Averages Decline by 1%

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

Broader averages declined one percent as oil rose by the same. The decline in averages was led by broad sell-off in retail, techs, consumer staples, casinos, and home buiders. Weekly oil report suggested that crude oil inventories fell but that of gasoline and distillate inventories rose. 10-year note yield fell by 0.06 percent to 4.18%.

U.S. MARKET AVERAGES

The market could not shake off the focus from the yesterday’s rate hike and rise in oil as Hurricane Katrina nears Gulf of Mexico at category four. Weekly petroleum report indicated rise in crude inventories and fall in gasoline inventories and rise in distillate inventories. While market liked the rise in gasoline inventories but feared that Rita can do significant damage to the oil exploration and refining sector in the state of Texas.

According the news on Mineral and Management services web site, the government office that monitors the exploration activities in the offshore and Gulf of Mexico region, 469 oil exploration platforms and 69 oil rigs are closed representing app daily 1.09 millions of barrels of oil and 4.7 billion cubic feel of gas production. Currently 73% of oil and 45% of gas production in the region is shut.

Weekly petroleum report from the Department of Energy reported that the inventories of crude oil dropped 300,000 barrels to 308.1 million barrels, distillate including heating oil 800,000 to 134.1 million, and gasoline inventories 3.4 million barrels to 195.4 million barrels in the week ending Sept 16.

Financials, techs, consumer staples joined in the broad sell-off led by the rise in oil and interest rates. Home builders, retailers and restaurant stocks continued their fifth day of sell-of.

MOVERS AND SHAKERS

Urban Outfitters ((URBN)) shed another 1.2% at mid-day, falling again on a second day on yesterday’s sector decline and nearing its May low of $49.44 but recovered close to $52.50 at close.

American Eagle Outfitters ((AEOS)) lost 6.5% on the second day after the company lowered its 3Q earnings outlook.

Fedex Corp ((FDX)) advanced 6% after the shipping and package delivery company expanded its profit forecast for 2006 after the first-quarter results appeared to be above analyst forecasts.

ConAgra Foods Inc ((CAG)) closed up 4% after the company posted first-quarter profit more than 50% above on higher selling prices and lower costs. Sale of its part in Pilgrim's Pride Corp. helped the company to achieve higher profit. ConAgra Foods was down 2% yesterday.

Merrill Lynch send shares of two rival companies in the semiconductor sector in different directions before the bell. The broker upgraded Intel Inc. ((INTC)) to buy from neutral due to relative valuation. At the same time Merrill Lynch downgraded Advanced Micro Devices ((AMD)) from buy to neutral also pointing valuation. At close, Intel was unchanged and Advanced Micro Devices was down 3.5%.

ECONOMIC NEWS
Crude oil inventories added to their recent declines with a slight dip in the latest week, according to government data released Wednesday, but the losses were far less steep than in the previous 2 weeks. Stocks of gasoline ticked up during the period. The Department of Energy's Energy Information Administration revealed that crude oil inventories dropped by 300,000 barrels for the week ended September 16, falling to 308.1 million barrels from the 308.4 million barrels recorded in the previous week. This followed a decline of 6.6 million barrels for the prior week and a drop of 6.4 million barrels in the week before that. Even with the recent declines, oil inventories are still 11.7% higher than their levels of the same time last year.

Gasoline inventories posted a week-over-week advance of 3.4 million barrels, adding to the more moderate gain posted in the prior week. Gasoline stocks are now 5.4% below their levels of last year. Inventories of distillate fuel oil rose by 800,000 barrels for the most recent week.

INTERNATIONAL MARKET NEWS

Asian-Pacific benchmarks closed mixed with Japan’s Nikkei and South Korea’s Kospi reaching record highs. The Japanese stocks rose 0.4% to hit another peak of 13 196 mainly on strong confidence in the economic growth of the country which has risen since Prime Minister Junichiro Koizumi was reelected. South Korean shares accumulated further 0.5% to yesterday gains and reached the record 1196. Among the other regional markets, Hong Kong’s Hang Seng lost 0.1%, while Sydney’s All Ordinaries dropped 0.6%.

European markets closed in the red with sharp declines on oil prices at $68 a barrel as Hurricane Rita threatens to hit the Gulf of Mexico. Among the leading losers of the day were chemical, media and airline stocks. The German DAX 30 tumbled 1.8%, the French CAC 40 dropped 1.4%, and London’s FTSE lost 0.7%. The euro gained 0.83% to $1.2217.

ENERGY, METALS, CURRENCIES

Oil prices surged over $67 a barrel on approaching Hurricane Rita, expected to hit oil facilities in the Gulf of Mexico by the weekend. Light sweet crude November delivery climbed $0.60 to $66.80 a barrel on the Nymex. Heating oil added 2 cents to $2.03 a gallon, while gasoline gained 4.6 cents to $1.973. Natural gas closed at $12.59 up 10 cents per 1,000 cubic feet. London Brent rose $1.01 to trade at $65.21.

Gold advanced in European trading. In London the precious metal closed at $468.30 per troy ounce, up from $465.50. In Hong Kong gold fell $2 to close at $468.25. Silver closed at $7.35 per ounce, down from $7.36. In New York gold closed up $2.60 to $469.40 per ounce.

The U.S. dollar fell against the other major currencies. The euro was quoted at $1.2229, up from $2162. The dollar changed hands at 111.10 yen, down from 111.61. The British pound was trading at $1.8109, up from $1.8038.

EARNINGS NEWS

Biomet,((BMET)) medical products maker, announced 1Q net profit rose 66% to 40 cents a share, with sales up 10.7% on continued strong sales of orthopedic reconstructive devices and dental reconstructive implants for its record quarter, missing analysts’ forecasts of 41 cents. The company said it was comfortable with 2Q consensus earnings forecasts of 42 to 44 cents a share.

FedEx Corp., ((FDX)) transportation and supply chain management services provider, posted 1Q earnings of $1.10 a share, up from $1.08 a share in the same period last year on 10% revenue growth for the comparable quarter. 1Q income included a $79 million charge for facility leases, without which Memphis-based FedEx said it would have earned $1.25 a share, beating analyst estimate for earnings of $1.17 a share. FedEx expects 2Q income $1.30 to $1.45 a share and raised its 2006 outlook to $5.25 to $5.50 a share.

CarMax Inc., ((KMX)) used car chain provider, reported that 2Q profit jumped 39 % to 39 cents per share, compared with 28 cents per share a year earlier, beating analysts’ forecasts of 37 cents per share. Revenue from used autos rose 25% to $1.24 billion as volume rose 21%. Meanwhile, new vehicle revenue grew 11 percent to $151.9 million and wholesale revenue rose 25% to $190.8 million.

ConAgra Foods Inc. ((CAG)), packaged food company, reported that 1Q earnings more than doubled to 68 cents per share from 26 cents per share in the year-ago period, following a large gain from selling its remaining shares in Pilgrim's Pride Corp. as well as strong performance in several areas of the business. Analysts were expecting 1Q earnings of 23 cents per share.

Morgan Stanley ((MWD)), financial services provider, reported 3Q net income dropped 83% from the year-earlier period and gained 13 cents per share compared with 76 cents per share a year ago. The results include an after-tax charge of $1 billion to reflect the planned sale of the company's aircraft financing business. From continuing operations, Morgan Stanley gained $1.17 billion, or $1.09 a share, up 34% from last year’s period.