Oil and Gas Turn Higher

Elena
01 Sep, 2005
New York City

Stocks trade lower on economic concerns.The consumer spending for July rose 1%. Personal incomes grew 0.3%. Retailers posted better-than-expected sales reports.Wal-Mart's sales increased by 3.3% for August.Indian markets finished at an all-time high, rising 0.9% on software stocks.

U.S. MARKET AVERAGES

In the first trading hour stock markets declined, affected by growing economic concerns after the Commerce Department released data, indicating the consumer spending for July exceeded personal incomes for the same month which happens for the second time during the last 46 years. The 1% growth in consumer spending contradicts the lower-than-expected personal incomes rise of only 0.3% and the disparity between them largely falls on the back of high gasoline prices as crude-oil reached record peaks. On Thursday crude futures are stable as oil production in the Gulf Coast is coming back in the play.Light sweet crude traded up 6 cents at $69 a barrel.

Retailers, led by Wal-Mart, Target Corp. and Costco Corp. posted better-than-expected sales for August.Wal-Mart Stores Inc. reported a 3.3 % increase in sales for August, just missing Wall Street's 3.4% forecast. The gains, however, were positive considering the nation's record gasoline prices, which hit Wal-Mart's lower-income customers disproportionately. Dow component Wal-Mart edged 4 cents higher to $45.

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.

ECONOMIC NEWS


The Department of Commerce released the report which indicates that personal spending in July has significantly increased to 1% compared with 0.8% in June matching economists’ expectations.

The report also showed 0.3% increase in personal income for July after an unrevised increase of 0.5% in June. Economists had expected growth of 0.6%.

The Commerce Dept. also said that prices rose 0.3 percent in July after coming in unchanged in the two previous months. Excluding food and energy, prices rose by a more modest 0.1 percent in July after coming in unchanged in June.

The U.S. Department of Labor revealed Thursday that initial jobless claims came in at 320,000 for the week ended on August 27, an advance of 3,000 from the previous week's revised total.

The 4-week moving average for initial claims, which flattens out the week-to-week volatility, rose 1,250 to 316,750. Continuing claims for the week

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.

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.

Major auto makers report August sales throughout the day. Analysts anticipate August's seasonally adjusted annual rate, or SAAR, for U.S. auto sales to fall to a rate in the 16.7 million to 16.8 million vehicle range, which is in line with the same period in 2004.

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.

Indian markets finished at an all-time high Thursday, fueled by software stocks. The 30-share benchmark index of the Bombay Stock Exchange, the Sensex, closed up 7876.15, adding 0.9% vs. the closing level Wednesday. The previous all-time high was hit on August 17th when the Sensex ended at 7859.53.

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

The Hain Celestial Group, natural and organic food and personal care products company, posted a 4Q record $620.0 million net sales, a 14% rise against last year sales of $544.1 million. 4Q net income, including charges of 27 cents per share, were 7 cents per share, with net income excluding charges at 20 cents per share, up from 14 cents per share in the year-ago period.The Hain Celestial Group announced net sales of $151.3 million for 4Q, a 10.2% rise from $137.4 million in the last year period.

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

TJX Cos., off-price retailer, said same-store sales advanced 2% in August, while total sales for the four weeks ended August 27 climbed 8% to $1.2 billion versus $1.1 billion in the comparable period last year. Comparable sales performance met the company’s estimates.

Family Dollar Stores Inc., discount retailer, announced that August same-store sales climbed 1.8%, while total sales for the four weeks ended Aug. 27 rose 9.4%. The company reiterated its guidance for 4Q earnings of about 17 cents a share. Several hundred stores of the company were hit by Hurricane Katrina, but it is likely that only 50 - 60 stores might be closed for an extended period.

Gap Inc. reported a 9% drop in same-store sales in August. Total sales for the four weeks ended August 27 declined 5% to $1.17 billion compared with $1.23 billion last year. The company said that August sales results were disappointing and merchandise margins were slightly below last year’s.

Kohl's Corp. said Thursday that same-store sales in August climbed 4.6%, while total sales for the four weeks ended Aug. 27 added 14% to $1 billion. The retailer backed its 3Q forecast for earnings of 43 - 46 cents a share.

Del Monte Foods, provider of assorted food and pet products, posted 1Q earnings from continuing operations of 8 cents a share, up vs. 4 cents a share a year ago. Sales added 7.2% in the latest quarter to $671.1 million. Analysts expectations were centered around a profit of 5 cents a share in the July period on sales of $642.3 million. Sales increase was mainly attributed to higher pricing, while earnings were bolstered by lower integration costs, reduced interest expenses, lower commodity costs, and volume increase for new and existing company’s products. Del Monte backed its target for earnings of 75 to 80 cents a share in 2006 with sale increase of 1% - 3% vs. $3.18 billion in 2005. The company expects earnings of 16 to 21 cents a share for the second quarter, while analysts expect a profit of 76 cents a share.

The Gymboree Corp. said same-store sales in August dropped 1%. Total sales added 3% to $44.1 million. The company still sees 3Q comparable sales unchanged to modestly higher versus the previous year, and backed forecast for earnings from continuing operations tof 20 -22 cents a share in 3Q and 30 - 33 cents a share in 4Q. Gymboree targets earnings from continuing operations for the full year to come in the range of 55 - 60 cents a share.

Corinthian Colleges, education company, posted 4Q earnings of 2 cents a share down vs. 20 cents a share last year. Excluding items, the company earned $13.1 million, or 13 cents a share, in the June period. Revenue advanced 10.6% in the latest quarter to $239.3 million vs. $216.4 million a year ago. Analysts expected a profit of 13 cents a share in the June period. Total student population grew 2% in the latest three months to 66,114 and total student starts dropped 1,090 to 20,168. Corinthian expects earnings of 8 - 10 cents a share for 1Q, including a reduction of a penny a share due to a change in the company's revenue recognition policy. For fiscal 2006 the company projects earnings of 60 - 66 cents a share.

Wal-Mart Stores, retailer, said same-store sales climbed 3.3% in August. Total sales at the company advanced 10% to $23.33 billion in the four weeks ended August 26 versus $21.2 billion a year ago. Wal-Mart sees a rise of between 2% and 4% in same-store sales in the U.S. for the five-week September period.

Stein Mart Inc., apparel designer, announced that same-store sales added 5.3% in August versus a year earlier. Total sales for August jumped 7.1% to $98.1 million. 13 stores of the company were closed ahead of Katrina but were re-opened once the storm had passed.

Chico's FAS Inc. reported Thursday that August same-store sales jumped 14%, while total sales for the four weeks ended August 27 climbed 32% to $101.5 million vs. $76.9 million in the same period last year.

Wilsons The Leather Experts Inc. said Thursday that same-store sales declined 7.9% in August compared with last-year period. Sales came in at $19.1 million versus $21.1 million in August 2004. The company said it had expected the weak results as mall outerwear sales were sluggish on the extremely warm weather during the first two weeks of August.

Limited Brands reported Thursday that same-store sales dropped 3% in August versus the year-ago comparable period. Net sales amounted to $575.3M compared with $577.8 million a year earlier.

CORPORATE NEWS

Swiss 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.