Earnings, Record Dow and Euro, Oil Above $66

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

Stocks in New York advacned on bettern than expected earnings from Microsoft, Cummins, Waste Management, Chevron and Gehl. Cummins gained 12% and microsoft advanced 3%. Oil rose above $66 on the series of arrests in Saudi Arabia. Euro traded at a record high against dollar on weak economic growth in the U.S. and dragging the European markets lower with it. Markets in Japan and China will be closed for the most of the week.

[R]4:00PM NY, 10:00PM Frankfurt, 1:30AM Mumbai – Global Markets Update[/R]

In New York trading market averages rose again for the third day in a row on strong earnings from Microsoft, Cummins, Waste Management and Gehl Co. First quarter GDP rose at 1.3% on weakness in housing market and lower capital spending from businesses. European markets closed lower across the region and weakness in Spain and construction stocks in the country dominated the news. Bank of Japan left its key interest rate unchanged on Friday. China Citic Bank, largest IPO in the world, rose 22% in Hong Kong trading.

Yields on U.S. bonds for 10-year bond closed at 4.705% and 30-year bond closed at 4.887% in New York trading.

Oil price in New York trading closed $1.40 higher to $66.46 per barrel and natural gas futures rose 22 cents to close at $7.83 per Mbtu. Gasoline futures rose 7 cents to close at 236.13 cents.

Gold future rose $6.70 to close at $684 per troy ounce, silver future rose 0.22 cents to close at $13.68 and copper future price fell $196 to close at $7,687 per metric ton.

Asian Markets closed lower across the region ahead of holiday period in Japan and China. Markets in Japan will be open on Tuesday and Wednesday and in China on Monday only. Stocks in Japan fell 0.2% and in Hong Kong dropped 0.7% ahead of the closure. China Citic Bank listed its share in Hong Kong and Shanghai at HK$ 5.80 per share and rose 21.8% at close. The largest IPO in the world so far raised $5.4 billion. Baidu.com, Chinese search engine surged 18% in New York trading on better than expected earnings. Insurance, banks and industrial stocks declined on the report that industrial production declined. India led the decliners with a loss of 2.25% despite solid profits from Reliance Industries and Bharti Airtel. Wholesale inflation in India rose to 6.09%.

European Markets closed lower on record level in euro against dollar and weakness in Spanish construction stocks. Spain lost 1.45% on the weakness in property, home builders and real estate stocks. U.K. fell 0.8%, Netherlands, Norway and Switzerland dropped 0.66%, France lost 0.23% and Germany declined 0.12%. Norwegian Statoil dropped 2.3% as it made an acquisition of $2 billion for Canadian sand tar energy company to diversify its holdings and on a sell recommendation from a broker on company lowering its production target of 1.3 million barrels a day. In Paris Dassault Systems advanced 11% on 15% rise in sales.

Latin American Markets closed mixed with Brazil dropping 0.2% and Mexico down 0.13%. Steel and mining stocks came under pressure on the account of slow economic growth report in the U.S. Brazil market takes its cue in the morning trading from the trading direction in New York. American Movil and Wal-Mart de Mexico in Mexico dropped 2%. Homebuilder Homex fell 2.5% and Grupo Aeroporturario del Pacifico were down 0.8%.


[R]2:30PM NY – U.S. Movers: Breakfast menu and high calorie burger lift sales at Burger king.[/R]

Burger King ((BKC)), fast food chain operator reported third quarter earnings of 25 cents per share vs. loss of 11 cents a year ago. The company reported earnings of $34 million in the quarter compared to a loss of $12 million on revenue growth of 8.9% to $539 million. The same-store sales in the U.S. and Canada rose 2.6% and gained 3.2% system-wide across the globe. Burger King has made an aggressive push to increase its breakfast sales that trails the others in the industry. The company introduced $1 breakfast and also introduced 1,000 calorie Double Texas Whoppers. In the quarter the company incrased number of stores in operation by 92.

Waste Management ((WM)), largest trash manager, reported first quarter earnings of $222 million compared to $186 million on a slight revenue fall to $3.19 billion. The company is paying more focus on profitability. In the quarter the company cut its service to several businesses and cities by 5.2% and increased its profit by 16%. The company revised its earnings guidance for the full year between $2.03 and $2.07 per share from $1.96 and $2.00 per share.


Gehl Co. ((GEHL)), agricultural and construction equipment maker, reported first quarter $6.3 million compared to a loss of $2.7 million or 51 cents in the quarter vs. loss of 12 cents a year ago. The company revenue fell 5.7% to $115.2 million. The company revised its sales guidance from the range of $465 to $495 million to $475 million to $500 million. The company revised continuing income between $2.15 and $2.35 per share from $2.00 and $2.30 per share.


[R]1:00AM NY, 5:00 PM Frankfurt - European stocks closed lower on surging euro.[/R]

European stock markets retreated from recent highs on Friday as the euro hit an all-time record versus the dollar on the back of weaker-than-expected U.S. growth data. Major oil companies were the biggest decliners, followed by Spanish property stocks. In the energy sector, Statoil fell 2.3% after making a $2 billion acquisition of a Canadian oil sands producer. BP dropped 1.7% and Royal Dutch Shell fell 1.3%.

Among Spanish property stocks, Grupo Immarcal dropped 2.3%. Banks were also in focus, with shares of Dutch bank ABN Amro up 1.2%. Royal Bank of Scotland slipped 1.5%, Banco Santander dropped 2.7%, and Fortis lost 1.7%. Deutsche Post climbed 5.3% and Deutsche Postbank rose 2.3%, lifted by takeover speculation.

In the tech sector, Infineon Technology fell 2.3% after the chipmaker said its Q2 net loss narrowed, but missed analysts'' expectations. The U.K. FTSE 100 fell 0.8% at 6,418.70, the German DAX Xetra 30 lost 0.1% at 7,378.12 and the French CAC-40 slipped 0.2% at 5,930.77. Spain''s Ibex-35 index lost 1.4% to end at 14,403.60.


[R]11:30AM U.S. stock averages traded in a lackluster fashion. Airlines declined.[/R]

U.S. stock market averages traded in a lackluster fashion, as investors weighed a weaker-than-expected GDP report against surging quarterly profit at Microsoft ((MSFT)). The tech-heavy Nasdaq was given a boost by the software giant which traded up 4.3%.

Among other gainers, Flextronics International ((FLEX)), the world''s largest contract electronics manufacturer, climbed 6.7% on higher quarterly profit. However, the chip sector came under pressure, led by Broadcom ((BRCM)), down 4.8% and SanDisk ((SNDK)), falling 2.3%. Among Internet shares, Amazon ((AMZN)) dropped 2% on brokerage downgrade.

The Dow was led down by General Motors ((GM)), down 1.9%, J.P. Morgan Chase & Co. ((JPM)), down 1.4%, and Home Depot ((HD)), falling 0.9%. At the same time, the downward move for the blue-chip average was limited by General Electric ((GE)) which rose 2.3% after positive comments from Citigroup.

Airlines stocks moved steeply lower after JP Morgan downgraded the whole sector. Continental Airlines Inc. ((CAL)) dropped 3.9%, UAL Corp. ((UAUA)) fell 4.4% and AMR Corp. ((AMR)) slipped 3%. The Dow Jones industrial average was up 3.25 points, or 0.02%, at 13,108.75. The Standard & Poor''s 500 Index was down 2.09 points, or 0.14%, at 1,492.16. The Nasdaq Composite Index was up 3.05 points, or 0.12%, at 2,557.51.


[R]9:45AM U.S. markets opened mixed on weak GDP data.[/R]

U.S. stocks started trading mixed on Friday, after the government''s estimate of Q1 economic growth came in weaker than expected, while a measure of employment costs showed continued gains. After the data, the dollar dropped to an all-time low against the euro, which rose as high as $13682.

However, surging profit at Microsoft helped to limit the downside move. Microsoft ((MSFT)) posted 65% earnings increase, helped by sales of its new Vista operating system. The software giant offered support to the blue-chip average, as well as tech stocks, with its shares moving up 4.7%. Not all tech stocks were trading in the positive. SanDisk ((SNDK)) dropped 1.6% after saying weak prices for flash-memory chips will continue through the summer. Broadcom ((BRCM)) dropped 5% after it posted Q2 revenue forecast below expectations.

Among other earnings-related stocks, Cummins ((CMI)), diesel engine maker, surged 15% after it said its Q1 profit rose 6% to $143 million, or $1.42 per share, from $135 million, or $1.35 per share, during the same period last year. Revenue grew 5% to $2.82 billion from $2.68 billion. Quarterly results beat expectations of a profit of 86 cents per share on revenue of $2.62 billion.

Of stocks driven by analyst comments, Amazon ((AMZN)) lost 2.6% after being downgraded to hold, due to concerns over valuation. The Dow Jones Industrial Average dropped 20 points to 13,086, as 23 of its 30 stocks fell. The S&P 500 fell 4 points to 1,490, while the Nasdaq Composite gained 0.5 points to 2,555.

[R]Economic growth slowed to 1.3% in Q1.[/R]

Friday morning, the Department of Commerce released its highly anticipated advance report on gross domestic product in the first quarter, showing that the pace of GDP growth slowed more than expected compared to the previous quarter. The report showed that GDP grew at an annual rate of 1.3 percent in the first quarter compared to the 2.5 percent growth seen in the fourth quarter. Economists had expected a more modest slowdown in the pace of growth to 1.8 percent. The Commerce Department said that the slowdown in the pace of growth compared to the previous quarter reflected a downturn in exports, an upturn in imports, a slowdown in consumer spending on nondurable goods, and a downturn in federal government spending.

At the same time, the report showed that the weaker than expected first quarter growth primarily reflected positive contributions from consumer spending and state and local government spending. The growth was partly offset by negative contributions from residential fixed investment, private inventory investment, and federal government spending. The Commerce Department also said that its closely watched reading on core consumer prices, which exclude food and energy prices, rose 2.2 percent in the first quarter compared to a 1.8 percent rate of growth in the fourth quarter.


[R]9:00AM U.S. stock futures turned lower on weak GDP data.[/R]

U.S. stock futures declined on Thursday on weaker-than-expected GDP data and weakness in the tech sector which offset Microsoft gains. The Commerce Department reported Friday that the U.S. economy slowed to 1.3% real annualized growth in Q1, hurt by rising energy prices and a weak housing market, making the weakest expansion in four years.

The first estimate of Q1 real GD came in below the 1.7% expected by economists as well as down from the 2.5% rise in the previous quarter. An inflation gauge tied to the GDP report showed that core prices, excluding food and energy, rose 2.2% in Q1, up from 1.8% in Q4. Among companies in focus, Microsoft ((MSFT)) climbed 4.9% in pre-open trading after the computer software giant reported a 65% profit rise, lifted by sales of its new Vista operating system and Office 2007.

However, other tech stocks weighed on the sector, as SanDisk ((SNDK)) said weak prices for flash memory chips will continue through the summer and Broadcom ((BRCM)) posted Q2 revenue forecast below expectations. Shares in Amazon ((AMZN)) fell 1.8% after reaching a 7-year high on Thursday. The decline followed a broker downgrade on concerns over valuation. Dow futures expiring in June fell 49, or 0.37%, to 13,120. The Standard & Poor''s 500 index futures fell 6.10, or 0.41%, to 1,496.70, and Nasdaq 100 futures fell 8.50, or 0.45%, to 1,897.50.


[R]8:15AM Microsoft Q3 earnings surged 65%.[/R]

Microsoft Corp. ((MSFT)) announced late Thursday that its Q3 profit surged 65%, boosted by sales of new products including the Vista operating system. The world''s biggest software maker reported earnings of $4.93 billion, or 50 cents a share, compared with $2.98 billion, or 29 cents a share, during the year-earlier period. Revenue rose 32% to $14.4 billion. Quarterly results beat expectations of earnings of 46 cents a share on revenue of $13.89 billion.

Microsoft had been widely expected to post solid growth for the quarter, when it saw significant new product releases including Vista and Office 2007, both released on Jan. 30. Microsoft said its business division, including Office 2007, reported Q3 revenue of $4.83 billion, compared with $3.6 billion a year earlier.

However, Microsoft posted disappointing Q4 outlook. The company said it expects Q4 earnings of between 37 cents a share and 39 cents a share, on revenue of between $13.1 billion and $13.4 billion. The stock rose 5.2% in pre-market trading.