Day Five

123jump.com Staff
02 Sep, 2005
New York City

At opening market learned of four-year low unemployment report and at mid-day digested the implication of release of oil from strategic reserve. Oil dropped close to $2 per barrels and gasoline dropped by 1% for now. Most oil companies are still surveying the extent of on and off-shore damage to their facilities. The nature and extent of the damage still unknown.

Day five. Investors know that more than 90% of oil and 73% of gas production on on-shore facilities is closed but what about the loss of rigs, platforms, and energy production in the off-shore locations. Investors and so is the much of the nation, still in dark.

Fear of economic slow down gripped the market despite the world-wide commitment to release 60 millions of barrels in the next thirty days. Rise in payroll reported this morning was largely ignored by the market.

Construction equipment, building materials, steel and other commodities rose during the day and week. Energy producers, distributors and refiners came under pressure after rising close to 20% during the week on the news of 60 million barrels release of oil.

Investors largely ignored the employment report, released by the Labor Dept. It indicated that non-farm payroll figures for August rose by 169,000, slightly down vs. the expected rise of 190,000. The jobless rate was reported to be the lowest in four years, at 4.9% compared with previous expectations of 5%.

The payroll data show that the labor market continued gaining speed but Friday’s figures don’t reflect Katrina’s impact. According to economists the economic picture ahead is not painted in bright colors as energy costs are seen as a serious hindrance to economic growth.

Several refineries and oil companies reported production shut-downs and loss of facilities.


ECONOMIC NEWS

The Labor Dept. reported unemployment rate of 4.9% for July which is the lowest level of unemployment since August 2001. Economists had expected unemployment rate to be 5%.
The Labor Department released the August employment report according to which U.S. companies provided 169,000 jobs, slightly down vs. expectations of 190,000.

The increase in monthly employment figure represents increased employment in construction, profession and business services, healthcare and education, financial services. Manufacturing employment continued to decrease for the third month in a row.

INTERNATIONAL MARKET NEWS

Asian-Pacific benchmarks closed mostly higher after mixed early trading. The Nikkei rose 0.74% on optimism about the Japanese economy and hopes that the U.S. Fed Reserve will slow the pace of interest-rate hikes. Blue chips and exporters were among the leading gainers together with automakers which rose on strong monthly sales reports. Across the region Hong Kong’s Hang Seng added 0.5% and South Korea’s Kospi gained 0.3%. The dollar stood at 109.85 against the yen.

European markets closed largely down, though off session lows on positive U.S. jobs report and M&A speculations across the region. The German DAX 30 fell 0.11%, the French CAC 40 was down 0.43%, and London’s FTSE declined 0.03%.

ENERGY, METALS AND CURRENCIES MARKETS

Oil prices tumbled by nearly $2 on oil support from the U.S. and European reserves. Light sweet crude dropped $1.90 to $67.57 a barrel and gasoline dropped 21 cents to $2.18 per gallon. London Brent shed $1.62 to $66.10.

Gold declined in European trading. In London the precious metal closed at $443.70 per ounce, down from $444.20. In Hong Kong gold climbed $11.10 to close at $447.05. Silver traded at $6.99, up from $6.96. In New York gold rose to $445.40 up $1.90 per ounce.

The U.S. dollar fell against most of its major counterparts in European trading. The euro was quoted at $1.2517, up from $1.2487. The dollar bought 109.72 yen, down vs. 109.88. The British pound closed at $1.8404, up from $1.8326.

EARNINGS NEWS

H&R Block, consulting services company, posted a 1Q net loss of 9 cents a share, up vs. 11 cents a share for the same period last year on revenue growth to $615 million from $486.6 million in the year-ago period.

CSK Auto, auto parts supplier, posted 2Q net earnings 29 cents a share, down 14.5% vs. 33 cents a share in the same period last year despite revenue growth to $419 million from $409.1 million the year-ago, but missing analysts’ expectations of $424 million. Same-store sales advanced 1.1% from last year.

JDS Uniphase telecommunications service provider, posted 4Q loss reached 10 cents a share, sharply down from a loss 2 cents a share in the year-ago period on revenue decline, missing analyst estimate of 2 cents a share. Apart from onetime restructuring and other costs, JDS announced it lost 2 cents a share.

Kellwood, apparel maker, posted a 2Q net loss of $2.86 a share, down vs. a profit of 36 cents a share in the same period a year earlier despite revenue growh, missing analysts’ expectations of 19 cents a share profit. Impairment, restructuring and related non-recurring charges of $3.36 a share are included in the current quarterly results.

Finisar Corp., optical equipment maker, posted 1Q net loss of 7 cents a share, up from a loss 10 cents a share in the year-ago period on 32% revenue growth. The company’s proforma loss amounted to 3 cents a share.

Plato Learning, educational software provider, posted a 3Q net loss of a penny a share, down vs. A profit of 29 cents a share in the year-ago period on revenue decline, beating analyst estimate of 11 cents a share.

Methode Electronics, component devices and subsystems designer company, reported 1Q for fiscal 2006 net income of 13 cents share, even with the same period last year’s result. The shallow manufacturing benefits for the quarter are due to a number of the company’s business units having experienced the effects of rising costs of materials, most prominently in in petroleum-based products such as silicone, urethane and other resins, as well as the greatly increased cost of copper.

CORPORATE NEWS

Boeing machinists went on strike Friday for the first time in 10 years, following their negative vote to reject the company's latest contract offer.

Northwest, U.S. No. 4 airline, said surging oil prices could compel it to look for even greater labor concessions and force a bankruptcy filing. The company's pilots' union voted Thursday to reopen contract negotiations soon having in mind the carrier's not so rosy financial situation.

Two groups of private-equity firms submit final offers of as much as $10 billion including debt for Ford Motor's Hertz unit, according to reports. One consortium composed of Bain Capital, Blackstone Group, Texas Pacific Group and Thomas H. Lee is competing against another group made up of Clayton Dubilier & Rice, Carlyle Group and Merrill Lynch Global Private Equity.