KB Home Loss, U.S. Stocks Down

123jump.com Staff
08 Jan, 2008
New York City

U.S. stocks fell after nearly two hours of trading on a weakness in housing market and worries related to economic slowdown. An index of pending home sales declined 19% from a year ago according to the Natioanl Association of Realtors. Bear Stearns and Starbucks replaced their chief executives. Oil and gold surged nearly 2% lifting the stocks in the energy and metals sectors. KB Home reported a sharply higher quarterly loss.

[R]11:15AM New York – U.S. stocks lost their morning gains as oil and gold climbed. Bear Stearns and Starbucks replace their chiefs.[/R]

Dow Jones Industrial Average gained 34.90 12,861.04, Nasdaq rose 16.50 to 2,516.57, and S&P 500 advanced 8.41 to 1,424.59.

Bear Stearns chief executive James Cayne has stepped down but will hold the position of chairman. The president Alan Schwartz is likely to succeed him as the chief executive.

Bear Stearns stock has declined in the current credit market malaise from the high of $172.61 to the current price just above $76.

Bear Stearns has suffered heavy losses in mortgage securitization and asset management divisions in the last six months.

Starbucks ((SBUX)) stock jumped $2.12 to $20.50 after it said that Jim Dolan the current chief executive will be replaced by the founder Howard Schultz. Schultz will assume the roles of chairman and chief executive.

Circuit City ((CC)) dropped in the morning trading but recovered to trade up 4 cents to $4.25 after it reported same store sales declined 11.4% in December.

KB Home ((KBH)) dropped $1.01 to $17.47 after reporting revenue decline of 31% to $2.07 billion from a year ago and home sold fell 22% to 8,132. The average sale price dropped 12% to $247,800. The company reported a net loss of for the quarter ended November 30 of $772.7 million or $9.99 per share compared to a loss of $49.6 million or 64 cents per share.

KB Home also took a charge of $514.2 million on the loss of deferred tax assets and in a loss of $403.4 million in pre-tax inventories and losses in land options.

National Association of Realtor’s index of pending existing home sales declined at a seasonally adjusted rate of 2.6% in November to 87.6 from the revised level in October of 89.90 and a drop of 19% from a year ago.

Chevron, Exxon Mobil, ConocoPhillips, and Schlumberger jumped higher on elevated crude oil prices.

Oil jumped $1.45 to $96.54 and gold increased $14 to $876.00. Euro traded at $1.4718 near the record level.

[R]9:00AM New York, 7:30PM Mumbai - Sensex kept its upwards charge bucking the regional and global trends.[/R]

Stock markets in India closed flat on Tuesday with the Bombay Stock Market benchmark index Sensex gaining 0.3% or 61 at 20,873.

Of the stocks traded on BSE, 539 shares advanced, 2,404 fell, 23 remained unchanged while.

Among the Sensex index stocks, 16 gained while 14 shares fell.

Turnover on the BSE stood at 11,580 crore rupees while revenue on the National Stock Exchange was at 25,435 crore rupees.

In the broader markets, CNX Nifty index of 50 stocks held up by 0.1% to close at 6,288.

Buying was visible in oil & gas, and information technology shares while selling was visible in metal, healthcare and real estate stocks.

Among the index share, Bharti Airtel, HDFC Bank, Satyam, State Bank of India, Mahindra & Mahindra and Reliance Communication were among the advancers with each gaining more than 1.8%.

Of the CNX 50 index stocks, Suzlon Energy, GlaxosmithKline, ONGC, Infosys Technologies and Wipro Ltd were the leading gainers with each gaining more than 1.4%.

Planning Commission Deputy Chairman Montek Singh Ahluwalia on Tuesday expressed concern that high economic growth over the years had not provided enough benefits to the rural poor.

He expressed a concern that not enough benefits were reaching to a large segment of population. The Planning Commission plans to focus on rural areas in the 11th 5-year plan. He predicted that India can achieve economic growth between 8% and 8.5% in the next five years.

Of the BSE shares Reliance Industries was up 1.05% to 3,047.25 rupees ICICI Bank fell 1.7% to 1,340.05 rupees and Reliance Natural Resources surged 7.2% to 244.15 rupees.

Tata Steel shed 4.2% to 866.95 rupees and Hindalco Industries lost 3.8% to 209 rupees.

Infosys advanced 1.6% to 1,665 rupees and. Wipro rose 1.2% to 489 rupees.

Bharat Heavy Electricals declined 0.6% to 2,494.3 rupees after the company signed a joint venture agreement with NTPC for engineering, procurement and construction business.

Cipla shed 1.3% to 209.15 rupees and Dr. Reddy''s Laboratories lost 1.4% to 702.6 rupees.

Tata Motors slipped 1.6% to 774.2 rupees and Maruti Suzuki India slid 2.4% to 939.65 rupees.


[R]6:00AM New York, 6:00PM Hong Kong – Foreign exchange reserves rose to a record level in Hong Kong.[/R]

Stocks in Hong Kong reversed earlier gains in the session to close lower on lingering worries of a slowdown in the U.S.

In Hong Kong trading Hang Seng index tumbled from a 1.7% rise in the morning session to close down 0.3% or 66.59 at 27,112.90, while the China Enterprises Index of Hong Kong-listed mainland companies gained 0.4% or 68.97 to 15,659.71.

Daily turnover on the main-board was reported at HK$114.9 billion compared to HK$113.5 billion recorded yesterday.

The Hong Kong Monetary Authority announced yesterday that foreign currency reserve assets increased by $2.3 billion from November to record $152.7 billion in December.

The Standard news, an online Hong Kong edition, reported today that Hong Kong Tourism Board chairman James Tien Pei reported today tourist arrivals increased from 25.3 million in 2006 to 28 million in 2007.

Visitors total spending also climbed from HK$119.4 billion in 2006 to a record HK$130 billion in 2007, as visitors spent an average HK$5,100 during each visit compared to HK$4,799 in 2006.

Chinese lenders rallied after China Merchants Bank said it estimated its annual earnings for 2007 will rise 110% to Rmb15 billion based on Chinese accounting.

Industrial and Commercial bank of China rose 0.6% to HK$5.30, Bank of China Communications Company rose 1.2% to HK$10.18.

However, property companies fell on analysts’ assertions that yesterday’s gains in the sector were not warranted. Sun Hung Kai declined 0.6% to HK$168.80, Cheung Kong Holdings Limited plunged 3% to HK$142.60, and Hung Lung Properties fell 2.8% to HK$33.20.

MTR Corp fell 2.4% to HK$34.05, ending a five-session gaining streak.

Exporters also declined on fears of a slowdown in the U.S. Li & Fung fell 3.5% to HK$27.95 and athletic shoemaker Yue Yuen Industrial Holdings Limited tumbled 1.3% to HK$26.50.

China Coal Energy Co Limited soared 2.6% to HK$25.4 after it reported that it planned to issue 1.5 billion shares in a proposed Shanghai listing.

Air China fell 3%t to HK$10.20 after shareholders of China Eastern rejected to sell a 24% stake in the carrier to Singapore Airlines and its holding company controlled by Singapore government Temasek.

Alibaba tumbled 8.1% to HK$23.85 tracking a decline in technology stocks in the U.S.


[R]5:00AM New York, 7:00PM Tokyo – Stocks in Tokyo edged 0.19% higher for the first time in 2008.[/R]

Stocks in Japan gained for the first time this year in volatile trading as investors sought commodity, shipping lines and financial stocks.

In Tokyo trading Nikkei 225 rose 0.19% or 28.12 to 14,528.67, while the broader Topix Index gained 0.74% or 10.35 to 1,403.06.

In the first section of the Tokyo Stock Exchange 9.1 billion shares worth 1.0 trillion yen were traded and in the second section 164.4 million shares valued at 3.0 billion yen changed hands.

Of the Nikkei 225 stocks 133 gained, 81declined, and 11were unchanged. Sumitomo Mitsui Financial Group led advancers with a rise of 6.69% followed by Shimizu Corporation climbing 6.44%.

Other financial stocks rose as well. Mizuho Financial Holdings climbed 5.27%, Mitsubishi UFJ Nicos edged up 5.02% and Resona Holding jumped 3.91%.

The Japan Times online edition reported today that Chairman of the Japan Business Federation Fujio Mitarai said yesterday that Japan economy will pick up in the second quarter buoyed by strong overseas demand.

“The pace of domestic economic expansion will accelerate after spring,” said Mitarai, adding that he believes that Japanese stocks were oversold.

Chairman of the Japan Association of Corporate Executive Masamitsu Sakurai also said at the same conference that the stock market is “overreacting” to uncertainties over the U.S. economy.

Chief economist at JP Morgan Chase & Company Masaaki Kanno said in a report published yesterday that the Bank of Japan will refrain from raising the benchmark interest rate until the fourth quarter. Kanno also revised downward Japan’s projected economic growth for this year from 2.0% to 1.8% for the year starting April 1.

Of the Nikkei 225 index shares Sumitomo Mitsui Financial Group led advancers with a rise of 6.69% followed by gains in Shimizu Corporation of 6.44%, in Nippon Light Metals of 5.98%, in Kawasaki Kisen of 5.52%, and KDDI Corporation of 5.4%.

Shipping lines also gained after Deutsche Bank recommended investors to buy the stocks. Also the Baltic Dry Index, which measures freight charges, rose for the first time in three weeks. Mitsui OSK Lines spiked 3.82% and Mitsui Engineering & Shipbuilding rose 1.01%.

Commodity stocks gained as well. Nippon Light Metal jumped 5.98% and Sumitomo Metal Industries soared 4.67%.

Fanuc Limited led declining Nikkei 225 index shares with a drop of 4.99% followed by losses in NSK Limited of 4.39%, in Okuma Corporation in 4.25%, in Seven I & Holdings of 3.48%, and in Alps Electrical Company Limited of 3.41%.

Exporters slumped after the yen fell from 109.47 to 109.48 against the dollar. Canon Corporation fell 0.20% and Casio Computer dropped 0.85%.

The Nikkei news, online edition, reported today that Hitachi Construction Company might joint venture with a Russian company Techstroycontract Limited to make buckets for excavators. The companies are targeting to produce 3,000 buckets for excavators per year. In addition, the company will start making complete excavators in April 2012.


Asian Markets Roundup

In Tokyo Nikkei 225 Index closed higher 28.12 or 0.19% to 14,528.67, in Hong Kong Hang Seng index closed declined 66.59 or 0.25% to 27,112.90, in Australia ASX 200 closed lower 33.50 or 0.54% to close 6,128.10.

In South Korea Kospi Index decreased 4.91 or 0.27% to close at 1,826.23, in Thailand SET index closed higher 3.38 or 0.42% to 811.69, and Indonesia JSE Index edged increased 9.22 or 0.33% to 2,785.63. Sensex index in India closed higher 60.68 or 0.29% to 20,873.33.