Heavy Volume, Gains in Tech, Finance, Energy

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

What a busy day. Heavy volume on NASD and NYSE, oil dropped close to 3%, bond yield rose to 4.26%, Intel and ExxonMobil got upgrades and finacials and tech stocks led the rally on a day when options expire and S&P rebalances the index. Home builders fell, semis rose and energy stocks advance despite fall in oil price.

The market was on the move.

The heavy volume supported narrow rally led by tech and energy stocks upgrade and financial stocks jump despite the rising bond yields to 4.26%.

The volume was strong right from the opening, and market passed one billion shares by mid-day. The total volume on NYSE was 3.0 billion shares surpassing the previous high of the year on March 18th. The trading volume of 2.2 billion shares on NASD was also close to this year’s record. There were 273 new highs and 104 new lows on NYSE and 220 new highs and 106 new lows on NASD.

The strength in financial sector was widespread across large banks, mortgage originators, and brokers. Despite the fall in bond prices these stocks were widely favored during the session. Home builders came under heavy selling pressure as yields on 10-year note rose to 4.26%.

Tech stocks advanced as shares of Intel were upgraded by a broker. Tech rally was felt by networking stocks, semiconductors, security systems, and select computer hardware makers.

Fall in oil price to $63 per barrel helped market to sustain the gains in the last trading hours, but energy stocks still rose on upgrade on ExxonMobil and fears of rising natural gas prices.

MOVERS AND SHAKERS

Intel ((INTC)) was up 1% after the company’s stock was 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. Company’s stock rose 2% on expectations of higher revenue and better margins.
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. Only a few days ago the stock was downgraded by Morgan Stanley.
American Express ((AXP)) shares jump $1.88 as news report suggest that bankruptcy court approved it lending plan for Delta Air.

Peabody Energy ((BTU)) and Fording Trust ((FDG)) shares rose better than 5% during the session.

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 made solid gains and closed higher on forthcoming German general election, strong resource stocks and 17-year high gold futures. The German DAX 30 rose 1.6% rebounding from recent losses, the French CAC 40 advanced 0.7%, and London’s FTSE 100 climbed 0.5%.

ENERGY, METALS, CURRENCIES

Oil prices fell $1.75 to $63 a barrel on lower OPEC demand forecast. OPEC suggested that world oil demand will decline by 150,000 to 200,000 barrels a day. The daily demand is still expected to be better than 82 million barrels a day. Heating oil fell 7 cents to $1.83 a gallon. Gasoline lost 11 cents to $1.78. London Brent fell $1.38 to $62.28.

Gold prices reached a 17-year high as the appeal for the precious metal increased on inflation concerns. In London gold closed at $458.70 per troy ounce, up from $454.80. In Hong Kong gold gained $8.40 to close at $457.85. Silver closed at $7.03, up from $7.01.

The U.S. dollar gained ground against the other major currencies in European trading. The euro was quoted at $1.2208, down from $1.2216. The dollar changed hands at 111.35 yen, up from 110.36.. The British pound traded at $1.8027, 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., 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.

CORPORATE NEWS

Fidelity National Financial ((FNF)) and Certegy ((CEY)) announced a definitive merger deal. Under the agreement, each share of Fidelity National Information Services, a majority-owned subsidiary of Fidelity National Financial, will be exchanged for 0.6396 shares of Certegy common stock.

Private equity firm Blackstone Group is close to an agreement to acquire UICI, a nontraditional health- insurance companyin a $1.2 billion deal. Blackstone is expected to sell about $250 million of equity in the deal to two other investment firms, including DLJ Merchant Banking Partners, the private-equity arm of Credit Suisse Group's Credit Suisse First Boston.

Google priced a follow-on stock offering of 14.16 million shares at $295 apiece. The sale will raise $4.18 billion, making it the biggest follow-on offering.
Newell Rubbermaid, consumer-products maker, announced that it will cut more than 5,000 jobs and close a third of its 80 manufacturing plants as part of a restructuring plan aimed at cutting $120 million a year in costs by 2008.