds climbed, with the yield on the 10-year Treasury note at 4.19%, down vs. 4.22% late Monday.

Oil prices advanced toward $66 on worries over global supply disruptions. U.S. light crude was 6 cents up at $65.71 a barrel. London Brent crude added 10 cents to $64.60 a barrel.

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

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.