New Home Sales Trim Index Losses

albena
24 Aug, 2005
New York City

Stocks declined in early trading as oil prices topped $66 a barrel and a larger-than-forecast 4.9% drop in July durable orders, after a revised 9.2% gain over the prior two months, provoked concerns that the economy could be slowing down faster than expected. On the other hand, new home sales in July hit a record high and helped trim the index losses. Google is to launch its instant-messaging service today. BHP Billiton reported record full-year net profit up 89.3 % vs. a year ago.

U.S. AVERAGES

A report pointing to a decreased demand for manufactured goods in July, combined with the fresh spike in oil prices, provoked fears on Wall Street that the U.S. economy could be slowing down faster than expected.

After the report Tuesday that marked a drop in July existing home sales, the Department of Commerce announced a steep advance in the month's new home sales.

The airline sector is among the decliners in the early trading, declining 1.3%. Northwest ((NWAC)) marked the worst performer, losing more than 5%.

Early in Wednesday’s session the Internet sector is also down on the fallout from Baidu's ((BIDU)) earnings.

The oil service sector is higher by 1.2%, while the disk drive sector is showing a modest advance.

General Motors Corp. ((GM)) added 2.5% to $34.35 on a report that the United Auto Workers Union is considering helping the world's No. 1 auto maker reduce costs.

Merck ((MRK)) gained 1.4% to $27.96 after recording losses related to an unfavorable court verdict on its painkiller drug Vioxx.

Google ((GOOG)) fell $2.16 to $277.42 after announcing that it expects to launch its instant-messaging service Wednesday to let users exchange text messages and make voice calls over their personal computers thus competing the messaging services provided by America Online, Yahoo! and Microsoft. Google Talk is about to enter a difficult battle on the instant-messaging services front as AOL's has already got about 41.6 million U.S. users, followed by Yahoo Messenger with 19.1 million users and MSN Messenger with 14.1 million users.

Ford Motor Co. ((F)) is to announce a new restructuring plan soon to return its key North American vehicle operations to profitability, according to the company.

Anglo-Australian mining company BHP Billiton’s ((BHP)) net profit jumped by almost 90% in fiscal 2005 due to strong market conditions, especially in China.

Regis ((RGS)) posted a 10% increase in 4Q earnings and reiterated its full-year forecast.

ECONOMIC NEWS

U.S. durable goods orders plummeted 4.9% in July, the first decline in four months, according to the Commerce Department report Wednesday morning. Economists had forecasted orders to decline 1.5% in July. Durable orders in June were downwardly revised to a 1.9% rise from a 2.8% increase previously expected.

Sales of new U.S. homes rose 6.5% in July to a record seasonally adjusted annual rate of 1.41 million, the Commerce Department reported Wednesday. Economists had been looking for sales to decline slightly to a 1.33 million pace in July.

INTERNATIONAL MARKET NEWS

Asian markets ended higher as oil prices retreated from recent high levels. Tokyo's Nikkei-225 Index was up by 0.22% to 10,985.33, while Hong Kong's Hang Seng Stock Index gained 1.73% to 12,646.49. Korea's Kospi Index added 0.60% to 792.34, while Australia's All Ordinaries Index finished up 0.13% to 3539.70.

Tokyo closed higher Wednesday, reaching to a new four-year high for the third-straight session due to growing confidence in the country's economic recovery. The Nikkei 225 index added 0.24% percent, to 12,502.26 on the Tokyo Stock Exchange. The broader TOPIX gained 0.28% to 1,275.61.

European shares declined at mid-day Wednesday with mining and metals stocks leading the list of decliners after the results from BHP Billiton and a spike in oil prices. The German DAX 30 lost 0.3% to 4904, the French CAC 40 shed 0.2% to 4428 and the U.K.'s FTSE 100 index dropped 0.2% to 5292.

ENERGY, METALS AND CURRENCIES MARKETS

Crude-oil prices added 63 cents to $66.34 a barrel in New York Mercantile Exchange electronic trading Wednesday, ahead of a key U.S. oil-inventories report that is expected to record a decline in crude and gasoline stocks.

The dollar traded at 110.13 yen, up vs. 109.84 yen late Tuesday, while the euro advanced to $1.2272 vs. $1.2233.

The 10-year Treasury climbed 6/32, or $1.86 per $1,000 invested, to yield 4.163%. The 30-year bond rose 10/32 to yield 4.373%.

Gold futures edged up with December gold up 50 cents at $444.80 an ounce in morning trade.

EARNINGS NEWS

Regis, hair care producer, reported 4Q net income of 64 cents per share, up vs. 58 cents per share for the same time last year on 17% consolidated revenue growth and a 0.9 % rise in same-store sales.

Telekom Austria, telecommunications provider, reported 2Q earnings of 39 eurocents, compared with 21 eurocents in the comparable period last year on revenue growth in the wireless business segment, mainly due to foreign operations, higher subscribers and strong data business.

BHP Billiton, Anglo-Australian resources group, reported record full-year net profit of US$6.398 billion, up 89.3 %t from US$3.379 billion a year ago on strong demand from China and high prices for its raw materials.

Genesco, specialty retailer, announced 2Q earnings increased to 27 cents a share vs. 20 cents a share for the year-ago period on strong sales, beating market expectations of 22 cents per share

Bombardier, aerospace company, posted 2Q earnings of 6 cents a share, up from a the same period last year’s profit of 5 cents per share despite revenue decline. Excluding items, the company earned 2 cents a share in July.
American Woodmark profit down but tops target

American Woodmark, kitchen cabinet maker and distributor, announced that 1Q profit went down to 45 cents a share, from 58 cents a year earlier, beating analysts forecasts of earnings within the range of 30 to 40 cents a share.

PetroChina announced its first-half net profit increased 36% and revenue went up 42% to 252.5 billion yuan from 178.4 billion yuan in the first half of last year. The said the earnings rise was due to ‘continued high crude-oil prices"""""""". PetroChina has recently reached an agreement to buy a major oil producer in Kazakhstan.

Dollar Tree Stores, discount retailer, reported that 2Q profit was down to 25 cents a share from 26 cents a year earlier despite sales increase, matching analyst estimate. Same-store sales decreased 1.5%.

Longview Fibre, paper and container manufacturer, announced that 3Q profit declined to 11 cents a share, from 15 cents a share for the same period last year, missing analysts’ forecast of 16 cents a share.

Brown-Forman, liquor company, posted 1Q earnings of 33 cents per share, down from or 42 cents per share, in the year-ago period despite sales growth on a heavy loss from the sale of its former Lenox Inc. china and crystal business.

CORPORATE NEWS

Northern Trust ((NTRS)) said that it has been chosen by Julius Baer Investments Ltd. to provide investment outsourcing solutions for about $4.5 billion in fixed income assets under management. The agreement is expected to be completed by the end of 2005.

News Corp. ((NWS)) plans to sell Sky Radio, Dutch radio broadcaster, according to reports. According to Rupert Murdoch, chairman and chief executive of News Corp., the popularity of digital music players is drawing listeners away from radio, making the long-term future of the medium uncertain.

Intel ((INTC)) said it designed a new generation of computer chips that should facilitate laptop PCs to function longer on their batteries, as well as help desktop users to save on power costs. Intel targets to start shipping these chips in the second half of the forthcoming year. The new chip would include features of Intel's Pentium 4 chip for desktops and servers and of the Pentium M chip used in notebooks, according to the company.

McDermott International, Inc. ((MDR)) announced that one of its subsidiaries has been awarded the installation contract for Chevron Corp.'s ((CVX)) Tahiti project in the gulf of Mexico. The contract terms weren't revealed.

MTC Technologies, Inc. ((MTCT)) has won a contract worth about $45 million to modify the Air National Guard and Air Reserve Command F-16 aircraft with a commercial fire control computer.

OTHER NEWS

The Japanese government announced Tuesday that the Ministry of Economy, Trade and Industry's all industries index stood at 104.1 in June, up 1.3% vs. the previous month. Economists had expected the index to rise 0.8%.