Techs Lead Narrow Rally

Elena
16 Sep, 2005
New York City

Blue-chip companies Exxon Mobil Corp. and Intel Corp. advanced on brokerage upgrades.The Commerce Department reported that current account deficit narrowed to $197.7 billion in 2Q from $198.7 billion in 1Q.The consumer confidence index fell to 76.9 in September from 89.1 in August.

U.S. MARKET AVERAGES

Stock markets opened higher ahead of economic data and remained strong although weaker-than-anticipated news was released. The market sentiment was lifted by two brokerage upgrades. Deutsche Bank upgraded Exxon Mobil Corp. and Credit Suisse First Boston upgraded Intel Corp. The three major averages have fallen off their highs but keep trading steadily.
The best Dow performers are JP Morgan which is up 1.8%, Dupont on a three-week high, up 1.6% and Exxon Mobil rising 1.6%.
CocaCola, Home Depot, and Merck slightly declined.

The Commerce Department reported that current account deficit narrowed to $197.7 billion in 2Q from $198.7 billion in 1Q with economists’ expectations of $194.5 billion.

The University of Michigan said consumer confidence index fell to $76.9 in September from 89.1 in August.

MOVERS AND SHAKERS

Intel ((INTC)) was up 1% after the company got upgraded at CS First Boston to neutral from underperform, citing as a reason that the stock price now sufficiently diminishes concerns over bearish market share and descending average selling prices.

Exxon Mobil Corp. ((XOM)) was upgraded at Deutsche Bank to buy from hold and raised its price target to $75. As a result the company’s stock rose 1.5%.

JDS Uniphase ((JDSU)) jumped 8.4% after Citigroup upgraded the company to buy from hold, and pointed as a reason improved clearness in the optical components market and the strong margin performance at Acterna.

Corning ((GLW)) advanced 3.2% after Merill Lynch upgraded the stock to buy from neutral, due to a favorable forecast for the company's liquid crystal display glass operations in Japan.

ECONOMIC NEWS

Friday morning, the Department of Commerce released its report on the U.S. current account deficit in the second quarter. The report showed that the deficit narrowed compared to an upwardly revised first quarter deficit.

The report showed that the current account deficit narrowed to $195.7 billion in the second quarter from an upwardly revised $198.7 billion in the first quarter. Despite the decrease, the deficit still ranked as the second highest on record.

Economists had expected the deficit to fall to $194.5 billion from the $195.1 billion deficit originally reported for the first quarter.

The Commerce Dept. said that the deficit amounted to 6.3 percent of the gross domestic product in the second quarter. The deficit in the first quarter ran at 6.5 percent of GDP.

The nation's trade deficit helped to keep the current account deficit near record levels, representing about 90 percent of the shortfall. The trade deficit rose to $173.3 billion in the second quarter from $173.1 billion in the first quarter.

INTERNATIONAL MARKET NEWS

Asian-Pacific benchmarks ended mostly down, reflecting confusing economic news coming from the U.S. The Japanese stocks declined 0.2% on tech stock issues sell-off because of negative earnings prospects of high-tech companies. Across the region, Hong Kong’s Hang Seng lost 0.4%, while South Korea’s Kospi advanced 0.4%.

European stocks were trading in the positive at mid-day on lower crude-oil prices and approaching general election in Germany with resource stocks and spot gold being the leading gainers. The German DAX 30 rose 1.4% rebounding from recent losses, the French CAC 40 advanced 0.7%, and London’s FTSE 100 climbed 0.5%.

ENERGY, METALS, CURRENCIES

Oil prices further declined on lower OPEC demand forecast. U.S. light sweet crude October delivery lost 65 cents to $64.10 a barrel in electronic trading on the Nymex. Heating oil fell 3 cents to $1.8810 a gallon. Gasoline lost more than 3 cents to $1.8650. London Brent fell 65 cents to $63.01.

Gold prices reached a 17-year high as the appeal for the precious metal increased on inflation concerns. Gold for immediate delivery in London rose $3.25 to $459.00 per troy ounce. December gold contract gained $3.40 to $462.70. In Hong Kong gold climbed $8.40 to close at $457.85. Silver opened at $7.07, up from $7.01.

The U.S. dollar fell against the other major currencies in European trading. The euro was quoted at $1.2273, up from $1.2216. The dollar changed hands at 110.81 yen, up from 110.36.. The British pound traded at $1.8110, up from $1.8053.

EARNINGS NEWS

Brinker International Inc., restaurant chains operator, stated its first quarterly dividend, which will be 10 cents a share payable on Dec. 14 to shareholders of record as of Nov. 22. The company also reaffirmed its full-year outlook for earnings of $2.40 to $2.46 a share, apart from costs for equity-based compensation.

SSA Global Technologies Inc., ((SSA)) software applications producer, posted 4Q net earnings of 4 cents a share, up vs. a net loss of $4.24 a share in the same time last year on strong revenue growth. The company stated 4Q pro forma earnings of 31 cents a share.

Adobe Systems Inc., ((ADBE)) software producer, reported fiscal a 3Q profit rise to 29 cents a share, up from 21 cents a share a year earlier on 21% revenue growth, topping analyst estimate of 27 cents a share.

[Clarcor Inc., ((CLC)) environmental filtration products, posted 3Q earnings of 40 cents a share, up from a year-earlier profit of 31 cents a share. Sales increased 4.9% The company raised its earnings outlook for the full year to earnings of $1.38 to $1.42 a share from a previous projection for a profit of $1.32 to $1.38 a share.

Tektronix Inc., ((TEK)) maker of testing equipment, posted 1Q net earnings of 17 cents a share, down vs. 43 cents a share in the same period a year ago on revenue growth, missing analysts’ forecasts of 23 cents a share.. The company reported first-quarter pro forma earnings of 25 cents a share.

Media General, Inc., ((MEG)) media firm, issued a warning that its 3Q profit would be 38-41 cents a share, below the last year period level of 66 cents a share. The Company stated lower advertising revenue and higher fuel costs, among other factors accounting for the warning. Analysts predicted earnings of 62 cents a share.