Stocks Tumble as Oil Hovers Near $71

Elena
30 Aug, 2005
New York City

Energy stocks are higher, while the housing sector has recently given up most of its earlier gains. The airline and retail sectors top the list of decliners for the morning session.Valero Energy and Chesapeake Energy hit 52-week highs on the surging oil.

U.S. MARKET AVERAGES

Stock futures are still trading in the negative territory as crude-oil prices increased $3 to $71 a barrel. Investors are concerned that tight oil supplies could be further constraint after damages had been assessed. According to estimates, It killed at least 55 people and caused insured losses of approximately $26 billion.
Stocks failed to be supported by surprisingly high consumer-confidence numbers for August.

ECONOMIC NEWS

Consumer confidence jumped unexpectedly to 105.6 in August, the Conference Board said, from a revised 103.6 in July. That surprised many economists, who were expecting confidence to fall amid the jump in oil prices over the last month.

A separate report also showed that factory orders fell 1.9 percent in July, a smaller-than-expected decline.

MOVERS AND SHAKERS

The advance in oil prices pushed energy stocks up more than 2.4%. Valero Energy and Chesapeake Energy are among the gainers. McDermott rose more than 25% on news that it has agreed to terms of a revised settlement agreement in the Chapter 11 bankruptcy proceedings involving The Babcock & Wilcox Co. Exxon Mobil Corp.rose 45 cents to $58.87; Chevron Corp. rose 75 cents to $60.26; ConocoPhillips rose 99 cents to $64.06.

Housing stocks reversed most of their early advances and are now enjoying only partial gains.

The airline and retail sectors are among the biggest decliners of the day, with losses of 3.1% and 2.2% respectively. AMR Corp. fell 56 cents to $12.84; Northwest Airlines Corp. fell 19 cents to $5 and Delta Air Lines fell 12 cents to $1.15. Wal-Mart reached a new 52-week low on concerns about the damage to its stores from Hurricane Katrina.

Insurance stocks were also among the decliners on hurricane damages assessment. Hartford Financial Services Group fell 49 cents to $72.85; Allstate Corp. fell 65 cents to $56.53 and MetLife Inc. fell 68 cents to $48.44.

The gaming sector fell 1.6% as casino operators assessed the damage to their Gulf Coast properties. Pinnacle Entertainment Inc. fell 51 cents to $21.56. Isle of Capri Casinos Inc. fell 44 cents to $23.

In company news

Boeing fell 80 cents to $66.78 after labor leaders warned of a possible strike at the Chicago plane manufacturer. Boeing submitted a revised offer to the union late Monday that increases payments to workers but that union leaders said did not do enough to address key issues.

Abercrombie & Fitch Co. fell $3.58 to $54.15. The company reaffirmed its full-year guidance for income between $3.10 and $3.30 per share on projected sales of about $2.7 billion.

Ford Motor Co. fell 5 cents to $9.72 after announcing plans to fire 400 U.S. employees by the end of 2005 as part of a restructuring plan.

Sprint Nextel Corp., the nation's third-largest wireless outfit, fell 36 cents to $25.22 after it confirmed it will purchase affiliates Gulf Coast Wireless and IWO Holdings Inc.

ECONOMIC NEWS
Consumer confidence jumped unexpectedly to 105.6 in August, the Conference Board said, from a revised 103.6 in July. That surprised many economists, who were expecting confidence to fall amid the jump in oil prices over the last month.

A separate report also showed that factory orders fell 1.9 percent in July, a smaller-than-expected decline.


INTERNATIONAL MARKET NEWS

Asian-Pacific benchmarks finished generally higher, boosted by easing oil prices and recovered U.S. markets with rallying steel, shipping and bank shares. The Nikkei rose 1.16% despite some disappointing economic news, lifted by exporter issues on the back of retreating oil prices to $67.97 a barrel. Among the other regional markets, Hong Kong’s Hang Seng advanced 0.6%, South Korea’s Kospi added 0.9%, while China stocks lost 0.7% on blue chips sell-off.

European markets closed mixed after trading higher throughout the session as crude-oil prices fell off record highs and as South African insurance company Old Mutual announced having bid talks with Swedish insurer Skandia Forsakring. Crude-oil stayed above $69 a barrel sending BP up 2.05%. The German DAX 30 fell 0.11%, the French CAC 40 lost 0.43%, while the U.K.’s FTSE 100 gained 0.5%.The euro slipped 0.1% to $1.2210.

ENERGY, METALS AND CURRENCIES MARKETS

Oil surged to all-time highs of nearly $71 a barrel on supply concerns amid uncertainty of the extent of damages caused by Hurricane Katrina to U.S. oil facilities. Light sweet crude for October delivery climbed $3.65 to $70.85 a barrel. London Brent gained $3.23 to trade at $68.10.

Gold declined in European trading. In London gold closed at $429.80 per ounce, down from $438.60. In Hong Kong the precious metal lost $3.40 to close at $436.35. Silver closed at $6.68, down from $6.78.

The dollar gained against the other major currencies in European trading. The euro was quoted at $1.2199, down from $1.2226. The greenback bought 111.46 yen, up from 110.47. The British pound traded at $1.7854, down from $1.7956.

EARNINGS NEWS

Maidenform, intimate apparel maker, announced it reversed to a 2Q profit of $2.6 million versus a year-ago loss of $2.4 million. The company posted a 58 cents loss per share, down from a loss of 23 cents for the same period last year because of preferred stock dividends and changes in redemption value related to its July 22 initial public offering. Sales for the quarter rose to $102.3 million from $50.1 million in the year-ago period.

Zale, jewelry retailer, posted 4Q earnings of 8 cents a share, down vs. profit of 13 cents a share in the year-ago period on revenue growth, matching analysts’ forecasts. The company has approved the buyback of up to $100 million worth of its common stock. It also expects that its adoption of new accounting standards as of August 1 will cut down earnings by about 10 cents a share in fiscal 2006.

Engineered Support Systems, military equipment manufacturer, posted 3Q net income of 52 cents a share, up from 49 cents a share in the same period last year on revenue growth, beating analysts forecasts of 50 cents a share. The company reaffirmed its outlook for earnings from continuing operations in 2005 of $2 to $2.03 a share and revenue of $1.02 billion to $1.05 billion.

CNOOC, China's offshore oil producer, reported net profit in the first half of 2005 jumped 68.6 percent on year to 11.83 billion yuan ($1.46 billion), spurred by high oil prices. CNOOC's net production offshore China advanced 20.1 % to 383,583 barrels of oil equivalent. CNOOC is due to hold a teleconference later Tuesday give more information on its results.

CRH, Irish constructions material company, posted first-half profit advanced to 55.7 euro cents a share, up vs. 47.4 euro cents a share in the year-ago period on 13% sales growth and an operating profit rise of 20%. The group lifted its dividend for the period by 17% to 11.25 euro cents a share.

CORPORATE NEWS

Sprint Nextel, wireless company, is about to buy two of its small wireless affiliates for a total price of approximately $700 million. The third largest U.S. wireless company was near to a purchase agreement with IWO Holdings Inc, wireless operator with 237,000 subscribers, for about $400 million. It was also near a $288 million acquisition of Gulf Coast Wireless, a Louisiana-based company with some 93,000 subscribers.

Internet Gold, internet access service company, said that MSN-Israel, the subsidiary it possesses with Microsoft Corporation, has acquired 51% of the rights in getprice.co.il - one of Israel's most popular price comparison sites. Together with GetPrice, MSN-Israel intends to establish a new price comparison site called MSN-Compare. MSN-Compare will work in parallel to GetPrice, but will target users of other MSN-Israel services.

Starwin Media Holdings announced that they have reached an agreement to acquire majority control of Strategic Media International Limited, a Hong Kong corporation - parent company of three corporations traded on the Hong Kong Stock Exchange and the other publicly traded on the Shenzhen Stock Exchange. These four publicly traded corporations are the holding corporations of the premier leading media corporation in the Asia Pacific region.