U.S. Stocks Lackluster at Close, Oil Drops

123jump.com Staff
09 Apr, 2007
New York City

U.S. stocks advanced on speculation that private equity buyout will continue to drive stocks higher. The Labor Department said 180,000 new jobs were created in March and the jobless rate fell to 4.4%. Railroad stocks rose on Berkshire stake news. Burlington Northern rose 7%, Union Pacific added 4.9%, Norfolk Southern gained 4%, and CSX moved 2% higher. Vonage Holdings declined 9.5%. American Home Mortgage Investment plunged 16%, while AMD rose 4.5%. Oil and gold fell.

[R]4:30PM NY; 10:30PM Frankfurt; 2:00AM Mumbai - GLOBAL MARKETS[/R]

Yield on 10-year bond closed at 4.747% and the 30-year bond closed at 4.919%.

Gold lost $2.500 to close at $676.900 a troy ounce, silver increased 7 cents to end at $13.810 a troy ounce and copper declined $88.000 to close at $7387.000 per metric ton.

Oil lost $2.770 to close at $61.510 a barrel and heating oil declined 4.520 cents to finish at 181.570 cents a gallon. Natural gas decreased 6.1 cents to close at $7.546 per MMBtu. Gasoline went down 3.180 cents to end at 209.700 cents a gallon.

Asian markets ended higher as Japanese exporters got a boost from U.S. economic data and the dollar''s rise against the yen. Markets in Hong Kong, Australia, New Zealand and the Philippines were closed for holidays. The advancers were led by India with a gain of 2.50%, Japan with an increase of 1.48% and Singapore with an advance of 1.62%. There were no decliners.

European markets were closed for Easter holiday.

Latin America markets finished higher pushed in part by investor enthusiasm over U.S. payroll data. Markets had been closed during the Easter holiday. The advancers were led by Mexico with an increase of 1.09%, Brazil with an advance of 0.81% and Argentina with a gain of 0.01%. There were no decliners. Canada gained 0.36% led by strength in the material and industrial groups.

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

Advanced Micro Devices ((AMD)) said it expects its first-quarter revenue to miss Wall Street expectations, weighed by lower prices and slumping sales, and announced plans to restructure its business model. The company pegged its quarterly revenue at about $1.23 billion, below analysts’ consensus view of $1.55 billion and shy of its prior outlook for $1.6 billion to $1.7 billion in sales which it warned in March it would likely not meet. Advanced Micro Devices also said it plans to restructure its business model to increase efficiencies and lower costs. Despite the sales projection, shares of Advanced Micro Devices climbed 5.1%.

Burlington Northern Santa Fe Corp. ((BNI)) shares jumped 7.3% despite warning of a hefty first-quarter charge, due to positive analyst notes on the railroad operator''s continuing operations and news of a Berkshire Hathaway Inc. investment. The company said it expects to record a charge of $80 million, or 14 cents per share, against first-quarter earnings because of environmental cleanup and technology costs.

Calamos Asset Management ((CLMS)) was upgraded to buy from neutral at Merrill Lynch, citing valuation. Shares of the company climbed 5.6%.

H&E Equipment Services ((HEES)), which rents and sells industrial machinery, shares surged 7.1% on expectations that its results will be boosted by a strong demand for its cranes and its presence in the Gulf Coast region. Bank of America''s Seth R. Weber boosted his rating for H&E to ""Buy"" from ""Neutral,"" noting the stock''s 15% decline since the start of the year. Weber said H&E''s crane segment accounts for an estimated 30 percent of its revenue.

Memory Pharmaceuticals Corp. ((MEMY)), drug developer, said it completed enrollment in its midstage study on MEM 1003, aimed at treating Alzheimer''s disease. The Phase IIa clinical trial involves 180 people. Results from the study are expected in the fourth quarter. Shares of the company jumped 41.7%.

Mirant Corp. ((MIR)) said it was considering a possible sale and other moves to boost the power provider''s value for shareholders. Its shares rose 6.9%. The energy company is currently selling its business in the Philippines, six U.S. natural gas-fired plants and its Caribbean operations. The transactions are expected to close by the year''s end.

NetLogic Microsystems Inc. ((NETL)), chip maker, raised its first-quarter revenue outlook slightly ahead of Wall Street''s view. The company sees quarterly sales climbing 11% to 11.5% from the $21 million in sales booked in the fourth quarter. That implies first-quarter sales of $23.3 million to $23.4 million. It originally anticipated revenue rising 8% to 10%. Shares climbed 8.8%.

Schnitzer Steel Industries Inc. ((SCHN)), steel recycler, posted a 35% increase in second-quarter profit as sales jumped by half on stronger volumes in its metals recycling segment. For the quarter net income rose to $28.4 million, or 93 cents per share, compared with $21.1 million, or 68 cents per share. Revenue grew 50% to $604.4 million, versus $403.3 million in the same period a year earlier.

SteelCloud Inc. ((SCLD)) shares surged 16.5%, after the network appliance and server marker said it won a disputed $8 million contract from the U.S. Postal Service. The U.S. Postal Service Engineering department initially selected SteelCloud in December 2006 for the multimillion dollar-contract to provide specialized servers. The contract could be worth more than $10 million, if the U.S. Postal Service exercises an option to buy more servers.

Stratagene Corp. ((STGN)) announced that it agreed to be acquired by Agilent Technologies for $10.94 per share, or roughly $245 million. Stratagene, which has 400 employees, will operate as a division within Santa Clara, Calif.-based Agilent''s life sciences solutions unit. Shares jumped 25.7%.

USA Technologies ((USAT)) said that Coke bottler Coca-Cola Bottling Co. United Inc. is installing cashless payment technology in its vending machines and credit card network MasterCard Inc. USA Technologies develops cashless payment systems. The company''s shares jumped 18.8% in wake of the announcement.

WD-40 ((WDFC)) said that its second-quarter earnings climbed 24% to $8.94 million, or 52 cents per share, compared with $7.23 million, or 43 cents per share, during the year-ago period. The company posted revenue of $79.3 million against $71.5 million a year ago. WD-40 said it has authorized a $35 million share buyback that expires in March 2008 and still expects fiscal 2007 per-share earnings of $1.70 to $1.85 on revenue of $307 million to $324 million. The outlook reflects the impact of the company''s move to open a direct operation in China. The results from the first year of direct operations in China are expected to reduce 2007 net income by about $1 million, or 6 cents per share. Shares jumped 17.7%.

World Airways ((WLDA.PK)) has agreed to be acquired by Global Aero Logistics, the parent company of ATA Airlines, for $315 million, or $12.50 per share. Shares of the company climbed 5.7%.

American Home Mortgage Investment Corp. ((AHM)) shares fell 15.9% after the company cut its first-quarter and full-year profit forecast by more than 25% after it was being hit by problems in the secondary market for home loans and mortgage-backed securities.

Ariad Pharmaceuticals Inc. ((ARIA)) said that enrollment of patients into the pivotal late-stage trial for its experimental cancer drug may be delayed until the third quarter. Ariad shares slipped 12.6%. Patient enrollment for the study of the drug, AP23573, for metastatic sarcoma, which will provide the data that Ariad expects to use to seek U.S. approval of the medicine, had been expected to begin in the current quarter, the company said.

Avocent Corp. ((AVCT)), which makes switching systems for network servers, shares dropped 8.1% after the company released first-quarter sales guidance below Wall Street''s expectations. Avocent said it expected first-quarter revenue to be between $132 million and $135 million.

Conexant Systems ((CNXT)), which makes chips used in communications devices, said second-quarter revenue fell 18% in the fiscal second quarter, due to lower-than-expected sales from several products. Second-quarter revenue totaled $200 million, down from $242.6 million the year prior. Shares of the company fell 7.3%.

Daktronics Inc. ((DAKT)) lowered its fourth-quarter outlook and the company now expects earnings of 6 cents to 10 cents per share on revenue of $101 million to $105 million. The supplier of large screen video displays had previously forecast per-share earnings of 12 cents to 19 cents on revenue of $106 million to $118 million. Daktronics said it made the revision after it was unable to book enough orders early in the quarter to generate sales. Shares fell 21%.

Sourcefire ((FIRE)), network security and information management system developer, said it expects to post a first-quarter 2007 loss. The company is projecting a loss of $2.2 million to $2.6 million. Excluding certain expenses, the company expects gross profit of $7.8 million to $8.2 million, up from $6.5 million for the first quarter 2006. Revenue for the quarter is expected to range from $10.1 million to $10.5 million, up from $8.5 million in the year ago period. Shares fell 28.5%.

[R]11:30AM U.S. markets lost direction. AMD gained despite lowered revenue forecast.[/R]
U.S. stocks traded mixed on Monday morning, reflecting cautiousness ahead of Q1 earnings season and modest support provided by deal news and a delayed reaction to Friday''s robust jobs report. Dow Chemical ((DOW)) jumped 5% on speculations that the company is likely to become a target of $50 billion. Further in deal news, Citigroup ((C)) was little changed after saying it will buy Taiwan''s Bank of Overseas Chinese for about $426 million in cash. Among other Dow components, Intel Corp. ((INTC)) and Dupont ((DD)) offered support, rising 2.8% and 0.5% respectively. Tech stocks traded mixed. Shares of Advanced Micro Devices ((AMD)) rose 4% although it lowered its Q1 revenue forecast and said it would aim to cut $500 million in capital spending in 2007. Semiconductor equipment makers Applied Materials Inc.((AMAT)) and KLA Tencor Corp. ((KLAC)) declined 0.2% and 1.3%, respectively. In late morning trading, the Dow Jones industrial average rose 7.07, or 0.06%, to 12,567.27. The Standard & Poor''s 500 index was up 1.37, or 0.09%, at 1,445.13, and the Nasdaq composite index rose 2.22, or 0.09%, to 2,473.56

[R]11:00AM U.S. markets lost direction. Transportation stocks rose.[/R]
U.S. stock markets failed to sustain the initial strength and turned to lackluster trading. Despite the pullback by the major averages, the transportation sector moved notably higher, led by Burlington Northern ((BNI)). The railroad company jumped 7.1% on the heels of news that Warren Buffett''s Berkshire Hathaway became the biggest shareholder, as he bought a 10.9% stake in the railroad company. Berkshire ((BRK-A)) had accumulated 39 million shares of the second- largest U.S. railroad, paying between $81.18 and $81.80 for the final 1.6 million. Some chemical stocks also showed strength, with shares of Dow Chemical ((DOW)) up 5%. At the same time, airline stocks came under pressure although the price of oil continued to fall after showing a notable decline last week. Some weakness was also visible in the semiconductor sector. Maxim Integrated Products ((MXIM)) and Micron Technology ((MU)) turned in two of the sector''s worst performances, falling 1.1% and 2.1% respectively. On the side of the gainers, Advance Micro Devices ((AMD)) rose 4.7% even though the chip maker warned of weaker-than-expected Q1 revenues.


[R]9:45AM U.S. stocks opened higher, boosted by deal talk and jobs data.[/R]
U.S. stock markets saw a positive start of Monday trading session, lifted by news that Dow Chemical is the target of $50 billion leveraged buyout, as well as easing economic growth concerns on the back of robust jobs report. The advance added to last week''s gains, which helped the major indexes return to positive territory for the year. In corporate news, Dow Chemical ((DOW)) was sent 6.6% higher by a report, saying that the break-up bid for Dow Chemical would be between $52 and $58 a share, valuing the company at a minimum of $50 billion. In other deal news, Dow component Citigroup ((C)) lost 0.1% after it agreed to buy Taiwan''s Bank of Overseas Chinese for about $426 million in cash.

Among companies in focus, American Home Mortgage ((AHM)) tumbled 16% after the company cut its earnings outlook by more than 25% and slashed its quarterly dividend by about 38%. As a result, the company''s stock was downgraded both at Citigroup and Lehman Bros. Shares of Ariad Pharmaceuticals ((ARIA)) slipped 12% after the company said that it may delay patient enrollment for its Phase III trial for cancer drug AP23573 to Q3 from Q2. Sanmina-SCI shares ((SANM)) dropped 4.2% after the electronics contract manufacturer warned the Q2 revenue would miss its previous estimate. In the first hour of trading, the Dow Jones industrial average rose 13.89, or 0.11%, to 12,574.09. The Standard & Poor''s 500 index was up 1.71, or 0.12%, at 1,445.47, and the Nasdaq composite index added 3.02, or 0.12%, to 2,474.36. Bonds regained some traction after falling in a shortened session Friday on the employment report. The yield on the benchmark 10-year Treasury note fell Monday to 4.73% from 4.75%.


[R]9:00AM U.S. stock futures pointed to a higher opening, helped by jobs data.[/R]
Wall Street looked poised for higher reopening after the three-day Easter holiday. U.S. stock futures rallied, boosted by stronger-than-expected jobs data in March and a report that Dow Chemical Co. is the target of a $50 billion buyout offer. On Monday, investors had their first chance to react to a Labor Department report which said Friday that nonfarm payrolls expanded by 180,000 in March, while the unemployment rate slipped to 4.4% from 4.5% in February. Economists had been expecting jobs growth of 168,000 and a jobless rate of 4.5%, on average. The jobs data raised some hope that growth was stronger-than-expected during the quarter, soothing concerns of economic slowdown before the Q1 earnings season. On the other hand, the robust jobs data significantly reduced the odds of an interest rate cut in the near future.

Dow Chemical ((DOW)) was in focus on speculations that a consortium of Middle Eastern investors and American buyout firms will launch a $50 billion bid to acquire the company. Kohlberg Kravis Roberts & Co., one of the biggest U.S. private equity firms is said to be one of the bidders. The stock rose 8.4% in the pre-open trading. In corporate news, Citigroup ((C)) said it agreed to buy Taiwan''s Bank of Overseas Chinese for $426 million. The deal is expected to complete in the second half of 2007. Company''s stock gained nearly 1% in the-open.

Among companies driven by analyst comments, American Home Mortgage ((AHM)) tumbled 19.3% after the company cut its earnings outlook by more than 25% and slashed its quarterly dividend by about 38%. Consequently, Lehman Bros. downgraded the stock to equal weight from overweight, and cut its price target to $20 from $45. Citigroup cut its rating to sell from hold and its price target to $19 from $26. Lehman Bros. downgraded Murphy Oil ((MUR)) to equal weight from overweight, citing valuation. Sanmina-SCI shares ((SANM)) dropped nearly 3% in pre-market trading after the electronics contract manufacturer warned the Q2 revenue would miss its previous estimate due to weak demand in the communications market. S&P 500 futures climbed 5.10 points to 1,457.80 and Nasdaq 100 futures hiked up 7.75 points to 1,836.00. Dow industrials futures ran up 40 points to 12,662.


[R]8:15AM Dow Chemical soars on bid speculations of $50 B.[/R]
Dow Chemical ((DOW)) jumped 10% in pre-market trading, driven by news that it could be target of the biggest leveraged buyout of all time. A consortium of Middle Eastern investors and American buyout companies is reportedly preparing a bid offer valued at $50 billion. Half of the capital is being provided by investors from Saudi Arabia, Kuwait, Bahrain, Qatar, UAE and Oman. A number of U.S. buyout firms including Kohlberg Kravis Roberts are responsible for contributing the rest of the financial resources. According to reports, a financing package has been put in place for a break-up bid of between $52 to $58 a share and an approach valuing the company at least $50 billion could come by the end of this week.


[R]8:00AM NY-7:PM Mumbai Sensex zooms more than 300 points on a broad rally.[/R]
The Sensex on BSE finished 321.66 points, or 2.50%, higher at 13,177.74. The market-breadth was very strong as there were more than three gainers for each decliner. For 1,915 stocks that advanced, 613 stocks declined, and only 71 stocks which remained unchanged. Of the 30 stocks in the Sensex, only one stock declined. The turnover on BSE was Rs 3,075 crore, slightly lower than Rs 3,182.14 crore on Thursday. On NSE, the turnover was Rs 6,286.86 crore, lower than Rs 6946.16 crore on Thursday.

Economic news

Prime Minister Manmohan Singh stated on Monday that Assam remains top priority for the UPA government and projects such as the gas cracker will bring development opportunities for the state. Mr. Singh demanded that project be put on fast track.

Trading highlights

Tata Steel was the most-active stock with a turnover of Rs 133.50 crore followed by MindTree and Indiabulls Real Estate.

Advancers

Steel stocks rose on reports that cold rolled steel makers are set to raise prices between Rs 4,200 and Rs 6,500 a ton, next week, a steep rise from the current price between Rs 32,000 and Rs 33,000 a ton. Tata Steel led the advancers, soaring 6% to Rs 493. ITC surged 5% to Rs 155. Hindustan Lever gained 2% to Rs 204.

Banking shares edged higher under the belief that an increase in lending rates will protect their profit margins. State Bank of India added 4.3% to Rs 988.7, on lifting the benchmark prime lending rate by 50 basis points to 12.75% per annum with effect from Monday (9 April).

Maruti and Reliance Communications rallied around 4.5% each to Rs 790 and Rs 416, respectively. Last week, Maruti reported record March month sales. Reliance Communications advanced after adding 1.2 million new wireless subscribers in March 2007. Reliance Communications said its average revenue per user was expected to rise by 12%, as a result of the re-verification exercise, making it one of the top-three players in India in terms of average revenue per user.

Cement stocks advanced for the second day in a row today, as cement makers refused to reduce cement prices despite the government last week banning import duties on the product. Grasim gained 3.88% to Rs 2,195, ACC rose 2.4% to Rs 739.90 and Gujarat Ambuja Cements added 2.4% to Rs 108.50.

Hindalco, BHEL, ONGC gained nearly 3% each at Rs 136, Rs 2,425, respectively. Other included Reliance Industries, Bharti Airtel, TCS and Wipro surging 2% each to Rs 1,384, Rs 761, Rs 1,217 and Rs 562, respectively. Infosys rallied 2.5% to Rs 2,044.

Decliners

Bajaj Auto was the sole decliner among the index stocks today, off 0.5% at Rs 2,297.


[R]7:00AM Asian markets finished higher on Monday with Japan upbeat on exporters.[/R]
Asian markets finished higher on Monday. Japan''s benchmark Nikkei 225 index rose 258.98 points, or 1.48%, to finish at 17,743.76. Upbeat figures showing U.S. non-farm payroll on Friday cheered optimism about the U.S. economy, the biggest export market for Japan. The weakness of the yen also buoyed sentiment. Advancers included Advantest, climbing 4.17% and Toyota Motor rising 1.89%. Machinery stocks also advanced with Komatsu rising 4.26%.

The Korea Composite Stock Price Index in South Korea gained 16.91 points, or 1.1%, to 1,501.06, in the third record close in four sessions. Hyundai Engineering & Construction gained 3%, Doosan Heavy Industries & Construction rose 3.8% on rising order news and Doosan Infracore rallied 8.4% on increasing demand for excavators in China.

In China, banks bounced back, after declining Friday on the latest reserve requirement ratio increase, supporting the country key stock indexes to a record finish for the sixth straight session. The benchmark Shanghai Composite Index gained 2.3% to 3,398.95 and the Shenzhen Composite Index added 2.1% to 907.82.