Low Volume Trading

Elena
09 Sep, 2005
New York City

Texas Instruments raised its 3Q earnings and sales outlook. Intel tightened its 3Q guidance range. PalmSource gained as the company agreed to be acquired by Japan's Access for $324.3 million. Energy and gold sectors advanced 1.8% and 2.1% respectively. The overall import prices for August rose 1.3% from 0.8% In July, up from the expected increase of 1.2%.

U.S. MARKET AVERAGES

The early afternoon session is one of low volume trading as the main averages are consolidating early gains. The stock markets welcomed upbeat news from chipmaker Intel which tightened 3Q guidance range and the semiconductor giant Texas Instruments which provided a boost to the market sentiment by releasing a 3Q lifted earnings and sales guidance. In these reports investors found hopes for an upswing in electronics demand.

In the meantime oil prices climbed over $65 a barrel on continued refinery shutdowns and U.S. Energy Dept forecast that winter energy costs would reach a 10-year high. Investors were cautious, awaiting more information about Katrina’s impact and sought for indicators of less-than-expected economic slowdown.

The energy sector was up 1.8%, standing out as one of the notable gainers in the trading session. The gold sector also joined the group of the big gainers, rising 2.1%. The tech sector is another gainer of the day, climbing 1.1%. Financial sector advanced 0.6%. The Housing sector moved higher to 1.7%.

Several healthcare stocks also posted strong gains sending the index up 5.9%

Transportation sector has notably declined by 1.4%. Airline sector was down 1.1% on lowered guidance by Continental. Trucking stocks weakened on lowered guidance from Yellow Roadway.

Investors also eyed a report, showing overall import prices for August rose 1.3% from 0.8% In July. Economists had expected an increase of 1.2%.

In midday trading, the Dow Jones industrial average climbed 77.62, or 0.73 percent, to 10,673.55. The Standard & Poor's 500 index rose 9.18, or 0.75 percent, to 1,240.85, and the Nasdaq composite index advanced 9.29, or 0.43 percent, to 2,175.32.

Bonds moved higher, with the yield on the 10-year Treasury note sliding to 4.11 percent from 4.14 percent on Thursday. The dollar was mixed against most major currencies, while gold prices climbed.

MOVERS AND SHAKERS

Intel Corp ((INTC)) fell 0.9% in the early trading after the company cut its previous plans for third-quarter sales, but it expected sales to grow by 10% this year in comparison with 2004.

Texas Instruments Inc ((TXN)) added 1% in pre-market trading because it lifted its third-quarter financial expectations due to a greater demand for its chips.

Yellow Roadway ((YELL)) dropped 4.4% in pre-market dealings after the company narrowed its third-quarter earnings predictions and cited the hurricane as one of the reasons.

Northrop Grumman Corp. ((NOC)) also expected to cut its earnings and revenue as a result of Katrina's damage to its Gulf Coast shipbuilding operations. The company advanced 0.6% on Thursday.

The airline industry continues to suffer by high fuel prices. Continental Airlines ((CAL)) fell 0.7% because of its forecasts for a significant loss in 2005 due to higher fuel prices.

Biogen Idec ((BIIB)) lost 1.3% as Citigroup downgraded the company after it cut 17% of its workforce in a try to free up cash for new drugs.

ECONOMIC NEWS

Friday morning, the Department of Labor released its report on import and export prices in the month of August. The report showed that import prices showed a notable increase while export prices fell modestly.

The Labor Dept. said that import prices rose 1.3 percent in August, extending a recent upward move after rising 0.8 percent in July and 1.2 percent in June. The continued increase in prices was largely due to higher prices for petroleum imports.

Prices for petroleum imports rose 7.1 percent in August after rising 6.1 percent in July and 8.6 percent in June. Excluding petroleum imports, prices were unchanged in August after falling 0.2 percent in the two previous months.

As mentioned above, the report also showed that export prices fell 0.1 percent in August after rising 0.1 percent in July. The decrease reflected a 0.6 percent drop in prices for agricultural exports, although prices still fell 0.1 percent excluding agricultural exports.

INTERNATIONAL MARKET NEWS

Asian-Pacific benchmarks ended the trading session mixed. The Nikkei climbed 1.3%, buoyed by optimism a day before the weekend parliamentary elections. Strong tech issues, supported by upbeat reports from Texas Instruments and Intel, also gave a boost. Across the region, Hong Kong’s Hang Seng finished flat, South Korea’s Kospi gained 0.6%, while China’s Shanghai Composite declined 0.4% on profit-taking. The dollar was up 0.11% at 110.60 yen.

European stocks finished higher with the German DAX 30 up 0.26%, rising above a key level on strong semiconductor sector after tech giants like Infineon, Phillips, STM, and ASML gained on U.S. upgrades. The French CAC 40 added 0.6%, and London’s FTSE 100 rose 0.35%.

ENERGY, METALS, CURRENCIES

Oil prices climbed over $65 a barrel after the Energy Department said that energy costs in winter would reach a 10-year high. Light sweet crude for October delivery gained 83 cents to 465.32 a barrel on the Nymex. London Brent rose 71 cents to $63.79. Gasoline rose marginally to $2.0430 a gallon. Heating oil added 3 cents to $1.9584. Natural gas rose 11 cents to $11.46 per 1,000 cubic feet.

Gold price climbed in European trading. In London the precious metal closed at $449.00 per troy ounce, up from $446.80. In Hong Kong gold closed at $447.05. Silver closed at $7.01, up from $6.99.

The U.S. dollar dropped against its major counterparts in European currency trading. The euro was quoted at $1.2420, up from $1.2391. The greenback changed hands at 109.59 yen, down from 110.48. The British pound was quoted at $1.8403, up from $1.8356.

EARNINGS NEWS

Aceto Corp.,((ACET)) drug and chemical distributor, posted 4Q earnings of 11 cents a share, down vs. 13 cents a share a year-earlier on sales decline, beating analyst estimate by a penny though. On a continuing operations basis, the company reported a profit of 11 cents a share in the quarter.

Intel Corp., ((INTC)) maker of computer chips, lowered its 3Q sales estimate to a range of $9.8 billion to $10 billion. That is on a par with its prior estimate of $9.6 billion to $10.2 billion. Intel reported that its gross margin would amount to 60% of sales, matching previous forecasts.

Quiksilver Inc., ((ZQK)) retailer, reported 3Q net earnings of 20 cents a share, up vs. 16 cents a share in the same time a year ago on revenue growth, matching analyst estimate. The company expects 4Q earnings of 26 cents to 27 cents a share on revenue of $582 million to $592 million.

National Semiconductor Corp. ((NSM)) posted fiscal 1Q net earnings of 24 cents a share, down 27% from 31 cents a share in the year-ago period on 9.9% revenue decline. The company expects 2Q revenue to rise 5% from 1Q.

Texas Instruments Inc., ((TXN)) chip maker, raised its 3Q financial objectives on account of better-than-expected demand. The company lifted its sale range to between $3.48 billion and $3.62 billion from the previous range of $3.29 billion to $3.56 billion. Texas Instruments upgraded its earnings per share forecast to 36 cents to 38 cents, up vs. 31 cents to 35 cents, including the cost of expensing stock options.

Yellow Roadway Corp., ((YELL)) transportation service provider, narrowed its 3Q earnings estimate to $1.40 to $1.45 a share from $1.60 to $1.65 a share previously, missing analysts’ forecasts of earnings at $1.62 a share. The company states Hurricane Katrina as one reason for the narrowed forecast.

G-III Apparel Group, ((GIII)) outerwear and sportswear maker, reported a 2Q net loss of 4 cents a share, up vs. a net loss of 23 cents a share in the year-ago period despite revenue growth. The company announced strong sales after its acquisitions of Marvin Richards and Winlit. G-III Apparel expects fiscal 2005 earnings of 95 cents to $1 a share.

Harris Interactive Inc., ((HPOL)) market research and opinion polling firm, posted 4Q net earnings of 2 cents a share, down vs. 43 cents a share in the same period last year despite revenue growth. The company expects 1Q earnings of breakeven to a penny a share on revenue of $46 million to $48 million and sees fiscal 2006 earnings of 11 cents to 14 cents a share.

Molex Inc. ((MOLX)) electronic components company, posted 4Q net earnings of 3 cents a share, down vs. 30 cents a share in the same period last year on revenue growth, missing analyst estimate of 25 cents a share. Molex still expects 1Q forecast of 21 cents to 23 cents a share and 2006 forecast of $1.07 to $1.12 a share.

CORPORATE NEWS

PalmSource Inc. agreed to be acquired by the Japanese software developer Access Co. for $324.3 million in cash, or $18.50 a share which is seeking to expand its mobile devices production. Under the agreement PalmSource will merge with the U.S. unit of Access to form a wholly owned subsidiary.

Boeing could be made to pay up to $500 million and avoid prosecution in two federal probes according to a settlement between the company and the Justice Department which is still being negotiated. The settlement would resolve accusations that Boeing had improperly acquired Lockheed Martin’s proprietary documents connected with rocket programs and illegally recruited a senior Air Force official while she still had oversight of billions of dollars in other Boeing contracts.

McDonald's the world's largest restaurant chain, is tentativelyscheduled to release sales for August. The company is likely to update plans for its Chipotle Mexican Grill and Boston Market chains. Those plans could include an initial public offering for Chipotle, according to a research note last month from Piper Jaffray.