Afternoon sell-off

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

Retail sales for August were $350.1 billion, down 2.1% from July, but up 7.9% from one year ago. Excluding automobiles, retail sales in August were $274.9 billion, up 1% from July, and up 9.4% from one year ago. Industrial output for August rose only 0.1% on Hurricane Katrina's impact. U.S. industrial production increased 0.1% in August, the Federal Reserve reported on Wednesday.

U.S. MARKET AVERAGES

In the early afternoon trading was driven by lower averages on NASD and NYSE. Higher than expected decline in retail sale, spike in oil price on inventory report, and general lack of buying interest has led averages in a tight trading range. Markets early gains have been erased at mid-day and averages are trading in negative.

On the second economic report of the day, U.S. industrial production increased 0.1% in August, the Federal Reserve announced on Wednesday. Capacity utilization stayed unchanged at 79.8%. Analysts were expecting production to advance 0.2% and capacity utilization to reach 79.8%.

Metals and Mining shares are up as gold prices have firmed up by one percent, energy stocks are up as oil is up 2%, home builders, retailers, Internet, tech stocks and casino are trading lower at mid-day.

MOVERS AND SHAKERS

Lehman Brothers ((LEH)) advanced nearly 2% after the company announced higher third-quarter profit connected with the strong fixed-income division. For the quarter, the company posted revenues of 3.9 billion representing a 47% improvement from the comparable improvement last year and an 18% increase over our second quarter results. This is highest quarterly revenue level ever. Net income was 879 million for the period, or $2.94 earnings per share, up over 70% versus the prior year and up approximately 30% over last quarter.

General Electric ((GE)) shares were up 0.2% due to the report that the company is planning to sale some of its industrial units.

Northwest Airlines ((NWAC)) dropped 0.6% following news reports that the company and Delta Air Lines Inc. ((DAL)) could look for protection from bankruptcy as early as today.

Baidu.com ((BIDU)) jumped 15% even though both Goldman Sachs and Piper Jaffray set up coverage of the company with underperform ratings, pointing worries over unsustainable estimation.

Image Entertainment ((DISK)) added 50% after the company said it received an undesirable buyout bid from Lions Gate Entertainment ((LGF)).


ECONOMIC NEWS

The Department of Energy's Energy Information Administration revealed that crude oil inventories dropped by 6.6 million barrels for the week ended September 9, falling to 308.4 million barrels from the 315.0 million barrels recorded in the previous week. This followed a decline of 6.4 million barrels for the prior week, which was the first period to include data on Hurricane Katrina's aftermath. Even with the recent declines, oil inventories were still 11.3% higher than their level of the same time last year.

Gasoline inventories posted a week-over-week advance of 1.9 million barrels, partially reversing the prior week's decline of 4.3 million barrels. Gasoline stocks were down 7.4% from the same time last year, though this is an improvement over the previous week, when inventories were 8.6% below the prior-year mark. Inventories of distillate fuel oil fell by 1.1 million for the most recent week.


INTERNATIONAL MARKET NEWS

Asian-Pacific benchmarks closed mixed on oil prices hovering below $64 a barrel, concerns of U.S. economy slowdown and lower corporate profits after Katrina’s impact. The Japanese stock market slid 0.5%, retreating from a four-year high Tuesday on sharp U.S. markets decline overnight. China’s Shanghai Composite surged to a five-month high of 0.8% on optimism about non-tradable reform. Hong Kong’s Hang Seng added 0.1% and South Korea’s Kospi climbed 1.1%. The dollar bought 110.34 yen.

European stocks closed higher, boosted by strong automotive sector on upbeat monthly sales data, with Volkswagen, Daimler Chrysler and Renault all rising. The German DAX 30 gained 0.2%, the French CAC 40 climbed 0.4%, and London’s FTSE 100 added 0.2%.

ENERGY, METALS, CURRENCIES

Oil prices surged on U.S. petroleum-stocks report, which showed crude inventories decline of 6.6 million barrels for the previous week. Light sweet crude October delivery rose 79 cents to $63.90 a barrel on the Nymex. Gasoline added less than a penny to $1.90 a gallon, while heating oil gained 3 cents to $1.8680 a gallon. London Brent was up 79 cents to $62.90.

Gold price climbed in European trading to a six-month high on weaker dollar. In London the precious metal rose $3.40 to $454.40 per troy ounce. Silver traded 4.5 cents higher at $7.05.

Copper prices fell by 1.1%, or 1.85 cents to $1.607 a pound.

The U.S. dollar lost ground against its major counterparts on lower-than-expected industrial output increase. The euro was quoted at $1.2306, up from $1.2267. The greenback changed hands at 110.04 yen, down from 110.70. The British pound was quoted at $1.8276, up from $1.8219.

EARNINGS NEWS

Lehman Brothers ((LEH)) reported 3Q earnings rise of $2.94 per share, up from $1.71 per share in the same period last year, beating expectations of a profit of $2.37 per share. The company said net revenue for the period came in at $3.9 billion, up 47% from last year's mark of $2.6 billion.

Touchstone Applied, ((TASA)) educational assessment products provider, posted 3Q net income for the company's 5 cents per share, down from 7 cents per share in the comparable quarter a year ago despite revenue and gross operating margins growth, due to increased professional fees and costs associated with implementation of Section 404 of the Sarbanes-Oxley Act.


Comarco Inc., ((CMRO)) provider of wireless test solutions, reported 2Q of fiscal 2006 revenue was $11.1 million, up 67% up from $6.7 million in revenue fro the same time last year.

Pike Electric Corporation, ((PEC)) providers of outsourced electric distribution and transmission services, reported 4Q net loss 65 cents per share, down from net income of 24 cents per share in the same quarter of the previous year. Revenues rose $61.4 million, or 65.5%, to $155.0 million from $93.6 million for the year-ago period, driven primarily by the acquisition of Red Simpson, Inc. in July 2004 and organic growth the result of strong customer demand.