Hurricane Rita, Oil up 7%

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

Hurricane Rita strikes on Wall Street. Traders wasted no time in biddding commodities up.Oil closed up 7%, gold 1.6%, and natural gas up 14%. Carnival Cruise despite rising fuel costs and Hurricane Katrina delivers revenue and earnings growth. Nike reports revenue and earnigs growth on the strength if domestic footwear market. Apple Computer hit all-time high. German election analysis.

U.S. MARKET AVERAGES

It is Hurricane Rita on the Wall Street, inconclusive election in Germany, and Fed watchers inflation worries all conspired to drift the market lower in the final hour of trading.

Hurricane Rita is expected to reach South Florida and strike as category one but then strengthen as category three storms as it travels to Gulf of Mexico. The commodity traders did not waste time in driving the prices of oil, natural gas, copper, gold and silver higher this morning. Gold reached seventeen-year-high at $467.30 up $7 per ounce. Silver was up eleven cents to $7.39 per ounce and copper was up six cents to $1.6545. Oil at close was up 7%.

Overnight election in Germany led no clear victor and now the country will have to endure days of political limbo. Financial markets in Germany were down 1.2%. Dollar was up one Euro cent against Euro on the news.

General weakness in techs led decline in Nasdaq and broader averages. Cisco, IBM, Dell, Intel, AMD, Texas Instruments, QUALCOMM traded lower.

Homebuilders were trading down for the sixth session in a row as yields in the bond market rose ahead of Fed’s action tomorrow. Casinos, retailers, restaurants stocks were down.

Energy stocks were up as oil and natural gas continued their climb with Hurricane Rita ruling the thoughts of traders. ExxonMobil, Murphy Oil, and refiners Valero and Tessoro traded higher. Shares of natural gas companies, EOG resources and South Western Energy, jumped up by more than 4%.


MOVERS AND SHAKERS

Spinnaker Exploration Co. ((SKE)) rose 32.5%to $64.57 after Norwegian Norsk Hydro ((NHY)), 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’.

Carnival Corp ((CCL)) shares were up 4% on earnings release. The company reported earnings of $1.36 vs. $1.22 per share a year ago on revenue growth of 11% to $3.61 billion. Fuel prices for the quarter rose 20% but still cost only 5.8% of total revenue.

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 analyst returned from trip to visit the company in China.
E.W. Scripps Co. ((SSP)) was upgraded at JP Morgan to overweight from neutral. The broker stressed the strength in cable networks business.

Dominion Resources ((D)) was upgraded to buy at Citigroup. The broker cited big rise in commodity prices.

ECONOMIC NEWS

Tuesday morning market is expecting housing starts and building permits for the month of August and Fed’s decision on interest rates in the afternoon.

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.

Copper rebounded from an eight-week low on speculations of increased demand because of lower prices. At mid-day copper futures December delivery rose 1.2%, or 1.95 cents to $1.6125 a pound but then rose quickly to $1.65

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 was break even, 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.

Former executives of Tyco International, Dennis Kozlowski and Mark Swartz were sentenced to prison up to 25 years and ordered to pay fines and restitution totaling $250 million.