U.S. Stocks Jump, Credit Markets Calmer

123jump.com Staff
13 Sep, 2007
New York City

Nervous market managed to close sharply higher led by stocks in energy, brokerage, and financial sectors. Countrywide Financial reported $12 billion of financing and the latest Fed data suggested that commercial paper market may be stabilizing after seven weeks of turmoil. Oil closed above $80 a barrel. European stocks closed higher. Brazil led markets in South America. In Asian trading Australia closed higher on higher oil and natural gas price. Hong Kong and Shanghai closed sharply higher.

[R]4:30PM New York, 10:30PM Frankfurt, 2:00 AM Mumbai[/R]

[R]Market averages in New York rose sharply after the credit market appeared to stabilize and Countrywide Financial reported $12 billion credit arrangements. Oil closed above $80 a barrel. Norway, Brazil, and Australia closed higher.[/R]

Dow Jones Industrial Average gained 1.00% or 133.23 to 13,424.88, Nasdaq gained 8.99 or 0.35% to 2,601.06, and S&P 500 added 12.39 or 0.84% to 1,483.95.

FTSE 100 Index in London gained 57.70 or 0.91% to 6,363.90, in Tokyo Nikkei 225 closed at 15,821.19, up 0.15% or 23.59, and in Brazil, iBovespa Index traded higher 1.97% or 1,062.09 to 54,944.80.

Yields edged higher on 10-year U.S. bonds and closed at 4.49% and 30-year bond rose to close at 4.75%.

Crude oil increased $0.18 to close at $80.09 per barrel record close for a front month contract, natural gas closed down 44 cents to $6.00 per mBtu, and gasoline futures added 3.0 cents to close at 204.64 cents per gallon.

Gold lost $2.80 in New York trading to close at $717.90 per ounce, silver closed 11 cents lower to close at $12.68 per ounce, and copper for August month deliver in London fell $55.50 to $7,482.00 per pound in New York trading.

In New York trading averages closed sharply higher after large cap companies led the rally. Investors cheered the 50% dividend hike at McDonald’s and welcomed the report that UAW President may agree in principle to form healthcare trust fund. General Motors soared 10% and Ford Motor added nearly 6%.

Countrywide Financial added 14% after the company raised $12 billion in credit facility from banks and lenders for mortgage loans. The capital infusion in the company was viewed by the market as vote of confidence in the recovery of the housing market and stability of the credit market. Alcatel-Lucent reported that in the third quarter operating income is likely to be near breakeven and lowered the revenue guidance for the year. Tech stocks were weak on the news. The Labor Department reported at the end of last week initial claims of unemployment seasonally adjusted declined by 4,000 to 319,000.

Outstanding commercial paper debt declined at a slower pace according to data released by the Federal Reserve today. Investors aware of the possible Fed action on Sept 18th are looking to invest in debt that is maturing before the end of the month. The Fed revised the commercial paper due this week to $503 billion from $265 billion. Commercial paper debt due in less than nine months declined by $21.6 billion and in the last five weeks has declined by $306 billion, according to the Fed data.

Hurricane Humberto concerns helped oil to rise 18 cents to $80.09 a barrel. Crude oil for the year is up 31% in the U.S. dollar.

Dollar strengthened against euro after falling for the six days in a row. One euro fetched 1.387 dollar at the end of trading in New York.

Of the 30 stocks in Dow Jones Industrial Average listed, 4 closed lower, 26 closed higher, and none closed unchanged. General Electric led the index with a surge of 10% to $33.21 followed by rises of 6.33% rise in McDonalds, 2.9% in Alcoa. JP Morgan, AT&T, General Electric, and Verizon added more than 2%. Fourteen stocks jumped more than 1%.

Of the stocks in S&P 500, 360 stocks closed higher and 138 fell, 2 stocks closed unchanged. Ten stocks in index lost more than 4%. Countrywide Financial led the gainers in the index with a rise of 14% followed by General Motors. Kohls, McDonalds, Jones Apparel, and Ford Motor added near 6%. T Rowe Price and Bear Stearns added 4%, Lehman Brothers and Morgan Stanley increased 5%.

In European Markets trading indexes closed higher. Indexes in Switzerland, Norway, and France led the region. Norway led the gainers with a rise of 1.7% followed by 1.5% in the Netherlands, and 1.1% in France, 0.9% increase in UK and Italy, and 0.7% in Spain.

In Latin Markets trading Brazil led the gainers with a rise of 1.9% followed by increases of 1.50% in Argentina, 0.8% in Canada, and 0.5% in Chile. Of the 63 stocks in iBovespa 52 gained, 10 lost, and 1 closed unchanged. Cosan led the gainers with a rise of 7.4% to 25.52 real, followed by 5.7% increase in Cyrela and Copel, and 4% gain in Gafisa, Votorantim, and Tim Participacoes.


[R]2:30PM New York, 7:30PM London - UK shares extended gains helped by firm oil stocks, as international crude oil prices hit record levels. Bank of England lent 4.4 billion pounds, as liquidity support to unnamed banks.[/R]

London stocks closed higher 0.9% extending two day rally. Of 102 FTSE 100 index stocks, 69 shares recorded gains, 39 dropped while a single share remained unchanged.

In London trading FTSE 100 finished up 0.9% at 6,363.90 as mining and oil stocks surged after global crude oil traded at record level.

Oil continued to trade near record level of $80 per barrel. Oil stocks helped protect the market from steeper losses as they rallied in the mid session. But losses were limited on concerns that another drop in U.S. crude stockpile is likely and the prospect of even tighter oil supplies should Hurricane Humberto damage energy facilities.

New York''s main futures contract, light sweet crude for delivery in October fell 16 cents to 79.75 dollars per barrel. New York crude had struck a record intra-day close of $80.18 Wednesday. On Thursday, the price of Brent North Sea crude for October delivery dropped 37 cents to $77.32 dollars per barrel in London.

Continued high overnight interest rates forced the Bank of England to offer £4.4bn additional cash to commercial banks on Thursday morning, in a bid to calm the money markets. The Bank hopes to flood the market with sterling and bring overnight interest rates back down towards the official rate of 5.75%. For the past month, overnight interest rates have been hovering around 5.9% during well above their usual level. Overnight rates are normally around 0.03% above the official rate. The London Bank signaled its latest move last week when it expressed concern on why commercial banks had not asked for a greater increase in their cash balances.

The Bank said it had taken the action it foreshadowed last week because secured overnight rates had fallen, but remained higher than normal relative to the official rate. Mervyn King, the Bank''s governor, argued on Wednesday that it may be that the banks may, at the start of the current maintenance period, have underestimated their demand for reserves, and the additional reserves would help to bring the overnight rate into line with the official rate.

Of the FTSE 100 index shares, mining companies dominated the top five gainers. Cable & Wireless led the gainers with a rise of 4.5% followed by increases in Lonmin of 3.66%, in Anglo America of 3.27%, in BT Group of 2.90%, and in BHP of 2.61%.

Oil companies recorded gains on firming oil prices. BP gained 0.8%. Royal Dutch Shell rose 1.8% to close at 2,037 pence.

Mortgage Bank, Northern Rock led the FTSE 100 stocks with a loss of 4.91% followed by ITV with a decline of 4.14%, and Alliance and Leicester fell below 2.70%, Shire fell 2.50% while British Land retreated 1.88%.

[R]1:30PM New York, 2:30AM Sydney - The Australian market closed slightly higher today on record crude oil price lifting energy stocks after Wall Street provided little direction.[/R]

In Sydney trading ASX 200 Index gained 0.17% or 10.3 to 6,230.60. The Aussie dollar retreated from one-month highs against the U.S. dollar on Thursday on a bout of profit taking following gains of over 2.5% in the past two sessions. A cautious return of appetite for riskier higher yielding currencies influenced by calmer stock markets helped the Aussie dollar to a peak at $0.8435 in international trading.

The oil price provided the only sources of news on quiet day of news. The U.S. crude oil futures shot to a record high above $80 a barrel on Wednesday in a rally fuelled by government data showing a bigger than expected crude oil draw down last week. Overnight, U.S. stocks finished little changed as gains in energy stocks, buoyed by a rising oil price, were offset by concerns about profits in the technology sector triggered by a disappointing outlook from chip maker Texas Instruments.

Of the Sydney ASX 200 shares, Boom Logistics led the gainer with a rise of 5.36% followed by Insurance Australia at 4.64% higher, Flight Centre rose 4.69% with Jubilee Mines and Alumina Ltd surging 3.8% and 3.2% respectively. Mining giant BHP Billiton closed up 0.39% and rival Rio Tinto fell by 0.23%. Companies lifted by higher oil price included Santos up 2.43%, Woodside up 1.72% and Oil Search, up 1.64%. Consolidated Minerals was up 2.89%, with the long-running take-over battle for the company set to continue after one suitor raised its total offer for the manganese miner to $1.03 billion.

Of the ASX 200 index stocks, Southern CR Broadcasting fell 2.80% followed by Corp Express down 2.83%, MFS Ltd sank 3.70 % followed by Compass Resource down 3.74% and CSR Ltd lost 6.92%.

Sugar producer and building materials company CSR Ltd declined after a trading halt was lifted following its equity raising and acquisition announcement yesterday for glass maker Don Mathieson.


[R]1:00PM NY, 5:00 PM Frankfurt European markets ended higher for a third session in a row, led by mining and telecoms stocks.[/R]

European stock markets finished in the positive Thursday for a third consecutive session, boosted by upbeat U.S. jobs data, as well as strength among automotive, mining and telecoms shares. Alcatel-Lucent limited the upward move after the mobile phone maker lowered its full-year revenue outlook. Among regional markets, France led advancers with a gain of 1.1%, followed by the U.K., up 0.9% and Germany, rising 0.8%.

In Frankfurt automakers were leading gainers, with Porsche rising 3.2% and DaimlerChrysler moving up 1.2% Other notable movers to the upside included Deutsche Boerse which added 3.3%, steelmaker ThyssenKrupp, up 2%, and RWE, moving up1.4%.

In Paris mining stocks gained, paced by ArcelorMittal which rose 4.5% after announcing a share buyback program. Vallourec surged 8.8% on reports that Russia''s OAO Gazprom is in advanced talks to buy the company. Among other top gainers, Lagardere climbed 4.7% after the magazine publisher reported a 78% profit rise for the first half and lifted its annual operating profit guidance. France Telecom which gained 1.5%. The upward move was limited by Alcatel-Lucent which dropped 8.7% after the telecom equipment maker cut its sales outlook.

In London miners paced the gains. American gained 3.3%, while BHP Billiton Ltd., the world''''s largest mining company, rose 2.6%. Oil companies continued to benefit from surging oil prices, with Royal Dutch shell rising 1.8%. Telecoms company Cable & Wireless rose 4.5% after it received an analyst upgrade from Cazenove.


[R]11:30AM U.S. market averages rallied. Financial stocks gained[/R]

U.S. market averages rallied, with the Dow Industrial posting triple-digit gains. Stocks advanced, as upbeat corporate news and growing optimism of interest-rate cuts offset surging oil prices and record-low U.S. dollar. Investors also cheered news of lower-than-anticipated increase in the initial jobless claims last week.

The blue chips were led higher by more than 6% increase in the shares of both General Motors ((GM)) and McDonald''s. The car maker advanced on a broker upgrade and progress in talks between automakers and workers over health care costs. Fellow member Ford ((F)) climbed 3.3% on the news. Macdonald''s ((MCD)) shares rose after the fast-food retailer lifted its dividend by 50%.

By sectors, steel and oil stocks moved significantly higher. Alcoa ((AA)) climbed 2.9% and Exxon Mobil ((XOM)) rose 1.3%, helping to push the Dow higher. Financial stocks gained, driven by interest-rate reduction optimism. Merrill Lynch ((MER)) rose 3.2%, Bear Stearns ((BSC)) climbed 4%, and Goldman Sachs ((GS)) added 2.8%. Pharmaceutical stocks continued their recent upward move, with Merck & Co. ((MRK)) rising 1.1% on broker upgrade of its stock. Technology stocks and small-capitalization issues showed weakness.

Light, sweet crude fell 66 cents to $79.25 a barrel. The dollar gained some ground vs. the euro which recently traded at $1.3874.In late morning trading, the Dow rose 144.45, or 1.09%, to 13,436.10. The Standard & Poor''s 500 index rose 14.48, or 0.98%, to 1,486.04, and the Nasdaq composite index rose 13.08, or 0.50%, to 2,605.15. Bond prices fell. The yield on the 10-year Treasury note, which moves opposite its price, rose to 4.46% from 4.41% late Wednesday.


[R]10:00AM New York - 7:30PM Mumbai – Suzlon plan to double its production in three years. Reliance and government agree on natural gas price.[/R]

Sensex in Mumbai trading gained 109.08 or 0.70% to close at 15,614.44. CNX Nifty gained 0.7% or 32.10 to close at 4,528.95. Rupee recovered to 40.60 against dollar from 40.65 in Friday trading. Market indexes opened higher at the opening but closed lower in a familiar pattern in the last three months of trading. Political worries dogged traders.

Of the stocks trading on BSE, 1,647 gained, 1,123 declined, and 66 closed unchanged. Daily turnover on the exchange declined to 5,257 crore rupees compared to 5,391 crore rupees a day ago. In trading on National Stock Exchange volume increased to 11,075 crore rupees from 10,835 crore rupees a day ago. Oil price at record level lifted stocks of sugar companies.

Of the 30 stocks in the Sensex 20 rose and 10 fell. Maruti Suzuki led the gainers with a rise of 3.7% to 891 rupees. Hindustan Lever led the decliners with a fall of 1.0% to 215 rupees.

Reliance Industries and a group of ministers appointed by the Government of India agreed on natural gas purchase price of $4.20 Mbtu for five years. The natural gas from Krishna Godavari basin will be distributed by government agencies. Reliance had asked for $4.33 Mbtu and negotiations between the government and the company had dragged for more than a year. Reliance in trading increased 0.6% to 2,025 rupees on 6.2 lakhs shares trading volume.

Jindal Steel & Power surged 8% to 4,690 rupees on the enthusiasm that the Bolivian iron ore mining project will receive government approval. Suzlon Energy jumped 3% to 1,379 rupees after the company said that it plans to invest 1 billion euros to double its wind turbine production capacity to 5,700 mw from 2,700 mw.

Western India Shipyard jumped 5% to 19 rupees after a deal with ABG Shipyard. The secured lenders committee and ABG are looking for ways to revive the ailing Western India Shipyard.
Auto stocks jumped higher led by 1.3% increase in Mahindra & Mahindra to 707 rupees and Tata Motors to 694 rupees, and 1.1% gain in Baja Auto to 2,418 rupees.

Reliance Communications jumped 1.9% to 552 rupees after the news that the company is selected to provide super high speed Internet data bandwidth between Tata Institute of Fundamental Research in Mumbai and CERN, European Organization for Nuclear Research in Geneva, Switzerland.

Software export companies rebounded after two weeks of slump. Tata Consultancy Services increased 1.36% to 1,030 rupees, followed by Satyam Computers gaining 1.27% to 434 rupees, and Wipro up 1.2% to 458 rupees. Infosys Technologies added 0.7% to 1,833 rupees. Of the smaller companies Mphasis led the gainers with a rise of 4% to 295 rupees and Tech Mahindra advanced 2.2% to 1,309 rupees.

August shipment data suggested strong rise in shipments for cement companies. ACC, Ambuja Cements, and Grasim added 2% or more.

Unitech, real estate company, jumped 7.8% to 285 rupees, the company will replace IPCL in CNX Nifty index on October 5th. Other real estate companies advanced on the news as well. Omaxe added 4% to 333 rupees, Orbit Corporation increased 2.6% to 512 rupees, and DLF jumped 1.6% to 645 rupees.

Ajanta Pharmaceuticals surged 10% to 110 rupees after the company entered in marketing collaboration with Canadian company Prollenium Medical to sell skin products in India.

Local subsidiary of Honda Motor Company jumped 2% to 665 rupees on the news that the company is planning to release new motorcycle products. Batliboi, machinery group, surged 10% to 168 rupees. The company will split stock face value from 10 rupees to 5 rupees on Oct 4tth.

[R]09:45AM Wall Street opened higher. The Dow rallied, boosted by GM and McDonald’s.[/R]

Wall Street rallied at opening Thursday, with Dow Jones surging 100 points on lower-than-expected increase in weekly jobless claims and upbeat corporate news from McDonald''s and General Motors. Although the market grew more optimistic about interest-rate cuts, many investors refrained from making big moves before Tuesday''s meeting of the Fed Reserve.

McDonald''s ((MCD)), fast-food retailer, rose 4.6% after it lifted its dividend to shareholders by 50%, while car maker General Motors ((GM)) jumped 6% after Citigroup raised its rating on the stock. Reportedly, the UAW may agree to establish a union-controlled trust fund for employee health care costs. Shares of rival Ford ((F)) rose 2%.

Among other stocks in the spotlight, Target Corp. ((TGT)) rose 1.9% on speculations of a possible sale of $7 billion in credit-card receivables. The Nasdaq was given a boost by software maker Microsoft ((MSFT)) which rose 0.5% after lifting its quarterly dividend by a penny, to 11 cents a share.

Tech stocks dropped sharply, with disk drive and networking stocks posting the largest losses. Alcatel-Lucent ((ALU)) declined 10.2% after it lowered its full-year revenue growth guidance, blaming the change in capital spending by wireless customers in North America.

In the commodities market, crude oil prices fell 37 cents to $79.54. Gold prices fell as the U.S. dollar reversed from an all-time low vs. the euro on Thursday. In early trading, the Dow rose 107.79, or 0.81%, to 13,399.44. The Standard & Poor''s 500 index rose 8.59, or 0.58%, to 1,480.15, and the Nasdaq composite index rose 5.53, or 0.21%, to 2,597.60. Bond prices fell. The yield on the 10-year Treasury note rose to 4.44% from 4.41% late Wednesday.


[R]09:00AM U.S. stock futures advanced on better-than-expected jobs data.[/R]

U.S. stock futures were pointing to recovery Thursday on better-than-anticipated jobs data. The Labor Department said that initial jobless claims rose by 4,000 last week to 319,000, less than the 325,000 claims analysts expected. The report also stated low unemployment rate of 4.6%. On the one hand, the unexpected drop in employment raised some concerns about the health of the economy, but on the other, it built on optimism that the Fed Reserve will cut interest rates at its next meeting on Sept. 18.

Among pre-market highlights, McDonald''s ((MCD)) rose 2% after it said it would increase its dividend by 50%. Microsoft ((MSFT)) gained 0.7% after it raised its quarterly dividend by a penny to 11 cents a share.

Dow member General Motors ((GM)) jumped 5.5% in pre-open trade on news that the car maker is planning a wage system that would allow it to pay newly-hired workers less than veterans. Reportedly, the UAW are willing to create a union-controlled health-care trust fund.

The retail sector received a boost from Target Corp. ((TGT)) which rose 2% after saying it considers selling its $7 billion in credit-card receivables. Among companies driven by analyst comments, Merck & Co. ((MRK)) rose 1% in pre-open trade, following an upgrade to buy from neutral at Banc of America Securities.

In other corporate news, telecom equipment maker, Alcatel-Lucent (ALU)) declined as a result of another reduction of its revenue guidance. Syntax-Brillian ((BRLC)) dropped 22% after posting lower-than-forecast quarterly revenue.

After early declines, S&P 500 futures rose 5.6 points at 1,481.80 and Nasdaq 100 futures rose 7.75 points at 2,004.00. Dow industrial futures rose 40 points.

[R]U.S. jobless claims rose less than expected in the latest week.[/R]

Thursday morning, the Department of Labor released its report on initial jobless claims in the week ended September 8, showing that jobless claims rose less than economists had been expecting compared to the previous week. The report showed that jobless claims rose to 319,000 from the previous week''s revised figure of 315,000. Economists had expected jobless claims to rise to 325,000 from the 318,000 originally reported for the previous week. The Labor Department also said that the less-volatile four-week moving average edged down to 324,000 from the previous week''s revised average of 325,000.

Additionally, the report showed that continuing claims in the week ended September 1 fell to 2.585 million from the preceding week''s revised level of 2.591 million. The smaller than expected increase in weekly jobless claims may help to offset some of the recent concerns about the labor market that were raised by the release of the August employment report last Friday. The August report showed that non-farm payrolls unexpectedly fell by 4,000 jobs following a downwardly revised increase of 68,000 in July. Economists had expected an increase of about 110,000 jobs compared to the increase of 92,000 originally reported for the previous month.


[R]7:00AM New York, 8:00PM Tokyo - Japanese stocks rebound from Wednesday’s slump led by commodities and pharmaceuticals stocks on record oil price. Japans five-year government note plummeted.[/R]

Japanese stocks rebounded led by commodity stocks as oil price soared to record highs at $80 per barrel. Pharmaceuticals stocks also rallied as Japan closed up 0.2%. Of the 225 Nikkei index stocks, 109 gained, 105 declined, while 11 traded unchanged. Engineering firms and technology stocks fell sharply on rising steel prices and falling demand. Of the index stocks, ten closed more than 3%. 13 slipped more than 2%.

In Tokyo trading the Nikkei 225 edged up 0.15%, or 23.59 to 15,821.19. Investors opted for the attractive stock in oil and drug manufacturing companies, shunning buying debt as yields on the Japanese five-year government notes slipped. The notes fell as yields reach their lowest since March 2006. Ten-year bond futures for December delivery fell 0.14 to 136.19. Bonds surged on Wednesday after the resignation of Prime Minister Shinzo Abe stocked expectations that the Bank of Japan will keep interest rates on hold next week. Bank of Japan’s base rate at 0.5% is the lowest among industrialized countries.

Japanese Ministry of Finance revealed today that the Japanese investors’ bond purchases rose to a two-year high. Weekly bond sale increased by 1,391.5 billion-yen than during the week ended September 8th. Higher yen is likely to draw investors into international mutual funds to channel investment into overseas assets.

Of the index shares, diversified pharmaceuticals and construction company paced gainers, climbing 4.29%, followed by Nippon Mining House at 4.20%. Dainippon Sumitomo Pharmaceuticals added 4.11%, while Eisai Co and Kyowa Hakko Kog swelled 3.72% and 3.66% respectively.

Engineering and construction firms led the decliners shedding 5.46% and 4.80% respectively. Toshiba Corporation slipped 3.86% on news of sluggish demand of PCs and a 11% shrink in the price of flash memory chips. Advantest Corp and Canon anchored the top five losers dropping 3.86% and 3.74 respectively.

It is forecasted that pharmaceuticals companies will continue on the upside after predictions that Japan’s four largest drug-makers will probably spend more on share buy-backs this year.

Takeda pharmaceuticals rose 1.92% after it was projected that the drug maker will increase expenditure on share buy backs to132.5 billion yen by the end of the year.