Decliners Lead in S&P 500

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

Stocks in the afternoon trading in New York are trading lackluster. Retailers declined after the release of consumer confidence survey and revised outlook from Target and Lowes. Maxim Integrated may be delisted from Nasdaq. Whirlpool and its union agree on contract details. Of the 500 stocks in S&P 500, 208 gained and 283 fell. Retailers led the decliners among the index stocks and Yahoo, Precision Capstone, and Gilead Sciences led the gainers.

[R]1:30PM New York – Market Movers – Retailers led the decliners among S&P 500 stocks.[/R]

Stocks declined on Tuesday, after retailers lowered their sales and profit forecasts. Market sentiment was bruised after two major retailers lowered their sales forecasts for this year and new data showed consumer confidence had fallen to near a two-year low.

New consumer confidence data weighed on retail stocks and consumer discretionary stocks. The Conference Board index of consumer confidence fell to 99.8 in August versus 105.6 in July, its lowest level since November 2005.

The Dow Jones Industrial Average shed 0.1 per cent to 13,749.96 while the Nasdaq Composite again outperformed the other major indices, remaining flat at 2,668.92.

The retail sector was in focus after Target Corp ((TGT)) lowered its September store sales to an expected rise between 1.5% and 2.5%, down from a prior range of 4% to 6%. The company cited citing weaker than expected traffic and sales softness in the northeast and Florida. The shares fell 3.7 per cent to $61.88 by 1:00PM in New York trading.

Of the 500 stocks in the S&P 500 index at 1:30pm in New York 208 stocks were up and 283 stocks were down. Yahoo ((YHOO)), Gilead Sciences ((GILD)), and Precision Capstone ((PCP)) led the gainers with a rise of 3% and retailers led the decliners. Lowe’s, Bed Bath & Beyond ((BBBY)), Nordstrom ((JWN)), and SuperValu led the decliners with a loss of 4%.

Lowe’s ((LOW)), the home improvement chain, fell 4.81% to $29.08 after it said late Monday that slower sales would reduce its full year profit. The company said late Monday that it now expects fiscal full-year earnings at the low end of its earlier forecast of $1.97 to $2.01 a share.

Maxim Integrated Products Inc. ((MXIM)) shares gave up $1.39, or 4.8%, to $27.59. On Aug. 17, Nasdaq said Maxim''s stock would be suspended if it does not file its overdue reports by Sept. 25. In a filing with the SEC, Maxim said it would not be able to file its reports by then.

Whirlpool Corp ((WHR)) was also among the top decliners after it lost $4.10, or 4.49% to $87.20. Members of the union for 2,400 workers at a Whirlpool Corp. refrigerator plant in eastern Iowa have given preliminary approval to a new four-year contract, despite failing to give it a majority vote.

Advanced Micro Devices Inc ((AMD)) added 1.82% to close at 13.72. The company no longer has the right to appoint any directors to flash memory maker Spansion Inc.''s board, Spansion said Tuesday in a Securities and Exchange Commission filing. In a Form 8-K filing, Spansion said that last Friday AMD transferred its only Class B common share to Spansion, where it was automatically converted into a Class A common share.

Lockheed Martin Corp. ((LMT)) was up $1.75, or 1.71% to $104.10. The world''s biggest military contractor said Tuesday it secured a $20.6 million contract for work on Australian Navy missile systems.

InterActiveCorp ((IACI)) added 1.63% to $28.60. The company was upgraded by Merrill Lynch from ‘neutral’ to ‘buy.’ The broker said in a research note that the company looks attractive at 7 times expected fiscal 2008 operating earnings and buybacks should add materially to earnings.

Agricultural chemicals and seed manufacturer Monsanto Co. ((MON)) was the second gainer with a rise of 2.17% to $80.86. The company and Israeli agro-biotechnology company Evogene Ltd. on Tuesday announced a joint-development agreement to improve nitrogen use efficiency in certain crops.


[R]1:00PM New York, 10:30PM Mumbai - Sensex recovered from morning losses. France courts investments from India. ONGC Videsh to explore oil in Myanmar.[/R]

Sensex in Mumbai recovered from early session losses to end higher at 0.2% or 39.7 or 16,885.55. In the morning trade, Sensex index had lost 168.80. The CNX Nifty lost 0.3% or 1.3 to close at 4,930.8 after reaching intra-day high of 4,953.90.

Of the Bombay Stock Exchange stocks, 1,643 shares declined, 1,081 increased and 329 were unchanged. Of the Sensex 30 stocks, 16 stocks declined and rest advanced. Daily turnover declined to 7,468 rupees down from 7,783 crore rupees on Monday.

Hindustan Lever led the gainers in the Sensex with a rise of 1.3% to 226 rupees and Reliance Energy led the decliners. The BSE Realty index was the top loser among the sectoral indices shedding 3.1%. IT stocks recovered from Monday''s fall.

ONGC Videsh, the international exploration arm of the company plans to invest $150 million in oil exploration project in Myanmar. The exploration blocks will be 100% owned by the company. Gremach Infrastructure jumped 5% to 266 rupees after the company said that it has acquired 75% stake in 11 coal mines in Mozambique. The mines are spread over 14,000 hectare area.

France has invited investments from India through setting up new businesses, joint ventures or acquisitions. Paris views last year''s acquisition of European steel giant Arcelor Steel by Mittal Steel as a successful example which can also be replicated in France. France, through its investment promotion body, Invest In France Agency is targeting 300 Indian companies in the IT and pharmaceutical sectors.

HDFC Bank led the gainers with a rise of 3.8% to 1,397 rupees followed by increases of 2.8% in Hindalco, 2.1% in Bharti Airtel to 950 rupees, and 1.8% in Reliance Industries at 2,374.80 rupees. Mahindra & Mahindra led the decliners with a loss of 2.6% to 790 rupees followed b a loss of 2.2% in Bajaj Auto, 1.6% in State Bank of India.

Pharmaceutical company Ranbaxy said Monday it had signed a licensing agreement with Australia''s Sirtex Medical to market the Australian firm''s liver cancer product SIR-Spheres. The product which was already approved in the U.S is used to treat patients with inoperable tumors from primary colorectal cancer spread to the liver.

BPCL jumped 7% to 348 rupees after the reports that the company’s joint venture has discovered oil in the Northeast India. The company denied the discovery but stock still closed higher.

Sadhbhav Engineering reported that it has received an order of 245 crore rupees for coal field excavation. The stock closed unchanged at 727 rupees. Gayatri Projects received 154 crore rupees project lifting the stock 1.4% to 310 rupees.

[R]10:30AM New York – Existing home sales fell. Consumer confidence declined to a 20-month low. Retailers declined.[/R]

After the first hour of trading market averages in New York are heading lower. Dow, Nasdaq, and S&P 500 fell between 0.3% and 0.2%. Lennar, one of the largest home builder reported, five decade record loss of $514 million on 41% decline in revenue. The company also reported new orders fell 48% and cancellation rate jumped to 32%.

The Conference Board index of confidence fell to 99.8 in September from 105.6 in August.

Existing home sales in August fell 4.3% from July to annual rate of 5.5 million or declined 12.8% from a year ago. Median home prices gained 0.2% to $224,500 from a year ago and fell 0.2% from July price of $228,700.

Total housing inventory rose 0.4% at the end of August to 4.58 million existing homes available for sale, which represents a 10 month supply at the current sales pace, up from a 9.5 month supply in July.

Existing home sales make up more 84% of total home sales and new home sales are about 16% of home sales. Total home sales for the year are expected to be between 6.5 million and 7 million homes.

Existing home sales in the Northeast fell 2%, in the Southeast declined 2.7%, in the Midwest slumped 5.2%, and in the West plummeted 9.8%. The prices in the regions declined between 0.7% in the Midwest to more than 3% in all other regions.

Retailers fell in the morning trading on revised outlook from Target ((TGT)) and Lowe’s ((LOW)). Target after the close yesterday lowered its same store sales forecast between 1.5% and 2.5% from 4% to 6% and weaker than expected traffic. The home improvement chain Lowe’s blamed drought on slower than expected sales and lowered its earnings guidance for the year ending February 1, 2008 to the low end of its earlier forecast of $1.97 and $2.01 per share.

The company CFO Robert Hull in a prepared statement to be presented in a conference aid that ""external pressures weigh on our near-term performance, but looking past the current cycle, we see many opportunities for continued sales and earnings growth and increasing cash flow from operations.”.

""For the three year period, total sales are expected to increase between 8 and 11 percent per year, while earnings per share are expected to average 12 to 15 percent growth per year across the three years. Improving earnings and solid working capital management will drive compound annual growth in cash flow from operations of approximately 15 percent. The current pressures will likely continue into 2008, so we expect our earnings performance to improve from mid-single digit growth in 2008 to high-teens in 2010,"" Hull said.

[R]9:00AM New York – Lennar report $3.25 per share loss in the third quarter.[/R]

Lennar Corp. reported third quarter net loss of $513.9 million from $206.7 million a year ago or loss of $3.25 earnings per share compared to income of $1.30. The company recorded $344.7 million in write down related to land sales and losses of $127.4 million from subsidiaries.

Revenue in the quarter fell 44% $2.34 billion and sold 7,266 homes, 41% decline from a year ago at 6.3% lower home price of $296,000

Gross margin on home sales excluding valuation adjustments fell to 14% in the third quarter from 19.5% in 2006. Including the valuation adjustment the gross margin fell in the third quarter to 1.0 million from $729.2 million or 18.7% from a year ago.

Selling and general administrative expenses were reduced by $122.3 million or 29% in the quarter on reduction in staff and as a percentage of sales the margin increased to 14% from 10.9%. Operating loss in the financing subsidiary was $5.2 million compared to profit of $61.7 million a year ago.

Lennar ((LEN)) fell 5.5% in the pre-market trading. Lennar stock has fallen from a peak of $56.54 in February of this year and traded as high as $66.44 in January of 2006.

[R]6:00AM New York, 7:00PM Tokyo, Realty stocks lift Tokyo stocks higher. Bank of Japan to wait for global markets to stabilize before hiking interest rate.[/R]

Japan opened the week higher, climbing 0.55% or 89.12 to 16,401.73 buoyed by gains in realty stocks and electronic companies.

Of the Nikkei 225 stocks, 136 gained, 81 slipped and 8 traded unchanged. Realty concern Tokyu Land Corporation led the rise in the index shares. Automakers also rose. Nisshin Oillio led retreating stocks.

Minutes of last week’s Bank of Japan meeting released today show policymakers believe the economy will continue to grow in step with the twice-yearly outlook made in April this year. The bank also revealed that it will keep interest rates on hold at 0.5% until global credit markets return to normal.

While the benchmark interest rate was kept low by 8 to1 vote, Governor of the Bank of Japan Toshihiko Fukui said last week keeping borrowing costs low may encourage risky investments. Authorities are struggling to stave off a decade-old deflation.

Japan’s GDP declined by an annualized 1.2% in the second quarter and consumer prices, a measure of inflation, slid 0.1% in July as consumer prices grew by half the pace of the first quarter, a government survey showed recently. The board will meet again on October 31.

Yen rose against the dollar and it traded as high as 114.55 in Tokyo at close. Yen has advanced 1% against Aussie dollar to 98.65 and 2.1% to 84.12 against New Zealand dollar. The dollar is likely to come under renewed pressure after the release of home sales statistics this morning in New York.

Hino Motors Ltd. Revised its sales forecast ending the six months at the end of September by 9% to 665 billion yen and net income by 17% to 11 billion yen. The company expects the international unit sales to increase by 12%.

However, realty stocks continue to gain after the Ministry of Land, Infrastructure and Transport reported Japan’s commercial land prices rose 1% overall, the first increase since 1991, while residential land price increase narrowed to 0.7% from 2.3%.

The strike at U.S. automaker General Motors, which threatens to spread to Mexico and Canada, also spurred Japanese automakers whose niche market is in North America. Toyota generated 70% of its operating profit in North America last year, while Honda generated 55% of its sales in the region.

Industry analysts believe that the nationwide strike may cost the company a loss of daily sales of 12,200 vehicles in the U.S. Buyers may turn to Japanese and European makers to meet their needs.

Toyota firmed for the first time in 3 days to 1.22%, while Honda edged up 1.6%.

Of the index shares, Tokyu Land Corporation climbed 8.32%, NGK Insulators gained 5.93%, Tokyo Dome Corporation soared 5.84%. Fuji Electric added 5.71% and Mitsui Engineering and Ship Building edged up 5.33% on news the Baltic Dry Index, the benchmark for bulk shipping fees, had increased to a record. Other ship companies gained as well with Kawasaki Kisen and Mitsui O.S.K. soaring 4.95% and 4.60 respectively.

Leading the decliners in the index was Nisshin Oillio shedding 5.66%, Mitsubishi UFJ Nicos lost 5.31%, Topy Industrials Limited declined 5.20% and Trend Micro Corp slipped 4.98%. Adventest Corporation fell 4.7% after reports that the world’s biggest supplier of memory chip tester’s operating profit may fall 1% to 56 billion yen.