Bonds Rise, Tech & Healthcare Fall

Elena
19 Sep, 2005
New York City

Crude-oil prices kept rising to reach trading levels over $66 a barrel, making a 5% jump. The oil surge is due to fears of another tropical storm threatening to hit the oil facilities in the Gulf Coast. Investors await Fed Reserve's decision on interest rate tomorrow, expecting a rise of 3.75%. Semiconductor sector is down 1.5%. German election analysis.

U.S. MARKET AVERAGES

The major U.S. averages have been steadily trading lower since opening of the trading session, making a slight attempt to rise from intraday lows but have hardly ticked up. The stock markets decline is attributable to a new spike of oil prices and uncertainty over the Fed Reserve’s decision on interest rate Tuesday.

Crude-oil jumped 5% over $66 a barrel on another tropical storm approaching the Gulf Coast. Traders are not very active in dealings, awaiting FOMC’s decision of interest-rate increases. Although a pause of the interest-rate hikes was expected as it was considered a good support to the economic recovery, economists now tend to see an increase of the benchmark rate by 3.75%.

Energy stocks climbed as crude-oil jumped 5% over $66 a barrel. The oil service space is leading the advance with a gain of 2.9%. The natural gas and oil service spaces are each up more than 2.4%.

The housing sector posted gains in the first trading hour, but has been falling steadily since the mid-morning. The space is down 1.8%. The semiconductor sector has extended its losses recently and is now down about 1.5%. With Monday's decline, the space has slipped below its 50-day moving average for the first time since May.


MOVERS AND SHAKERS

Spinnaker Exploration Co. jumped 32.5%to $64.57 after Norwegian Norsk Hydro, energy and aluminum group agreed to buy the U.S. oil exploration company for $2.45 billion in cash.

Blockbuster Inc. dropped 8.4% to $4.36 after the company's CEO told the Wall Street Journal that the entire video rental industry ‘is in the tank’.

TBC jumped 32% in premarket trading benefited from the news that it will become a unit of Sumitomo.

Nike ((NKE)) was up 7.4% after announcing its first-quarter earnings of $432.3 million, well above analysts' expectations. Revenue soars 8% to $3.9 billion from $3.6 billion a year earlier.

EBay Inc. ((EBAY)) fell 0.5% after Bear Sterns downgraded the company to peer perform from outperform after the broker traveled to China.

E.W. Scripps Co. ((SSP)) was upgraded at JP Morgan to overweight from neutral. The broker pointed awaited strength in cable networks. There were bare premarket quotes.

Dominion Resources ((D)) was upgraded to buy at Citigroup. The broker cited big rise in commodity prices. Premarket quotes were not available.

ECONOMIC NEWS

No major economic news release is due today.

INTERNATIONAL MARKET NEWS

Asian-Pacific benchmarks ended generally higher, lifted by special treatment shares of companies which have reported losses for two successive years. The Japanese and Hong Kong stock markets were closed for holidays. Among the regional markets, Shanghai’s Composite rose 0.6%, South Korea’s Kospi gained 0.4%, and India’s BSE 30 added 0.5%. In currency markets the dollar bought 111.42 yen.

European markets closed higher but the German DAX 30 sharply dropped 1.2% after the general election brought uncertainty and caused concerns over the pace of economic reforms. Markets across the region gained on broker upgrades and strong energy sector. The French CAC 40 fell 0.1%, while London’s FTSE 100 added 0.4% on deals, restructuring talk and energy stocks. The euro lost 0.7% to $1.2154.

ENERGY, METALS, CURRENCIES

Oil prices jumped almost $3 on fears of another tropical storm approaching the Gulf Coast likely to hit the still recovering oil facilities. U.S. light sweet crude October delivery rose 4%, or $2.80 to $65.80 a barrel on the Nymex. Heating oil gained 14 cents to $1.98 a gallon. Gasoline rose more than 16 cents to $1.9525. London Brent November delivery climbed $2.64 to $64.45.

Gold prices reached a 17-year high as the appeal for the precious metal increased on inflation concerns and uncertainty about U.S. economy. Since last week the precious metal has risen 4%. In London gold traded at $461.95 per troy ounce, up from $458.70. Silver opened at $7.20, up from $7.03.

Copper rebounded from an eight-week low on speculations of increased demand because of lower prices. Copper futures December delivery rose 1.2%, or 1.95 cents to $1.6125 a pound.

The U.S. dollar climbed against the other major currencies in European trading. The euro was quoted at $1.2132, down from $1.2225. The dollar changed hands at 111.42 yen, up from 110.33. The British pound traded at $1.8003, down from $1.8059.

EARNINGS NEWS

Nike Inc., ((NIKE)) footwear and apparel maker, posted 1Q earnings of $1.61 a share, up from a year-earlier profit of $1.21 a share on 8% revenue growth, beating analyst estimate of $1.42 a share.

Steelcase, ((SCS)) office furniture company, posted 2Q earnings of 9 cents a share, up from a nickel a share in the year-earlier period on 8% revenue growth, missing analysts’ forecasts of 14 cents a share.

Sycamore Networks, Inc. ((SCMRE)) optical networking company, reported 3Q net loss on a generally accepted accounting principles (GAAP) basis was 4 cents per share, flat with the year-ago period. 3Q non-GAAP net loss was 0 cents a share, up from 3 cents per share in the same period last year. 3Q revenue was $17.8 million, up vs. $14.7 million in the year-ago period.

Marcus Corp., ((MCS)) operator of movie theaters and hotel properties, posted 1Q earnings of 51 cents a share, down vs. a year-earlier profit of 61 cents a share on revenue growth, beating analyst estimate of 39 cents a share. On a continuing operations basis, the Milwaukee gained $12.3 million, or 40 cents a share in the quarter.

CORPORATE NEWS

Spinnaker Exploration ((SKE)) has agreed to be acquired by affiliates of Norsk Hydro ASA for $65.50 per share in cash. The transaction is expected to be completed in the fourth quarter.

TBC Corp. ((TBCC)) has agreed to be acquired by Sumitomo Corporation of America for $35 per share in cash. The transaction, which is expected to close by the end of the year, has a total value of about $1.1 billion, excluding debt.