Flat Opening on Oil and GDP

Elena
29 Sep, 2005
New York City

PepsiCo reported Q3 earnings of 78 cents a share on revenue of $18.8 billion, beating expectations. Research In Motion declined 7% on disappointing earnings report. The initial jobless claims in the latest week fell by 79,000 to 356,000, 60,000 of which were related to Hurricane Katrina. The Commerce Department said that Q2 GDP figures remained unchanged at 3.3% growth.

U.S. MARKET AVERAGES

The U.S. stock futures predict a flat opening, continuing the sequence of three consecutive lackluster sessions with mixed Wednesday close. Crude-oil, natural gas prices, and gasoline prices have weighed on the market sentiment making another rise after the release of the weekly petroleum report yesterday.
Two economic reports likely to give a definite direction to the market have been released. The Commerce Department reported that the final reading for second-quarter GDP was 3.3%, remaining unchanged from the prior reading and down from 3.8% in the first quarter. The news was in line with analysts’ expectations.

According to the Labor Department report the initial jobless claims in the latest week fell by 79,000 to 356,000; 60,000 of those claims were related to Hurricane Katrina.

The beverage and food maker PepsiCo posted better-than-expected 3Q earnings of 78 cents a share on revenue of $18.8 billion, excluding repatriation charges.

A sale of $1.6 billion unit by J.P. Morgan Chase and a cost-saving plan at Ford Motor will also attract traders’ attention.

INTERNATIONAL MARKET NEWS

Asian-Pacific benchmarks ended mostly in the positive. The strong performance was led by the Nikkei which closed at a new four-year high of 1.4% at 13617.24 with gains, made on the back of the stronger dollar, positive retail sales data and optimism about the domestic economy ahead of two economic reports. Hong Kong’s Hang Seng rose 1.4%, reflecting gains in commodity prices and higher U.S. durable goods orders. South Korea’s Kospi ended up 0.2% at a record of 1,231 22, despite disappointing economic news.

European markets lost ground at mid-day trading on mixed corporate upgrades from pharmacy chain Boots Group and sugar refinery Tate & Lyle, although strength in steel and mining stocks provided some support to the markets with Arcelor rising 2.7% and Corus up 2.9%. The German DAX 30 lost 0.2%, the French CAC 40 declined 0.1%, and London’s FTSE 100 was flat. The euro was steady against the dollar at $1.2061.

ENERGY, METALS, CURRENCIES

Crude-oil prices surged over $66 a barrel, but refined products prices declined after the U.S. petroleum inventory report, which showed a drop of crude and distillate stocks but an increase of gasoline stocks. Light sweet crude November delivery added 15 cents to $66.50 a barrel in electronic trading on the Nymex. Heating oil inched up to $2.1345 a gallon, while gasoline was up 1 cent to $2.3300 London Brent added 7 cents to $64 a barrel.

Gold prices jumped in European trading, reflecting higher crude-oil and weaker dollar. In London the precious metal traded at $472.50 per troy ounce, up from $463.90. In Hong Kong gold rose $8.20 to $470.25. Silver traded at $7.35, up from $7.30.

The U.S. dollar lost ground against the other major currencies in European trading. The euro was quoted at $1.2054, up from $1.2038. The dollar changed hands at 112.72 yen, up from 113.01. The British pound was trading at $1.7651, up from $1.7648.

EARNINGS NEWS

PepsiCo ((PEP)), beverages and foods manufacturer, reported 3Q earnings dropped 37% to 51 cents a share and after adjusting for repatriating $7.5 billion of international earnings, its earnings of 78 cents a share beat analysts’ forecasts of 73 cents a share. Revenue soared 12.7% to $8.18 billion, also beating analyst estimate

Emmis Broadcasting Corp. ((EMMS)), broadcasting company, reported 2Q net income dropped to 15 cents a share, down from 23 cents a share in the year-ago period, on higher interest expense from debt incurred to implement the company's Dutch Auction stock repurchase in June. Revenue for the period advanced 11% to $108 million. The company also stated that the sale of 9 of its 16 stations would lead to proceeds that exceed expectations.

American Greetings Corp. ((AM)), greeting cards maker, reported that 2Q net income dropped to 5 cents per share, down from 10 cents per share a year earlier as weak international business countered strong domestic growth. Sales shed 1 % to $387.6 million from $392.1 million in the year ago period.

Actuant Corp. ((ATU)) industrial products and systems manufacturer, reported 4Q net income increased to $19.1 million, or 63 cents a share, up from $18.3 million, or 67 cents a share in the same time last year. The year earlier net income incorporated 39 cents a share gain from discontinued operations.

CORPORATE NEWS

E-Trade Financial Corp. announced it has agreed to buy BrownCo from JPMorgan Chase & Co. for $1.6 billion in cash. For the online brokerage this will be the second acquisition deal of a rival in the last two months.