Stocks Rebound on 2.6% Productivity Growth

Elena
06 Sep, 2007
New York City

U.S. stocks bounced back into the positive territory at opening, boosted by a sharp drop in U.S. jobless claims and a stronger-than-forecast productivity report. Some better-than-expected retail sales reports also provided support. The Labor Department said initial claims for state unemployment benefits fell by 19,000 after five straight weeks of increases. Productivity in the U.S. nonfarm business sector was revised up to an annual rate of 2.6% in Q2 from 1.8% gain repored earlier.

[R]09:45AM Wall Street opened higher on lower initial jobless claims and robust productiviry.[/R]

U.S. stocks bounced back into the positive territory at opening, boosted by a sharp drop in U.S. jobless claims and a stronger-than-forecast productivity report. Some better-than-expected retail sales reports also provided support. The Labor Department said initial claims for state unemployment benefits fell by 19,000 after five straight weeks of increases. Productivity in the U.S. nonfarm business sector was revised up to an annual rate of 2.6% in Q2 from 1.8% gain reported earlier.

Retailers were in focus Thursday, with most of them posting in-line or better-than-expected sales figures. Dow component Wal-Mart ((WMT)) gained 1%, as it posted a stronger-than-forecast 3% sales rise for August. Ann Taylor Stores ((ANN)) rose 4.5% after posting 2.9% same-store sales increase, beating the 1.9% sales decline projected by analysts.

On the side of the losers, Gap ((GPS)) dropped 2.8% after it reported a better-than-expected 1% sales drop. Stein Mart ((SMRT)) fell 2.6% after posting August same-store sales decline of 5.2%, worse than the 4% fall estimated by analysts. Limited Brands and J.C. Penney ((JCP)) lost about 1% each on disappointing sales results.

In global economic news, the European Central Bank and the Bank of England both held rates unchanged. In addition, the ECB on Thursday injected another $57 billion into the banking system. The Dow Industrials were 10.9 points higher at 13,316.4. The S&P 500 rose 0.3 points at 1,472.6, while the Nasdaq gained 1.1 points at 2,607.05.


[R]9:30AM New York, 7:00PM Mumbai – Deal making and expectations of strong industrial activities in the current quarter lifted the index.[/R]

Sensex in Mumbai trading closed up 170.16 or 1.1% to 15,616.31. CNX Nifty closed up 42.75 or 0.96% to 4,518.60.

Of the stocks traded on Bombay Stock Exchange, 1,698 closed higher 1,050 declined, and 74 were unchanged. The daily turnover on the exchanges was 4,646 crore rupees compared to 5,167 rupees in the previous session. The turnover on the National Stock Exchange declined to 9,937 crore rupees from 10,939 crore rupees a day ago.

The broad rally in the market was evident in oil and gas, consumer durables, auto, and banking stocks. Of the 30 stocks in the Sensex, 27 closed higher and 3 declined.

State Bank of India increased 2.6% to 1,635 rupees. The bank plans to raise 1,500 crore rupees in a bond issues.

Cement stocks led the rally. Birla Corporation jumped 3.6% to 317 rupees followed by 1.7% rise in ACC to 1,101 rupees, 1.6% gain in Ambuja Cement to 140 rupees, and 4% in India Cements to 274 rupees.

A day after Maruti warned that sales growth may be lower in the rest of the year, investors bid up auto stocks. Maruti Suzuki jumped 0.6% to 878 rupees followed by increases in Tata Motors of 2.1% to 712 rupees, Hero Honda Motors of 2.7% to 652 rupees and Bajaj Auto of 1.5% to 2,340 rupees.

Hindustan Unilever jumped 1.9% to 216 rupees on the news that its Assam personal care products plant has ended seven week long strike. The normal operations are expected beginning next week.

Welspun Gujarat lost 5.8% to 241 rupees and Raymond declined 0.6% to 273 rupees. Raymond is planning to launch women apparel group with a retail chain of 175 stores.

Saregma India soared 10% for the second day to 260 rupees. Yesterday Sonanta Investments purchased 10.6 lakhs or 1.06 million shares. Networth Stock Broking increased 5% for the second day after the company said that it is negotiating with several investors but failed to name them. Traders suggested Hiduja Group is likely to buy a stake in the company.

Hindustan Zinc added 3% to 724 rupees after the company lowered zinc price by 3.7% to 139,200 rupees to a ton and lead price was lowered by 6% to 139,100 rupees to a ton.

Hindoostan Spinning & Weaving Mills added 5% for the second day in a row after the news that the company has sold 8 acre land in Mumbai for 350 crore rupees to Akruti Nirman.


[R]09:00AM U.S. stock futures indicated a lower opening ahead of economic data.[/R]

U.S. stock futures pointed to a negative opening of Thursday trading session ahead of key economic data expected to show slowing growth in the services sector. The economic agenda included also data on weekly jobless claims, a final look at second-quarter productivity and weekly energy data.

Investors looked past a better-than-forecast performance from retailers in August, showing disbelief that the strong spending of the back-to-school season would continue into the coming months. According to the International Council of Shopping Centers same-store sales will increase 2.5% in August.

Wal-Mart Stores ((WMT)) advanced 2% in pre-market trading after reporting a stronger-than-forecast 3% sales rise for August. Among other retail companies, Limited Brands ((LTD)) posted 1% growth in same-store sales for August, while J.C. Penney ((JCP)) said its comparable sales dropped 4%.

On the earnings news front, Campbell Soup ((CPB)) dropped 5.3% in the pre-open after posting a 39% profit rise, while UTI Worldwide ((UTIW)) added 1% after it reported a 20% drop in Q2 earnings, citing slower revenue growth. S&P 500 futures dropped 4.6 points at 1,472.00 and Nasdaq 100 futures fell 6 points at 1,997.25. Dow industrial futures fell 21 points.


[R]8:00AM Retailers released August same-store sales. Wal-Mart, Saks beat expectations.[/R]

Wal-Mart Stores Inc. ((WMT)) posted 3.1% increase in August same-store sales, compared with estimates of 1.5% increase. Including the impact of fuel sales same-store sales rose 3%. Total sales climbed 9.3% to $28.22 billion. Looking ahead, the company expects U.S. September same-store sales to be between 1% and 3%.

Saks ((SKS)) said Thursday its August same-store sales jumped 18.2%, exceeding two times analyst expectations of a 9.2% increase. Total sales rose 19.9% to $213.5 million. The best performing categories for the month were women''s shoes; men''s apparel, accessories, women''s designer apparel and modern collections; and fine jewelry. Due to the retail calendar shift and promotional adjustments, the company expects to see huge same-store sales growth in September and November and below-average same-store sales growth in October and December.

Nordstrom Inc. ((JWN)) posted 6.6% increase in monthly same-store sales, ahead of the estimate of 6.3%. The department store chain reported total sales of $582.3 million, up 12.6%.

Wet Seal ((WTSLA)), retailer of apparel and accessories, reported higher-than-expected 1.7% increase in August same-store sales. Analysts had anticipated 0.6% rise in comparable sales. Total sales rose 9.6% to $56.1 million from $51.2 million. For September, Wet Seal expects same-store sales to range from down 1% to up 3%.

Limited Brands Inc. ((LTD)) posted 1% increase in its August same-store sales, coming in slightly below estimates of a 1.4% rise in comparable store sales. Total sales fell to $565.2 million from $638.8 million.

Maternity-apparel retailer Mothers Work ((MWRK)) reported 3.7% decrease of its August same-store sales, while net sales for the month rose 1.6% to $47.1 million, helped by increased sales from the company''s licensed relationship.


[R]7:00AM New York, 8:00PM Tokyo - Japanese stocks rebound in volatile trading Thursday on weak U.S housing market data. Japan digital camera exports jumped 35% in July. Nippon Steel lifts profit estimates.[/R]

Tokyo finished up 0.61% paring losses of as much as 2% in morning trade. Investors remain uncertain and concerned with the events in the credit markets. The continued volatility in the U.S. and unknown scale of exposure and losses emanating from sub-prime lending in its banking system keeps investors on the sidelines. Yesterday Nikkei 225 fell 1.6%, the heaviest since decline this week.

Of the 225 Tokyo shares, 122 stocks gained, 93 dropped while 10 remained unchanged. Of the index stocks, 32 shares gained over 2%.

Nikkei 225 in Tokyo trading ended up 0.6% or 98.55 at 16,257.00 recovering from early morning losses caused by reports U.S. homes sales plunged 12% in July. Technology shares rebound on higher exports. The yen gained sharply overnight before retreating to 115.3 per dollar from yesterday’s closing rate of 116.1.

The Japan Camera and Imaging Products Association announced Wednesday digital camera exports surged 34.7% to 7.3 million units in July from a year ago, driven by single-lens reflex models. Shipments in value terms rose 24.4% to 153.3 billion yen while exports of digital SLR cameras were up 35% to 580,000 units. Digital camera exports in July expanded 38.2% to 6.45 million units. Exports to Europe grew 39%, North America up 37.8% and rest of Asia soared 31%.

Of the Nikkei 225 stocks, Nippon Oil Corp led gainers rallying 9.1% helped by firmer global oil prices followed trading firm, Itochu Corp up 5.1%. Tosoh Corp finished higher 4.6%, Softbank Corp added 4.51% and Toray Industries rose 4.22%. Technology related stocks Minebea Co Ltd, Trend Micro Inc, KDDI Corp, NTT Data Corp rose 3.31%, 2.8%, 2.5% and 2.1% respectively.

Of the index shares, real estate, financial and industrial stocks dropped. Hitachi Zosen paced decliners slumping 11.5% while giant land developer Sumitomo Realty plunged 4.3% after stronger gains Wednesday. Tokyu Land Corp fell 4.23%, Daiwa Securities Corp down 3.64% and Kayima Corp lost 3.5%.

Steelmaker, Nippon Steel said Thursday it will pay a 5-yen per share dividend in the interim to September, up from 1-yen per share 12 months ago, according to its revised profit estimates. The group predicts net earnings in the half-year will climb to 170 billion yen, from earlier forecasts of 160 billion yen. Nippon Steel targets profit before tax will rise to 280 billion yen from 270 yen, as previously expected. The shares closed up 1.8% in Tokyo.

Marubeni Corp ended higher 1.43% after reporting Wednesday its U.S unit, Marubeni American Corp had acquired shares in Canadian trailer hiring firm, Train Trailer Rentals Ltd. No figures were released. Train Trailer has engaged in leasing business for dry and refrigerated freight trailers and container chassis for 35 years, according to Marubeni.

Nissin Food Products Co said Wednesday it will raise the prices of almost its entire instant noodles in January by between 7% and 11%, for the first time in 17 years, owing to rising international wheat prices. Already, there are concerns that firming world wheat prices will have a direct negative impact on domestic grain products.