Rita Hurts Averages

Elena
22 Sep, 2005
New York City

Asian markets closed mostly lower with the Nikkei down 0.3% and Hong Kong down 0.3%. European stocks sharply declined at mid-day with German DAX 30 being the biggest loser , down 0.7%. The Labor Dept. released weekly jobless claims for the week ending Sept. 17, showing an increase of 8,000 to a seasonally adjusted of 432,000 people, vs. expectations of 440,000.

U.S. MARKET AVERAGES

Stock markets are expected to open weak or at the flat line. The main reason for the lower start is undoubtedly Hurricane Rita of category 5 which has gathered strength along its march towards the Texas coast, sending oil prices near $68 a barrel and making oil majors evacuate their rigs in the Mexican Gulf.
The second hurricane after devastating Katrina raises concerns about its impact on gasoline prices which could hurt consumer spending, the key indicator of economic growth.

S&P 500 futures were down 0.9 points, slightly above the fair value. Dow Jones industrial average futures slipped 11 points, also above fair value. Nasdaq 100 futures fell 2 points, taking them slightly below fair value.

Investors will also watch shares of Cognos Inc which fell 4.3% to $37.33 on the electronic brokerage network after Wednesday's close. The Canadian software company posted 3Q forecast that lagged Wall Street expectations.

Shares of retailer Bed Bath & Beyond Inc. may be in the spotlight after its earnings topped forecasts. The stock rose 4% to $39.01 after the bell.

ECONOMIC NEWS

UNEMPLOYMENT INSURANCE WEEKLY CLAIMS REPORT
SEASONALLY ADJUSTED DATA

In the week ending Sept. 17, the advance figure for seasonally adjusted initial claims was 432,000, an increase of 8,000 from the previous week's revised figure of 424,000. The 4-week moving average was 376,250, an increase of 29,000 from the previous week's revised average of 347,250.
The advance seasonally adjusted insured unemployment rate was 2.1 percent for the week ending Sept. 10, an increase of 0.1 percentage point from the prior week's unrevised rate of 2.0 percent.

The advance number for seasonally adjusted insured unemployment during the week ending Sept. 10 was 2,666,000, an increase of 88,000 from the preceding week's revised level of 2,578,000. The 4-week moving average was 2,603,000, an increase of 23,750 from the preceding week's revised average of 2,579,250.

INTERNATIONAL MARKET NEWS

Asian-Pacific benchmarks ended mostly in the red on sharp declines of U.S. stock markets overnight and soaring oil prices, boosted by threatening Hurricane Rita. The Nikkei fell 0.3%, dragged by consumer-electronics group Sony Corp. and other decliners like Advantest Corp., Honda Motor. Across the region, South Korea’s Kospi added 0.3% and Australia’s All Ordinaries gained 0.2%. Markets in Hong Kong, Shanghai and Singapore finished down.

European markets traded in the negative territory at mid-day, reflecting surging oil prices as Hurricane Rita gained power in the Mexican Gulf region. The German DAX 30 was the biggest loser, down 0.7% on post-election economic uncertainty. The French CAC 40 lost 0.5%, dragged by beverage producer Pernod Ricar and insurer AXA. London’s FTSE lost only 0.1% as oil majors and mining stocks provided support.

ENERGY, METALS, CURRENCIES

Oil prices surged over $67 a barrel on Hurricane Rita, category 5, threatening to hit key oil production facilities in the Mexican Gulf. Light sweet crude November delivery climbed 91 cents to $67.71 a barrel on the Nymex. Heating oil added 3 cents to $2.0750 a gallon, while gasoline gained 9cents to $2.1445. Natural gas reached $13.17 per 1,000 cubic feet. London Brent rose 63 cents to trade at $66.36.

Gold advanced in European trading. In London the precious metal traded at the recommended price of $472.75 per troy ounce, up from $468.30. In Hong Kong gold climbed $4.50 to close at $472.75. Silver traded at $7.42, up from $7.35.

The U.S. dollar was mixed against the other major currencies. The euro was quoted at $1.2212, down from $1.2217. The dollar changed hands at 111.22 yen, down from 111.24. The British pound was trading at $1.8043, down from $1.8100.

EARNINGS NEWS

KB Home, ((KBH)) homebuilder, posted fiscal 3Q earnings of $2.55 a share, up from $1.42 a share in the year-ago period, beating the analyst estimate of $2.39 a share on 44% revenue growth.

General Mills, Inc. ((GIS)), packaged consumer producer, reported 1Q results of fiscal 2006. Earnings per share rose to 64 cents, up from 45 cents in the comparable period last year. Net sales for the period increased 3 % to $2.66 billion over the same period a year earlier, as unit volume grew 1 percent worldwide. Segment operating profits rose 21 % to $500 million. Earnings after tax amounted to $252 million, up 38 % from $183 million in the year-ago period.

Rite Aid Corp., ((RAD)) drugstore chain, reported a 2Q loss of 3 cents a share, down vs. year-ago earnings of nil per share, hurt by sluggish pharmacy sales and rising expenses, matching analysts’ expectations of a loss of 3 cents a share.
Texas Industries Swings to Loss from Year-Earlier Profit

Texas Industries, ((TXI)) construction materials producer, posted 1Q loss of $2.25 a share, down vs. a profit of $1.62 a share in the same period a year earlier despite revenue growth, missing widely the analyst estimate of 63 cents a share. Excluding discontinued operations and debt retirement costs, earnings would have amounted to 59 cents a share.

CORPORATE NEWS

Sony Corp, consumer-electronics group, announced a decision to cut 10,000 jobs, or 6% of its global workforce, shut down 11 plants and terminate 15 unprofitable restructuring operations in order to revive its electronics business. The company expects losses of $90 million for 2005.

Delta Air Lines Inc., nation’s third-largest carrier, said it will slash 9,000 jobs, lower employee payment and shift its focus on international flights as part of cost-saving restructuring plan. The company aims at achieving additional $3 billion in annual cost savings by the end of 2007.