Luckluster Trading on Low Volume

Elena
07 Sep, 2005
New York City

U.S. averages are trading mixed. Energy, steel and some stocks from the tech sector are among the gainers on 0.5% higher oil prices and speculations of rising steel prices by 20%. Telecommunication stocks are trading down.

U.S. MARKET AVERAGES

The morning trading hours are showing market averages trading in a lackluster fashion. The lack of direction in averages, low trading volume, resurging oil price, and lower read on the productivity data are all contributing to a very quiet and boring trading session so far.

Energy, steel, and select stocks in tech sectors are trading higher. Steel companies are set for 20% prices hike. Nucor, U.S. Steel, and other metal and mining stocks are trading higher on this news. Telecommunication stocks are trading lower. Casino stocks are trading higher led by MGM, Harrah’s and Las Vegas Sands.

Separately shares of Altera lost 5% on lower gross margin forecast. Shares of Electronics for Imaging, Marchex, Baidu.com and Google are generating positive moves during the day.

Energy stocks, especially stocks in refining and gas exploration are trading higher as oil prices are up close to 0.5%. Valero, Tesoro, and Chesapeake Energy are up.

MOVERS AND SHAKERS

Hewlett-Packard rose 2% after UBS raised its view on the company to buy from neutral.

Albertson's Inc. ((ABS)) is expected to fall due to its earnings from continuing operations that fell short of analysts' estimates. On Tuesday, the stock rose 1.5%.

Alnylam Pharmaceuticals Inc. ((ALNY)) was up 30% after Swiss drugmaker Novartis agreed to buy a 19.9% stake in the company.

Ventiv Health ((VTIV)) plans to buy privately-held healthcare marketing firm inChord Communications. The company advanced 1.2% on Wednesday.

Time Warner Inc. ((TWX)) rose 0.8% on Wednesday after receiving a vote of confidence from the world's fifth-richest man, Saudi Prince Alwaleed bin Talal, who is also an investor in the company.

Genentech Inc. ((DNA)) was down 1.4% in pre-market trading after Friedman Billings Ramsey downgraded the company to market perform from outperform.

Yum Brands ((YUM)) rose 1.9% after it was upgraded by UBS and Bear Sterns to buy from neutral.


ECONOMIC NEWS

The Department of Labor released a revised 2Q productivity report, showing 1.8% growth from originally reported 2.2%, compared with 3.2% in the firs quarter. Economists had expected a downward revision of 2.1%.

The downward revision reflected smaller than previously reported growth in productivity in the manufacturing sector. The report showed that productivity growth in the manufacturing sector was revised down to 3.6 percent from the 4.1 percent growth previously reported.

The report also showed that unit labor costs rose by 2.5 percent in the second quarter, up from the 2.2 percent growth reported for the first quarter. Economists had expected a more modest increase of about 1.5 percent.


INTERNATIONAL MARKET NEWS

Asian-Pacific benchmarks closed higher, gaining on continuously falling oil prices which dropped to $65.96 a barrel and reduced fears of the impact of energy costs on major export markets. The Japanese Nikkei gained 0.1%, lifted by exporter issues with Sony up 2.1%, TDK Corp. 1.65%, and Suzuki Motor also up 1.2%. Hong Kong’s Hang Seng rose 0.4%, South Korea’s Kospi added 1.8%, and Australia’s All Ordinaries climbed 0.8%. The dollar bought 109.46 yen.

European markets closed higher, boosted by strong equity markets and upbeat earnings news, headed by French Bank Credit Agricole and defense contractor BAE Systems. The German DAX 30 rose 0.4%, the French CAC 40 climbed 0.3%, and London’s FTSE added 0.1%.

ENERGY, METALS, CURRENCIES

Crude-oil prices keep hovering below $66 a barrel as 9 refineries, two of which were completely shut down, came back on line. Light sweet crude October delivery fell 31 cents to $65.65 a barrel. London Brent declined 35 cents to $64.32.

Gold rose in European trading. In London the precious metal closed at $444.75, up from $443.50 per troy ounce. In Hong Kong gold gained $1.40 to close at $444.75. Silver closed at $7.04, up from $7.02.

The U.S. dollar gained ground against the yen and the euro on speculations that the Fed Reserve will keep raising the interest rates. Against the euro the dollar stood at $1.2449, up from $1.2465. The greenback changed hands at 110.03 yen, up from 109.68. The British pound was quoted at $1.8390, down from $1.8431.

EARNINGS NEWS

Navistar, diesel engine producer, announced that 3Q earnings net income rose to 83 cents per share, up from 66 cents per share for the comparable period last year on 27% revenue growth. The strong 3Q results were obtained despite one-time pre-tax adjustments amounting to nearly $14 million as the company settled a number of accounting issues within one of its foundry operations.

Albertson's, supermarket chain, reported 2Q earnings of 29 cents per share, up from 28 cents per share in the same period last year on total sales growth, missing analysts' forecasts of 34 cents per share. Earnings from continuing operations came to 30 cents per share, down from 34 cents per share in the comparable period a year ago.

Casey's General Stores, convenience store operator, posted 1Q net earnings of 41 cents a share, up vs. 32 cents a share for the same period last year on revenue growth, beating analyst estimate of 34 cents a share.

McData, storage-technology company, posted a 2Q net loss of 18 cents a share, down from a loss of 5 cents a share in the year-ago period despite 68% revenue growth, missing analysts’ expectations of 1 cent a share. Its pro forma earnings amounted to 3 cents a share.

Ruth's Chris Steak House, restaurant chain, posted 2Q earnings of 11 cents a share, up vs. a net loss of 7 cents a share in the same period last year on strong revenue growth. Same-store sales rose 10.3% at company-owned restaurants and 7.4% at franchised restaurants in 2Q.

Shuffle Master, gaming supply company, said that 3Q net earnings came to 22 cents a share, up 29% from 17 cents a share in the year-earlier period on revenue growth, beating analyst estimate by a penny. The company expects 81 cents to 82 cents a share for 2005.

CORPORATE NEWS

Northrop Grumman is expected to announce Wednesday that it is ready to work in a team with European Aeronautic Defence & Space to bid on the Air Force's next-generation aerial-refueling contract, joining efforts in the competition against Boeing.

Goodrich Corp., systems and services supplier to aerospace and security markets, has agreed to acquire Sensors Unlimited Inc, technology maker, for $60 million in cash. The acquisition is expected to close in the fourth quarter.

Novartis and Alnylam Pharmaceuticals will be working in cooperation for a multy-year period of time in which they will focus on discovering therapeutics based on RNAi.- a natural process for selective gene ‘silencing’ found in all cells. Under the terms of the alliance Novartis has to make initial payments totaling $56.8 million to Alnylam, consisting of upfront payments as well as the purchase of 4.2 million Alnylam common shares, representing a 19.9% stake, at a price of $11.11 each. Not including royalties, collective payments to Alnylam could surpass $700 million, the company said. Shares of Alnylam fell 10 cents, or 1%, to end at $9.56 on Tuesday, while U.S.-traded shares of Novartis added 18 cents to $49.28.