New York Rebounds, Oil Up 3.3%

123jump.com Staff
25 Jul, 2007
New York City

Averages is New York rebounded on revised earnings forecast from Boeing and better than expected earnings from Amazon.com. Market gained its firmness in the last hour of trading lifting the averages in Brazil but Mexico closed lower. Europe declined led by a loss in Germany. Japan closed lower on tracking previous day losses in New York but Shanghai closed higher. U.S. and U.K. private equity lenders are stuck with $12 billion of loans. Apple jumps 8% after reporting earnings.

[R]5:00PM New York – Apple Inc reported third quarter earnings soared 73% on revenue rise of 24%.[/R]

Apple Inc reported third quarter sales growth of 24%, earnings gain of 73%, earnings per share rise of 70.3%

The company reported sales in the quarter of $5.4 billion, net income of $818 million, and earnings per share of 92 cents per share. The company in the previous reported revenue of $4.37 billion, earnings of $472 million, and earnings per share of 54 cents.

Revenue in the North and South America jumped 21% on unit shipment rise of 28%. In Europe revenue gained 29% on 31% rise in unit shipments. In Japan units shipped rose 3% on flat revenue.

The gross margin in the quarter jumped to 36.9% from 30.3% on higher than expected shipments of Apple Macintosh computers. The international sales accounted 40% of total sales.

Apple Macintosh jumped 33% to 1.76 million, 9.81 million iPods, and 270,000 iPhones and accessories. Late launch of iPhone in the last quarter did not give enough data to analysts to predict early sales of iPhone. AT&T reported that in the last two days company had signed only 146,000 subscribers using iPhone, substantially lower than anticipated.

The company guided fourth quarter sales for the current fiscal year of $5.7 billion and earnings of 65 cents per share.

[R]4:30PM NY, 10:30 PM Frankfurt, 2:00AM Mumbai – Global Markets[/R]

Wall Street managed to rebound at least for today on better than expected earnings from Boeing, Amazon.com, DaimerChrysler. Sub-prime lending related jitters made another rounds knocking stocks of banks around the world. Nomura in Japan reported sharply higher earnings. American Movil earnings jumped 31%. Shanghai bucked the trend in Asia and closed up. Europe closed lower led by a loss in Germany.

Yields edged lower on 10-year U.S. bonds and closed at 4.913% and 30-year bond rose to close at 5.03%.

Crude oil jumped $2.44 to close at $76.00 per barrel, natural gas closed up 6 cents lower to $5.92 per mBtu, and gasoline futures increased 4.02 cents to close at 208.79 cents per gallon.

Gold traded lost $11.00 to close at $673.80 per ounce, silver decreased 29 cents to close at $13.15 per ounce, and copper futures lost or $60.50 to close at $8,044.50 per metric ton.

Dow Jones added 68.12 to 13,785.07, Nasdaq increased 8.31 to 2,648.17 and S&P 500 rose 7.05 to 1,518.09. DAX index in Germany closed down 114.24 to 7,692.55, in Tokyo Nikkei 225 closed at 17,858.42, down 143.61, and Brazil Bovespa gained 0.37% to close at 56,001.30.

A day after a sharp drop in New York market averages recovered on earnings from Colgate-Palmolive, Xerox, New York Times, Amazon.com, DaimlerChrysler, and Boeing. Existing home sales in June fell 3.8% in June from May but home prices inched up a fraction from a year ago. The annual rate of 5.75 million homes is likely to be revised lower in the coming months as home inventories rise across the country. Weekly inventory of crude oil fell as refineries operated at 91% capacity. The weekly data lifted the oil price by 3%.

Retail, restaurants, and consumer driven stocks dropped for the second day in a row. Nordstrom, Macy’s, Saks, Tiffany, and J C Penney fell more than 2%. Countrywide Financial dropped 3% after plunging 11% on a day of 33% decline in earnings.


Latin American Markets closed lower across the region led by a fall of 1.0% in Chile and Mexico, 0.3% decrease in Argentina, but 0.4% gain in Brazil.

In Sao Paolo trading iBovespa jumped 0.37% to 56,001.30 on falling metals prices and volatile trading in New York. CVRD fell 1.7% after nickel prices fell in international markets. Petrobras gained a fraction on rising oil prices. Yesterday, Petrobras ((PBR)) was ordered by the National Petroleum Agency to pay $700 million of unpaid taxes which the company plans to appeal. Gol Linheas fell 2.4% after the company requested passengers to delay all unnecessary travel. The recent crash of TAM Air plane in Sao Paolo has created delays at several airports. TAM fell 0.8%. All flights are halted indefinitely from Sao Paolo based Cognhos airport. Lojas Renner plunged 5.5% on declining same-store sales.

In Mexico City trading IPC Index fell 0.54% to 31,200.03 on weakness in European and American trading. American Movil dropped 2.6% after losing more than 3% in previous day trading. The company reported earnings rise of 31% on 29% increase in sales. The company chief executive said that it is looking to buy two smaller mobile telephone companies Telemig and Telesp. Groupo Elektra earnings fell 10% on higher financing cost from a year ago. The stock fell a fraction. The local airport operator Asur signed a five year deal with Banco Santander to open bank branches in the nine airports. The stock jumped 2% on a recommendation from a broker. Telefonos de Mexico dropped 1.8%, the company recently reported earnings gain of 16.4% on revenue gain of 1.9%.


[R]1:00PM NY, 5:00 PM Frankfurt European markets closed down, weighed by Volvo, Siemens.[/R]

European stock markets ended lower on Wednesday for a second straight session, dragged by disappointing earnings and guidance from Volvo, Randstad and Siemens. News about another delay of the sale of Chrysler's bonds also weighed. Across the region, Germany led decliners with a drop of 1.5%, followed by France, down 1.2% and the U.L. losing 0.7%.

Volvo dropped 9% after it reported a 14% profit decline on weakness in the North American truck market. Dutch recruitment firm Randstad fell 16.4% amid slower sales growth.

In Frankfurt Siemens fell 6.4% after the company reported Q2 loss of $758 million and forecasted weaker-than-expected sales growth. On the side of the gainers, DaimlerChrysler rose 1.8% after the auto maker posted partial Q2 results with earnings at its Mercedes car division up 74%.

In Paris automakers were also in the spotlight. Peugeot-Citroen slipped 5.9% as the group's margins raised concerns. Rival Renault dropped 3.5% ahead of earnings release after the bell. Shares of luxury-goods retailer Hermes fell 3.6%, due to a slight reduction of its same-store sales forecast. Business Objects climbed 7.4% after the software maker posted tripled Q2 profit and lifted its earnings outlook for the year.

In London recruitment firms Michael Page dropped 5.2%, while Hays fell 4.1%. Chipmaker CSR dropped 11.3% as the company warned of lower Q4 revenue. British insurance firms Friends Provident and Resolution fell 1.2% and 2.4%, respectively after they confirmed a merger talk of $17.7 billion deal. Among movers to the upside, GlaxoSmithKline shares rose 2.3% after it reported a flat Q2 profit, and also announced an increase in its share-buyback program to $25 billion.


[R]11:30AM Wall Street erased earlier gains on housing market concerns.[/R]

After the initial gains on the back of strong earnings from Boeing and Amazon, U.S. stocks fell sharply lower following the release of a report which showed a bigger-than-expected drop in existing home sales in June. The National Association of Realtors said that sales of existing homes dropped 3.8% to the slowest rate in over 4 years.

News that Wall Street companies are incapable of raising money to fund the $12 billion leveraged buy-out of DaimlerChrysler ((DCX)) unit Chrysler by Cerberus Capital Management also generated negative mood. As a result shares of banks involved in the Chrysler underwriting declined. J.P.Morgan ((JPM)) fell 1% and Citigroup ((C)) lost 0.4%. Broker-dealers continued to trade up, led by Goldman Sachs ((GS)) and Lehman Bros ((LEH)).

On the earnings news front, health benefits group WellPoint Inc. ((WLP)) said its Q2 net profit rose 11.2% to $1.35 a share, up from $1.17 a share on 7.7% revenue growth, meeting analyst expectations. It also raised its earnings guidance for the year. The stock dropped 3.5%. Corning Inc. ((GLW)), supplier of high-technology components, dropped 5.5% after it posted Q2 earnings decline of 30 cents a share, off from 32 cents a year ago. Quarterly earnings and revenue missed analyst expectations.

In late morning trading, the Dow Jones industrial average fell 2.84, or 0.02%, to 13,714.11, after rising sharply in earlier trading. The Standard & Poor's 500 index fell 2.77, or 0.18%, at 1,508.27, and the Nasdaq composite index fell 4.68, or 0.18%, to 2,635.18.


[R]09:45AM Wall Street opened higher, driven by robust earnings from Boeing, Amazon, NY Times.[/R]

Wall Street opened in the positive territory, boosted by robust earnings from Boeing Co. and Amazon.com. The Dow gained 81 points in the early going, reversing from the steep drop of over 200 points in the previous session.

The blue-chip average was led higher by 3.5% advance in the shares of Boeing ((BA)). It swung to a Q2 profit of $1.1 billion, or $1.35 a share from a loss of $160 million, or 21 cents a share, due to growth in its commercial airplane business and 14% revenue increase. The airline carrier boosted its estimate for 2007 spending on research and development to $3.7 billion. A solid boost to the market sentiment was given by Amazon.com ((AMZN)) which soared 25% after it said Q2 profit more than tripled on strong sales.

Among other major companies posting earnings, New York Times ((NYT)) reported profit of $118.4 million, or 82 cents a share, higher than $59.6 million, or 41 cents a year ago, beating analyst estimates. The stock added nearly 1%. GlaxoSmithKline ((GSK)) rose 3.6% after it reported disappointing Q2 earnings and revenue. The company unveiled a new $25 billion buyback.

Further on the earnings news front, Colgate-Palmolive Co. ((CL)) added 0.7% after posting a 47% increase in Q2 profit. Xerox Corp. ((XRX)) posted 2.3% increase in Q2 earnings on strong revenue from financing and office equipment servicing and supplies. The company earned 28 cents a share, slightly better than the 27 cents expected by analysts. The stock dropped 5.3%.

In midmorning trading, the Dow Jones industrial average rose 72.11, or 0.53%, to 13,789.06. The Standard & Poor''s 500 index was up 10.15, or 0.67%, at 1,521.19, and the Nasdaq composite index gained 16.68, or 0.63%, to 2,656.54. Bond prices rose as stocks climbed, pushing the yield on the benchmark 10-year Treasury note down to 4.92% from 4.95%late Tuesday.


[R]9:00AM U.S. stock futures pointed higher, helped by Boeing and Amazon.[/R]

U.S. stock futures rebounded Wednesday from steep losses posted in the previous session. Stronger-than-expected results at Amazon.com and an improved earnings guidance at Boeing generated positive sentiment, helping to offset expectations of another decline in existing home sales.

Amazon ((AMZN)) soared 23% in pre-open trading after the online retailer said its Q2 earnings tripled on 35% revenue growth. Boeing ((BA)) rose 3% after posting a $1.05 billion profit on strong jets sales.

Among other stocks in focus, NutriSystem ((NTRI)) dropped 12% in the pre-open, despite 70% profit increase in Q2. The company''s Q3 outlook fell below analyst expectations. S&P 500 futures climbed 7 points at 1,529.50 and Nasdaq 100 futures improved 7.5 points at 2,033.00. Dow industrial futures climbed 67 points.


[R]8:45AM New York, 6:15 PM Mumbai – Sensex in India close lower led by cement, real estate, and infrastructure stocks.[/R]

Sensex 30 on Bombay Stock Exchange fell 95.59 to close at 15,699.33 on weakness in trading in cement, technology and auto stocks. Of the 30 stocks in Sensex 23 fell and the rest advanced. The turnover on the exchange was reported at 5,605 crore rupees, a decline from 6,464 crore rupees in the previous session.

Earnings News

ONGC, government controlled oil and natural gas leader, jumped 2.4% to 937 rupees after reporting first quarter earnings growth of 11% to 4,610 crore rupees. Revenue fell to 13,688 crore rupees from 14,600 crore rupees and subsidy from the government declined 29% on the higher value of rupee. The company produced 6.88 million tons of crude oil, a decline from 6.93 million tons a year ago. The company generated a gross profit of $50.21 per barrel oil arise of nearly 10% from $45 a year ago.

Decliners

The strength in rupee dragged down the technology and business services exporters. TCS fell 2% followed by 1.3% loss in Wipro but Infosys jumped 0.7%. After the close in Mumbai the company reported that it was awarded $250 million project from Philips Electronics.

Bajaj Auto fell 3.6% to 2,360 rupees after the company scheduled a meeting settle the dispute between the holding company, minority shareholders, and creditors. The meeting is scheduled on August 18th

Real Estate stocks fell sharply a day after rallying. DLF fell 3%, Parsvnath declined 3.8%, and Unitech dropped 3.6%. Stocks in the infrastructure developers fell sharply led by Suzlon energy with a loss of 6.7%. Praj Industry fell 3.5% and L&T declined 3.2%.

Cement stocks fell after the government agency ordered an investigation into the business practices of the largest eighteen cement companies. India cement plunged 9% to 204 rupees followed by 5% decline in Ambuja Cements, 3.8% loss to 1,075 rupees in ACC, and 1% to 2, 990 decreases in Grasim.

Gainers

Indian Tobacco Corporation known as ITC jumped 8.6% to 165.30 rupees on the news that the company is planning to sell consumer products through a network of kiosks and supermarket to stem the impact of higher taxes on cigarettes. The company is scheduled to report earnings on July 27th. Target price revision by CLSA brokerage group to 185 rupees contributed the firmness in the stock.

Hindustan Unilever edged 1% higher to 203 rupees on the speculation that the company may sell its vast real estate holdings in Mumbai or develop its property in Bangalore.

Ballarpur Industries, largest paper company in India, jumped 3.6% on the news that the company is looking to restructure and may buyback up to 40% of its holding.


[R]8:00AM New York, 8:00PM Hong Kong – Shanghai index climbs to a record and Hong Kong closed a fraction lower.[/R]

Asian markets decline following sharp declines in Europe and America in the overnight trading. Philippines led the region with a loss of 1.6% followed by 1.2% decline in Australia, 0.8% decrease in Japan, and 0.6% fall in India. Hong Kong edged 0.5% lower but Shanghai advanced 2.7%.

In Hong Kong Hang Seng Index lost 110.7 to close at 23,362.18 and CSI 300 Index in Shanghai closed up 2.3% to 4,255.46 and Shanghai Composite Index jumped 2.7% to 4,323.97.

Airlines stocks soared on the earnings news. China Southern Airlines surged 9%, Hainan airlines jumped 2.6% lifted on the news that Air China earnings surged on higher demands for its international flights. The company stock jumped 7% on earnings growth of 20-fold.

Baotou Aluminum surged 9.9% and Aluminum Corp of China jumped 9.3% on the speculation that aluminum prices will gain in the coming months.

Industrial and Commercial Bank of China, the largest bank in China, jumped 2.6% in sympathy with the broader market rise. The recent rise in the stock has lifted its market value to the largest bank in market capitalization in the world.

Shanghai Automotive jumped 4.8% after it said that it plans to issue convertible bonds to expand its production and hunt for acquisition in the overseas market. The 8 billion yen bond is likely to be priced before the end of the year. Huaneng Power surged 10% after Goldman Sachs upgraded the stock.

Exposure to sub-prime lending in the U.S. left HSBC lower 1% in Hong Kong trading. Lower oil price in the region dragged CNOOC 3% lower. Property stocks held steady but telecom and retail stocks edged a fraction higher.


[R]6:30AM New York, 6:30PM Tokyo – Oil complex stocks and leading exporters lead a sell-off in Tokyo. Shipping companies recover at close[/R]

In Tokyo trading Nikkei 225 fell 143.61 to close at 17,858.42 on weak oil and sharp fall in New York trading. The index recovered from its mid-day trading losses of 1.5% to close only 0.8% lower.

Nintendo stock rebounded 6% from a loss of 2.5% to 3.5% at close during the day. Nintendo reported first quarter earnings of 80.3 billion yen from 15.6 billion a year ago and revised its annual earnings projection to 245 billion. The sharp revision in earnings 41% from an earlier projection lifted the stock and trading sentiment in the market. Nintendo also pays out high percentage of its earnings in dividend.

Nomura Holdings reported first quarter earnings of 76.7 billion yen compared to 20.1 billion yen from a year ago on higher asset under management and profits in stock trading. The boom is assets to manage retirement accounts in mutual funds helped the largest securities company to reach 30 trillion yen in assets under management. The investment management fees rose 47.3 billion from 29.7 billion and trading and brokerage commissions jumped to 113 billion from 79.6 billion.

Mistukoshi jumped 7% after Nikkei newspaper reported that the company may be exploring merger or other recapitalization plans.

Shipping companies closed higher after facing a sell-off in the morning trading. Kawasaki Kisen Kaisha closed up 2.7% followed by 1.4% gain in Mitsui O.S.K. Lines, and 1.3% in Nippon Yusen K.K.

Victor Company of Japan, popularly known as JVC, unit of Matushita declined 10% on the news that the company has agreed to acquire Kenwood. The worries of earnings dilution hurt the stock.

Lower oil dragged oil trading and refining companies at close. The refiner, Nippon Mining Holdings dropped 2.8% and Nippon oil fell 4%. Inpex, the largest oil explorer edged 3.2% lower.