Morning Rally in New York

123jump.com Staff
22 Aug, 2007
New York City

At the opening in New York, after fifteen minutes of trading, three popular averages raced to near 1% rise. The merger news, firm trading in Asia and Europe, and no new surprises in the credit market helped averages. NYMEX said that it is in merger talks with NYSE Euronext. E*Trade and TD Ameritrade are exploring merger possibilities. Toll brothers reported 85% decline in earnings. BHP Billiton profit rose 28%. MGM Mirage sells 9.5% stake in the company to Dubai World.

[R]9:45 AM New York – Investors bid stocks higher on merger news and no new news in the credit market. Rise in Asian and European markets supported opening rally.[/R]

Markets in Asia and Europe provided the positive support to opening rally in New York. Merger news raised hopes on Wall Street as three popular averages opened higher. Nasdaq and S&P 500 jumped above 1% and Dow traded near 0.8% increase after fifteen minutes of trading.

Dubai World has agreed to pay $5 billion for 9.5% stake in MGM Mirage and 50% stake in CityCenter restaurant and theme park complex in Las Vegas. MGM stock jumped 9% at the opening.

TD Ametritrade and E*Trade are in merger talks according to the web site of the Wall Street Journal. The two online brokerages, if merged are likely to increase competitive pressure in the market. The commissions for online trade have declined more than 80% in the last five years and are likely to fall more as more banks add such services to their clients. Bank of America recently launched service with free online trades to its account holders with balance of at least $25,000.

Nymex, the operator of futures and commodities exchange, released a statement indicating that it is merger talks with NYSE Euronext. The exchange also plans to sell its headquarters building and cut 750 jobs. The stock jumped 6% in the first ten minutes of trading.

Toll Brothers reported third quarter earnings dropped 85% from a year ago. The company earned 16 cents compared to $1.07 per share a year ago. For the first nine months earnings dropped to 72 cents from $3.10 per share a year ago. Revenue in the third quarter declined to $1.21 billion from $1.53 billion a year ago. The backlog at the end of the quarter fell to $3.67 billion from $5.59 billion.

BHP Billiton jumped 3.2% after reporting 28% increase in earnings.

[R]7:00AM New York, 8:00PM Tokyo-Japanese shares eased in volatile trading closing virtually unchanged, as investors await Federal Reserve rates action. Japan trade surplus dips 21% in July on low yen and higher oil prices. Bank of Japan starts crucial two day meeting.[/R]

Japanese stocks finished marginally lower, as several Asian shares rose. Investors largely remained at bay awaiting US Federal Reserve rates cue. Japan closed down 0.7 points. Of the 225 Tokyo stocks, 125 fell, 93 rose and 7 were unchanged. Top 25 gained over 2% while bottom 15 dragged by more than 3%. Broader index, Topix fell 4.99 or 0.3% to close at 1,544.89. Trading volume of the Topix stocks was recorded at 1.7 billion stocks and 2.3 trillion yen.

In Tokyo trading, Nikkei 225 fell 0.7 or 0% to 15 900.64 in mixed trading, as investor concern piled economic growth will slow down. The Finance Ministry said Wednesday customs-cleared trade surplus dropped 21.1% in July to 671.2 billion yen, year-on-year. Exports rose 12% to 7.1 trillion yen with imports surging 17% to 6.4 trillion yen.

The Bank of Japan started a two-day policy meeting Wednesday amid expectations that the central bank will keep its key short-term rate steady following global market turbulence triggered by the U.S. subprime mortgage crisis. The bank is widely expected to maintain the key bank rate at 0.5%. Yesterday a high-ranking official said government opposed any rate hike. The yen dropped to 115.07 per dollar from 114.83 yesterday amid speculation the BOJ will leave rates untouched.

Nikkei 225 index closed down 0.7 points at 15,900.64. Of the 225 stocks in the index 125 closed lower, 93 increased, and 7 were unchanged.

In the index stocks, Chiyoda Corp led the decliners with a fall of 6.2% followed by declines of 5.6% in Meiji Dairies, 3.9% in retailer Isetan, and 3.5% in Kajima, Sumitomo Metals and Mining, and Nippon Sheet Glass. Yahoo Japan led the gainers with a rise of 5.7% followed by increase of 4.5% in Nichirei Corp, 4.3% in Trend Micro, Tosho Corp, and NTT Data. Nippon Oil, Japan Airlines, and Sumitomo Electric closed up more than 4%.

Banks fell as investors worried that rising mortgage defaults in the U.S. may hurt earnings of Japanese banks. Resona Holdings led the decline in banks with a loss of 3.4%. Mitsubishi UFJ dropped and Sumitomo Mitsui Financial fell 1.8%. Shinsei Bank dropped 3.2%. Stocks of real estate and trading companies declined as well. Marubeni Corp fell 2.3% and Mitsubishi Estate declined 2%.

Crude oil in Asian trading fell below $70 per barrel lifting stocks of airlines and chemical companies. Japan Airlines soared 4.2%.