NY Recovers Early Losses, Oil Up

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

Stocks recovered from early decline in NY trading on weak home-sales data and rising oil prices. Crude-oil futures closed up 63 cents. The medical and biotechnology sectors saw volatile trading on long-awaited coronary stent industry report. Boston Scientific declined 7.4%. CV Therapeutics tumbled 21%. Agere Systems fell 2.9% and LSI fell 2.3%. Citigroup declined on lay-off news. European and Latin markets closed lower.

[R]4:030PM NY; 9:30PM Frankfurt; 2:00AM Mumbai - GLOBAL MARKETS[/R]

Market averages in NY trading managed to recover after sliding at the opening and weak trading in the morning. Oil rebounded on concerns over Iran action and European and Latin American markets closed lower on the decline in the U.S. home sales.

Yield on 10-year U.S. bond closed at 4.587% and the 30-year bond closed at 4.787%.

Gold gained $6.600 to close at $663.900 a troy ounce, silver increased 18.3 cents to end at $13.410 a troy ounce and copper declined $6.000 to close at $6765.000 per metric ton.

Oil gained 63 cents to close at $62.910 a barrel and heating oil advanced 6.500 cents to finish at 177.610 cents a gallon. Natural gas decreased 1.5 cents to close at $7.254 per MMBtu. Gasoline went up 6.940 cents to end at 206.770 cents a gallon.

Asian markets closed mostly higher, with Japan''s Nikkei average rising modestly as investors snapped up blue-chip shares. The advancers were led by Indonesia with an increase of 0.43%, Hong Kong with a gain of 0.37% and Japan with an advance of 0.24%. The decliners were led by India with a decrease of 1.22%, Philippines with a loss of 0.63% and Singapore with a decline of 0.14%. Australia advanced 0.63%.

European markets finished lower after a sharp drop in U.S. new-home sales reignited economic growth concerns and on weakness in the automotive sector after Porsche made a below-market value move on Volkswagen. The decliners were led by Belgium with a decrease of 1.16%, Italy with a decline of 1.13% and France with a loss of 1.04%. There were no advancers.

Latin America markets finished mostly lower following a surprisingly large drop in U.S. home-sales figures. The decliners were Mexico with a decrease of 0.79% and Argentina with a decline of 0.74%. The only advancer was Brazil with an increase of 0.06%. Canada gained 0.24% as the energy sector rose on higher oil prices and investors cheered ongoing merger activity. Those factors helped offset the drag from bearish U.S. equities.

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

Biosite ((BSTE)) soared 51.3% after Beckman Coulter ((BEC)) said it will acquire the company.

DG FastChannel Inc. ((DGIT)) shares climbed 13.1% after the provider of digital advertising services reported fourth-quarter net earnings of $1.99 million, or 15 cents a share, compared with a net loss of $1.03 million, or 14 cents per share, in the year-ago period. Revenue jumped to $21.7 million from $13 million. DG FastChannel forecast first-quarter adjusted EBITDA of $5.8 million to $6 million.

Inovio Biomedical Corp. ((INO)) shares jumped 10.2% after the company said the Journal of Virology published a positive study from development partner Wyeth regarding an investigational DNA vaccine for HIV. The vaccine uses the company''s electroportation technology. The study involved rhesus macaques, with results indicating that the technology appears safe and improves the delivery and effectiveness of the vaccine in non-human primates.

Mac-Gray Corp. ((TUC)) said the New York Stock Exchange contacted the company and requested that it issue a public statement on whether there are any corporate developments that might explain the unusual activity in its stock. Shares of the company climbed 13.1%.

Novatel Wireless Inc. ((NVTL)) shares climbed 11.8% after the company boosted its first-quarter outlook. The maker of wireless-access cards now sees adjusted earnings of 35 cents a share, up from a prior forecast of 16 cents. Novatel projects revenue of more than $100 million, compared with its previous guidance of $80 million.

Osiris Therapeutics ((OSIR)) shares rose over 14.4% a day after the company reported positive results from a study involving its stem cell therapy for the treatment of heart disease.

Semiconductor Manufacturing International Corp. ((SMI)) surged 7.6% on news that it had hired investment banks Morgan Stanley and Deutsche Bank to find a strategic investor. The Financial Times reported on Monday that a successful suitor would likely need to spend up to $500 million for an expected 20% stake.

Tarrant Apparel ((TAGS)), maker of private-label clothes, said it swung to a profit in the fourth quarter as sales rose 16% and margins improved. Net income totaled $1.7 million, or 6 cents per share, compared with a year-earlier loss of $1.5 million, or 5 cents per share. Revenue rose to $57.4 million, from $49.7 million, helped by higher sales of private-label clothes and the company''s American Rag brand. Shares of the company rose 17.4%.

Vonage Holdings Corp. ((VG)) said the market had overreacted after a federal judge agreed to bar the Internet phone company from using technology patented by Verizon Communications Inc. Shares of the company jumped 14.7%.

Monro Muffler Brake ((MNRO)), which operates a chain of automotive undercar repair and tire services stores, trimmed its quarterly and fiscal-year earnings expectations, due to underperformance at its ProCare stores and greater-than-expected workers compensation expenses. The company said it now expects a profit in the fourth quarter of between 25 cents per share and 27 cents per share, compared with previous guidance of 37 cents to 40 cents per share. Monro Muffler also reduced its fiscal 2007 earnings guidance to $1.54 to $1.56 per share on revenue of $415 million.

Progressive Gaming International ((PGIC)) plummeted 17.4% after the maker of gambling equipment announced irregular trading volume in its stock Friday and after Interactive Systems Worldwide Inc. said the two companies have settled the patent infringement lawsuit filed by ISWI over Progressive''s Rapid Bet Live product.

Trex Co. ((TWP)) said that its fourth-quarter loss widened as it incurred higher labor and packaging costs while also experiencing problems with new manufacturing processes. The fourth-quarter loss totaled $13.8 million, or 93 cents per share, compared with $10.9 million, or 73 cents per share, in the prior year. Sales dropped 27% to $32.1 million, from $44 million a year ago. Shares fell 6.3%.



[R]1:00PM NY European markets closed down, dragged by U.S. housing data andweaker automotive sector.[/R]
European stocks finished lower on Monday, weighed down by unexpected drop in U.S. new-home sales, which added to recent economic growth concerns. Weakness in the automotive sector also generated negative mood, as Porsche made a below-market value move on Volkswagen. Volkswagen fell3.2% after luxury-car maker Porsche raised its stake to more than 30% and offered to buy the company at 100.92 euros for each share. It won’t pay a premium because VW shares have more than doubled since Porsche first acquired a stake. Porsche rose 0.6%. Other decliners included bank ING, consumer-products group Unilever and food retailer Carrefour. On the positive side, Endesa rose 3.6% after Germany''s E.On raised its offer for the third time to 42.36 billion euros ($56.4 billion), or 40 euros a share. The German DAX Xetra 30 dropped 1% at 6,828.82, the French CAC-40 slipped 1% at 5,576.30, and the U.K.''s FTSE 100 index lost 0.8% at 6,291.90.


[R]11:30AM U.S. stocks turned sharply lower on disappointing home sales.[/R]
U.S. stocks tumbled, following the release of much weaker-than-anticipated housing data. Sales of new homes in February fell 3.9%, the lowest level seen in nearly seven years, and triggered further concern that economic growth is slowing more than expected. The data contributed to substantial weakness in the housing sector. Beazer Homes ((BZH)) and Champion Enterprises ((CHB)) turned in two of the sector''s worst performances, falling 2.2% and 15, respectively. The Dow Jones industrials showed losses of more than 100 points. The blue-chip average was led down by cyclical shares such as Alcoa Inc. ((AA)) losing 1.3% , Boeing Co. ((BA)), lower by 1%, General Motors Corp. ((GM)), down 0.8% , Honeywell International Inc. ((HON)), falling 1.6%, Microsoft Corp. ((MSFT)), down 1%, and Home Depot ((HD)).

Among companies in focus, Citigroup ((C)) fell nearly 1% on speculation it might reduce its workforce by about 5%. Computer giant Dell Inc. ((DELL)) climbed 2.4% after an upgrade at Goldman Sachs. On earnings news front, Walgreen Co. ((WAG)) reported better-than-expected Q2 profit as the drug store chain posted robust revenue from retail prescriptions. Tiffany & Co. ((TIF)), luxury jewelry retailer, posted flat Q4 earnings on impairment charge but beat expectations. Revenue rose 15% to $986.4 million. The Dow Jones industrials showed losses of more than 100 points. In late morning trading, the benchmark index fell 102.78, or 0.82%, to 12,378.23. Broader stock indicators also sank. The Standard & Poor''s 500 index fell 11.53, or 0.80%, at 1,424.58, and the Nasdaq composite index dropped 18.64, or 0.76%, to 2,430.29. Bonds rallied, with the yield on the benchmark 10-year Treasury note falling to 4.57% from 4.61% late Friday.

[R]New home sales unexpectedly fell in February.[/R]
Monday morning, the Department of Commerce released its report on new home sales in the month of February, showing that new home sales fell compared to economists'' expectations of an increase in sales. The report showed that new home sales fell 3.9 percent to a seasonally adjusted annual rate of 848,000 units in February from a revised 882,000 unit rate in January. Economists had expected sales to increase to a 995,000 unit rate compared to the 937,000 originally reported for the previous month. With the decrease, new home sales were down 18.3 percent year-over-year, falling to their slowest pace since June of 2000. The unexpected decline was due in large part to significant decreases in sales in the Northeast and Midwest, which fell 26.8 percent and 20.0 percent respectively.

New home sales in the South fell 7.0 percent, while sales in the West rose 24.6 percent. The Commerce Department also said that the seasonally adjusted estimate of new houses for sale at the end of February was 546,000. This represents a supply of 8.1 months at the current sales rate. The report also showed that the median sales price of new houses sold in February was $250,000, while the average sales price was $331,000. The weakness in the markets comes on the heels of the release of some disappointing new home sales data, which has renewed concerns about the strength of the housing market after last week''s strong existing home sales alleviated some of those concerns.


[R]9:45AM U.S. stocks opened mixed ahead of housing data.[/R]
U.S. stock markets opened mixed on Monday ahead of a report on new home sales. Analysts expect a rise to 995,000 from 937,000 in January. On Friday, the National Association announced better-than-expected jump in sales of existing homes. Market sentiment was supported by computer maker Dell ((DELL)) which rose 2.8% on an upgrade to buy from neutral at Goldman Sachs. Intel ((INTC)) was trading flat after Goldman Sachs cut its profit estimates. Citigroup ((C)) was in the focus on reports that the company will cut 15,000 jobs. In other corporate news, Merck ((MRK)) shares slipped 0.5% after the pharmaceutical firm said it was working with Schering-Plough on a new cholesterol lowering medicine. Schering-Plough rose 2.1%.

In merger-and-acquisition news, shares of Biosite ((BSTE)) surged 51% after Beckman Coulter ((BEC)) agreed to buy the biomedical-equipment firm for $1.55 billion, or $85 a share. Piper Jaffray downgraded Beckman to market perform, sending its shares down 7.7%. In other deal speculations, Saudi Basic Industries is considering a bid up to $12 billion for the plastics unit of General Electric ((GE)). In the first minutes of trading, the Dow Jones industrial average fell 4.17, or 0.03 %, to 12,476.84. The Dow secured its best week in four years last week, rising 370.60 points. The Standard & Poor''s 500 index was up 0.33, or 0.02%, at 1,436.44, and the Nasdaq composite index rose 2.56, or 0.10%, 2,451.49.


[R]9:00AM Wall Street to open modestly higher, helped by Dell.[/R]
U.S. stock futures predicted a slightly higher opening on Monday, lifted by gains for tech giants United Technologies and computer maker Dell Inc. on the back of brokerage upgrades. An improved profit outlook from Kimberly Clark also generated positive mood.

Shares of Dell ((DELL)) rose 3% before the opening bell after brokerage Goldman Sachs lifted its rating on the stock. Dow component United technologies ((UTX)) added 0.5% after Credit Suisse upgraded the company to outperform from neutral on hopes for the company''s quality control program. Kimberly-Clark Corp. ((KMB)) said it expects its adjusted earnings to meet or exceed the high end of its prior outlook. In corporate news, Intel ((INTC)) said it will invest $2.5 billion to build a 300-millimeter wafer fabrication facility in China. Citigroup Inc. ((C)) advanced 0.6% in the pre-open amid reports that its restructuring plan is likely to involve around 15,000 job cuts from the global banking company''s 327,000 employees and a charge against earnings of more than $1 billion.

On the deal news front, General Electric ((GE)) edged up on speculations that Saudi Basic Industries Corp. may bid up to $12 billion for the plastics unit of the company. In European M&A, Germany''s utility company E.On ((EON)) increased its bid offer for Spain''s Endesa ((ELE)) to $56.4 billion (42.3 billion euros), or 40 euros a share, up from its last offer to 37.50 euros and an initial offer in February 2006 of 27.50 euros each. This is the third time it has raised its bid for the Spanish utility in a year, seeking to control the company ahead of a liberalization of European energy markets. Shares of Endesa ((ELE)) climbed 4% in Madrid. S&P 500 futures were up 0.9 point, a tad above fair value. Dow Jones industrial average futures were up 8 points, and Nasdaq 100 futures were up 5 points.


[R]8:30AM Asian markets finished higher on Monday with Japan leading gainers.[/R]
Asian markets closed higher on Monday. Japanese Nikkei 225 finished 0.2% higher at 17,521.96. Shares of Nippon Steel rose 0.4% following reports that the company plans to expand capacity at its U.S. joint venture with Arcelor Mittal. Shares of NTT DoCoMo rose 1.4%. Shares of Isetan rose 2.2% after reports the department-store operator had agreed to a tie-up with smaller retail group Tokyo Department Store to share information systems. Mitsui Fudosan led declines among the property issues as investors took profits following gains in the sector ahead of the release of land-price data last week.

In Hong Kong, the Hang Seng Index rose 0.4% to end at 19,765.85. China Mobile Ltd. gained 1% as some investors stated that the recent decline of the stock from an all-time high had undervalued the company earnings prospects. Cnooc, China largest offshore oil producer, gained 0.9%, the highest close since Feb. 16.

Chinese stocks hit a new high after reports that the government is considering an additional $6 billion quota for overseas investors to buy local-currency securities. China Minsheng Banking Corp., the nation fastest growing bank, rose 2.1%. The Shanghai Composite Index, which tracks the bigger of China stock exchanges, added 1.6% to 3,122.81.

Australian S&P/ASX 200 gained 0.7% to finish 5,990.70, while South Korean Kospi ended 0.2% higher at 1,449.77. Singapore Straits Times Index ended 0.1% higher at 3,204.55 and Taiwan Weighted Price Index closed 0.2% higher at 7,877.82.


[R]8:00AM NY- 7:00PM Mumbai Sensex plunges on selling pressure, rupee surges.[/R]
The Sensex on BSE finished 161.61, or 1.22%, lower at 13,124.32. The market-breadth was weak as there were more than two decliners for each advancer. As 1,740 stocks declined, 843 advanced and 60 remained unchanged. Of the 30 stocks in the Sensex only four advanced, while the other 26 declined. The turnover on BSE was Rs 3,126 crore. On NSE, the turnover was Rs 6,753.15.

Economic news

The sugar industries received a boost as the government declared the creation of a buffer stock mechanism, as also export incentives for two years. There would be an export subsidy of Rs 1,350 per ton for coastal sugar mills and an export subsidy of Rs 1450 per ton for northern mills. There would be an incentive of Rs 440 per tonne for export of raw sugar.

The rupee surged sharply to near 20-month high of 43.4150/43.4250 against US dollar in late morning deals tracking sharp increase in forward dollar premia and as banks sold dollar holdings to relieve tight cash conditions in the banking system.

Arcelor Mittal announced on Sunday the company could build steel plants in two Indian states, rather than just one. Mittal signed an initial agreement with the administration of the eastern state of Jharkhand in 2005 to build a $9 billion steel plant there but progress has been slow on problems over securing an iron ore mine.

Trading highlights

Indiabulls Real Estate was the most-active stock with a turnover of Rs 261.70 crore followed by Reliance Communications and MindTree.

Advancers

IT large-cap Satyam Computers led the gainers, up 1.73% to Rs 472.2, on a volume of 5.15 lakh shares. ONGC added 1.2% to Rs 853.2 and Tata Steel advanced 0.7% to Rs 441.9. Reliance Comms gained slightly 0.2% to Rs 426.3. Reliance Communications is intending to set up an overseas initial public offering for its international communication subsidiary FLAG Telecom, and has short-listed four merchant bankers for the float.

Decliners

Tata Motors was the top-loser, down 4.51% to Rs 754, on 2.66 lakh shares traded on BSE, after dipping to a low of Rs 749.35. Maruti Udyog lost 2.48% to Rs 818.9, while Hero Honda lost 1.72% to Rs 667.9. HDFC Bank plunged 3.5% to Rs 976.

Bajaj Auto shed 0.34% to Rs 2,525. Reportedly, the company may build cars to ward off the prospective threat Rs 1 lakh car of Tata. Rs 1 lakh people car of Tata Motors will be on the roads in 2008, provided the firm gets the product right.

Other large-cap decliners included HDFC, off 2.03% to Rs 1,562 and Reliance Energy shedding 2.30% to Rs 475. Maruti and Wipro slipped 2.5% each to Rs 819 and Rs 586, respectively.

Index heavy Reliance Industries lost 0.74% to Rs 1,369, on a volume of 3.70 lakh shares. Reliance Industries informed BSE that a separate meeting of equity shareholders, secured creditors, including debenture-holders & unsecured creditors will be held on 21 April 2007, for approving the scheme of amalgamation of Indian Petrochemicals Corporation with itself.


[R]7:00AM European equities declined Monday on weak utilities, Iran tensions.[/R]
European stocks were lower on Monday morning. German Xetra Dax lost 15.2 points, or 0.2%, at 6,884.09 and in Paris, the French CAC 40 eased 16 points, or 0.2%, at 5,619.16, the U.K. FTSE 100 index declined 0.1% to 6,331.50.

Advancers

Porsche announced it planned a buyout offer fo VW. Porsche rose 3.1%. Porsche was forced to launch an offer after exercising an option to take its stake above 30%, to 31% from 27.3%.

OMV gained 2% after Citigroup boosted its price target for the refiner and reiterated a buy recommendation. UK homebuilders surged. Taylor Woodrow shares rose 15.6% while Wimpey shares increased 10.4%.

French information technology services company Atos Origin shares rose 3.3% as it said that its supervisory board has decided to explore strategic options following recent expressions of interest in the company.

Decliners

Volkswagen shed 3.4% after rival carmaker Porsche said it planned a buyout offer for VW shares. Eiffage lost 5.1% as some of the bid speculation which pushed the French construction company up by 40.3% last week faded.

E.On shares declined 0.8% as it raised its offer for Endesa of Spain. E.On said that it will exercise all legal options against Enel and Acciona, which on Friday said they were considering making a bid for Endesa.

Oil and gold

Crude oil surged to its highest in three months after Iran took 15 British servicemen captive and the United Nations imposed new sanctions on the country, heightening worries supplies from the Middle East will be disrupted. Crude oil for May delivery climbed 61 cents, or 1%, to $62.89 a barrel in after-hours electronic trading on the New York Mercantile Exchange, the highest since Dec. 26. It was at $62.77 in early trade in London. Brent crude oil for May settlement rose 73 cents, or 1.2%, to $63.91 a barrel in electronic trading on the ICE Futures exchange.

Gold gained in London, powered higher by investors buying the metal as a haven and hedge against inflation. Gold for immediate delivery in London rose $2.60, or 0.4%, to $660.00 an ounce today.

Currencies

The dollar traded at a one-week high against the euro on speculation a U.S. government report will show a rebound in new home sales in February. The dollar traded at $1.3263 per euro in early trade in London from $1.3283 in New York March 23. Against the euro, the pound was at 67.67 pence in London, from 67.72 on March 23. It also traded at $1.9598, from $1.9614. Against the Japanese currency, the dollar traded at 118.23 Japanese yen, up from 118.05.