Economic Data to Guide the Opening

Elena
01 Sep, 2005
New York City

Futures dipped in the early going, pointing to a weak opening for stocks after the rally Wednesday as oil slid after the government said it would tap the oil reserve. The ISM business confidence survey for August will be in focus Thursday. Economists see the ISM up to 57.2 from 56.6. Top retailers report August sales results today. IBM has signed a global contract with ABN AMRO worth about 1.5 billion euro over 5 years. Novartis offered $4.5 billion to gain full control of Chiron.

U.S. MARKET AVERAGES

U.S. stocks are trading down, awaiting a number of economic reports due later in the day. Retailers and automakers are expected to release their sales reports for August. Data on jobless claims, personal income and the manufacturing index are also in the focus.

Before the close of the Wednesday trading session stocks gained ground as crude-oil prices decreased and traders centered their attention on heavy-equipment companies and homebuilders like Caterpillar Inc. and D.R. Horton Inc.

Costco Wholesale posted a 9% growth in comparable August sales. Haggar Corp. said it has agreed to be purchased by Infinity Associates, Perseus and Symphony Holdings for $212 million.

IBM has signed a global contract with Dutch global bank ABN AMRO worth about 1.5 billion euro over 5 years.

Novartis, Swiss pharmaceutical company, offered $4.5 billion to gain full control of U.S. vaccines maker Chiron. Novartis already owns just over 42% of Chiron.

American Eagle Outfitters Inc. reported 11.8% increase in its August same-store sales and backed its 3Q earnings guidance. Whole Foods Market Inc. announced $5 to $6 million sales growth in 4Q due to Hurricane Katrina American Eagle Outfitters Inc. reported 11.8% increase in its August same-store sales and backed its 3Q earnings guidance. Whole Foods Market Inc. announced $5 to $6 million sales growth in 4Q due to Hurricane Katrina.

Del Monte Foods Co. is expected to report earnings of 5 cents a share before the bell Thursday. Also expected to report are Ciena Corp., Corinthian Colleges Inc., JDS Uniphase Corp. and H&R Block Inc..

ECONOMIC NEWS

Personal income and spending for July readings are due on Thursday. Economists forecast personal incomes climbed 0.5% in July after a similar rise in the previous month. Personal spending is expected to advance to 1% after adding 0.8%.

The August data on manufacturing from the Institute for Supply Management is also scheduled today with expectation of the reading to advance to 57 vs. 56.6.

Truck and auto sales for August are forecasted to drop vs. the previous month. Economists expect car and light truck sales dropping to an annual rate of about 14.1 million from July's 17 million, fueled by automakers' offer of employee discounts.

Top retailers report August sales results Thursday. Same-store sales likely will rise about 4 percent collectively, estimates Mike Niemira, chief economist at International Council of Shopping Centers. That will be slightly ahead of the 3.8 percent same-store sales gain the retailers have posted so far this year.

The Labor Department is due to release jobless claims data for the week ended Aug. 27 at 8:30 a.m. Economists expect claims to have been unchanged at 315,000 in the latest week.

The Commerce Department is due to release the construction spending report for July at 10 a.m. Economists forecast spending up 0.5 percent for July.

INTERNATIONAL MARKET NEWS

Tokyo hit a four-year closing high, following U.S. news that government would tap into oil reserves and after results from a poll implied the ruling coalition would win this month's general election. Tokyo's Nikkei 225 index added 0.8%, to 12,506.

Elsewhere in the Asian region markets advanced on oil’s retreat below $70 a barrel. Hong Kong's Hang Seng Index ended up 1.6% to 15,143 and Singapore's Straits Times Index gained 0.9% to 2,295. Australia's All-Ordinaries Index added 1.1% to 4.460, while Seoul's Composite Index climbed 2.1% to 1,106.

European markets are trading in the positive territory at mid-day, making solid gains on the back of automakers and airlines shares which advanced on declining oil prices below $70 a barrel, as well as on upbeat earnings news. Auto makers Volkswagen, BMW, Daimler Chrysler and airlines Deutsche Lufthansa and Air France-KLM went higher. Drug maker Novartis and insurance giant Swiss Re were also in the focus. The German DAX 30 added 1.6%, the French CAC 40 gained 0.6%, and London’s FTSE 100 rose 0.4%.

ENERGY, METALS AND CURRENCIES MARKETS

Crude-oil hovered over $69 a barrel after the U.S. government released oil from the Strategic Petroleum Reserves in attempt to make up for losses caused by Katrina, but gasoline prices surged nationwide as the extent of damages became apparent with key refineries and pipelines out of order. U.S. light sweet crude added 21 cents to $69.15 a barrel, below the record-high of $70.85. Gasoline futures on the Nymex jumped 12.47 cents to $2.38 a gallon. London Brent gained 36 cents to $67.88 a barrel.

Gold in London was traded at $435.75 per troy ounce, up from $433.25.

The U.S. dollar fell against the euro ahead of European Central Bank interest rate decision and reflecting consequences of Katrina’s devastation. The euro was quoted at $1.2378, up from $1.2341. The greenback bought 110.63 yen, up from 110.62.

EARNINGS NEWS

Costco, warehouse facilities operator, posted 4Q net sales of $16.37 billion, an increase of 10 % from $14.83 billion in the comparable period last year. For the full fiscal year ended August 28, 2005, the company posted net sales of $51.87 billion, a rise of 10 % from $47.15 billion during the same period last year.

NCI Building Systems, manufacturer of metal products, reported 3Q net income of 70 cents per share, up vs. 41 cents per share for the same period last year. Sales for the current quarter were $292.7 million and marked a slight decline vs. $295.8 million in the same quarter last year.Fiscal 3Q results for 2004 were influenced by a charge for debt refinancing costs of $9.9 million ($5.8 million, or $0.28 per diluted share, after tax).

Greif, industrial packaging company, reported 3Q net income of$1.71 per share up vs. 51 cents per share for the year-ago period. Net sales advanced 4 %(2 % aside from the impact of foreign currency translation) to $609.0 million for the 3Q of 2005 from $584.8 million for the same quarter of 2004. Greif 3Q results for the current year were positively influenced by higher timberland profits and lower restructuring charges compared to 3Q of 2004.

Ciena, the network specialist, posted 3Q net loss of 9 cents a share, up vs. a net loss of 25 cents a share for the same time a year ago on 46.2% revenue growth over the comparable period last year. Ciena reduced its long-term debt with the purchase of $41.2 million par value of its $690 million outstanding 3.75% convertible notes due in 2008 for $36.9 million.

SkillSoft , provider of content resources for integrated enterprise learning, reported 2Q of fiscal 2006 net income of 22 cents a share, up vs. a net income of 1 cent per share for the same period last year. 2Q net income incorporates $19.5 million, which come from the final settlement with the Company's insurance carriers concerning the 2002 securities class action lawsuit and related legal fees.

CORPORATE NEWS

ISwiss pharmaceutical giant Novartis AG proposed $4.5 billion to gain total control over Chiron Corp., U.S. vaccines maker. Novartis, which already owns a little more than 42% of Chiron, submitted a proposal to Chiron to buy the rest of the company for $40 a share in cash. Chiron shares closed Wednesday at $36.44.

SBC Communications Inc., which has been debating what to do with the AT&T Corp. name after acquiring the company, is inclined at present to call itself by the name of its former parent. As a final decision hasn't been reached, SBC executives still could decide to keep the SBC name or think of another name.

Sun Microsystems Inc. said it completed its acquisition of StorageTek following approval of StorageTek stockholders.