Day's Gain Lost on Nasdaq Fall

123jump.com Staff
11 Oct, 2005
New York City

FOMC minutes revelaed little that surprised the market. The minutes noted that the aggregate demand is strengthening and rising energy prices are contributing to inflation pressures. Infosys quarterly earnings rose 36% on the strength in European outsourcing contracts. Gannett earnings dropped 4% on weakness in broadcasting advertising revenue.

U.S. MARKET AVERAGES

Market averages spent most of the session in the plus side with the upbeat earnings from Genentech and Alcoa. Oil rose in the early hours of trading and kept the upward bias for the entire day. IBM enjoyed a second upgrade in as many days. UBS upgrade of the stock was followed by yesterday’s upgrade from Citigroup. In the afternoon General Motors stock got a lift after Kirk Kirkorian controlled Trancinda Partnership received anti-trust clearance to raise the current holding of 9.5% in the stock.

FOMC minutes released at 2:00 PM noted that the aggregate demand is still strong however rising energy prices and lack of fiscal discipline are contributing to the inflation pressures.

In the late afternoon trading tech and financial sectors weakened on the lack of buying and investors’ wait and see attitude on Advanced Micro Devices ((AMD)) and Apple Compute ((AAPL)) earnings after the close.

Energy stocks staged a strong climb as oil and natural gas prices firmed. Chesapeke Energy ((CHK)), Southwestern Energy ((SWN)), Exxon Mobil ((XOM)) and EOG Resources ((EOG)) jumped between 3% and 5%. Shares of Phelps Dodge jumped 4% on strengthening copper prices near record levels.

World’s largest derivatives trading firm Refco dropped another 17%after the stock reopened at 3:00 PM. The company’s stock had declined 45% in yesterday’s trading. The company is facing SEC inquiry and class action lawsuit.

MOVERS AND SHAKERS

The aluminum producer Alcoa ((AA)) posted a third-quarter profit that was slightly higher than the reduced outlook it announced two weeks ago. Alcoa reported earnings of $289 million, or 33 cents a share, for the three months ended September 30, an increase from $283 million, or 32 cents, for the same period in 2004. Alcoa is currently up 0.8%.

Genentech ((DNA)) gained 3.7% after the company also reported higher-than-expected third-quarter net income. The company said net income increased 56% to $359.4 million, or 33 cents a share, in the quarter ended September, compared with $230.9 million or 21 cents a share for the same period in 2004.

Fast-food giant McDonald's ((MCD)), a Dow component, added 1.3% after UBS lifted its price target for the stock by $6 to $43. The broker cited a spin-off of McDonald’s company-owned restaurants makes sense and would unlock shareholder value. The analysts are also optimistic on the company’s fundamental outlook heading into 2006.

Another Dow component, General Motors ((GM)), climbed 4.9% after the company lost 10% of its value yesterday as a result of its former unit Delphi's bankruptcy filing.

Apple Computer ((AAPL)) is going to report its earnings results after the close of trade. Analysts are expecting the company to post earnings of 37 cents a share for the quarter ended September on $3.73 billion in sales. Apple was up 1.3%.

INTERNATIONAL MARKET NEWS

Asian-Pacific benchmarks closed the trading session mostly higher. The Nikkei advanced 2.5% after the long weekend, rebounding from last-week sharp declines on the back of strong bank and machinery stocks. Across the region, South Korea’s Kospi gained 1.4% on sensitive to domestic consumption stocks. Hong Kong’s Hang Seng added 0.3%, while Australia’s All Ordinaries fell 0.8%.

European markets finished higher on signs of improving retail sector in the U.K. and strong earnings report from a Roche Holdings’ subsidiary Genentech. The German DAX 30 added 0.2%, the French CAC 40 rose 0.3%, and London’s FTSE 100 gained 0.1%. The euro fell 0.4% to $1.2004.

ENERGY, METALS, CURRENCIES

Oil prices rose over $63 a barrel on a report of the International Energy Agency, saying that last-month drop in fuel demand could moderate and lead to shortages during the winter. Light sweet crude for November delivery gained $1.65 to trade at $63.45 a barrel on the Nymex. Heating oil rose nearly 4 cents to $2.015 a gallon. Gasoline prices advanced 3 cents to $1.83. Natural gas futures added 52 cents to $13.49 per 1,000 cubic feet. London Brent added 69cents to $59.47.

In European trading gold prices climbed on higher energy costs which increased the appeal for the precious metal, seen as a hedge against the inflation. In London gold December contract closed at $476.05 per troy ounce, up from $473.60. Markets in Hong Kong were closed for a holiday. Silver closed at $7.85, up from $7.76.

In European trading the U.S. dollar gained ground against its major counterparts. The euro was quoted at $1.199, down from $1.2052.The dollar changed hands at 114.34 yen, up from 114.20. The British pound was trading at $1.7455, down from $1.7537.

EARNINGS NEWS

Alcoa Inc. (AA)), aluminum producer, posted Q3 net earnings of 33 cents a share, up from 32 cents in the same time last year on revenue growth, beating analysts’ expectations of 29 cents a share.

Genentech Inc. ((DNA)), biotechnological products producer, announced that Q3 net earnings advanced to 33 cents a share, up from 21 cents a share in the same time last year on operating revenue growth, topping analyst estimate of 30 cents a share. Excluding one-time items, earnings totaled 35 cents a share.

Ault Inc. ((AULTE)), power conversion product maker, posted a Q1 net loss of 9 cents a share, down vs. a net loss of 2 cents a share in the same period last year on revenue decline.

Robbins & Myers, Inc. ((RBN)), pharmaceutical, energy, and industrial products maker, posted Q4 net income per share of 16 cents, including restructuring expenses of 10 cents per share, or income of 26 cents per share on a pre- restructuring basis. Q4 sales were $10.5 million higher than sales in the comparable period a year ago. The income per share in the comparable period last year was 24 cents.

Sycamore Networks Inc. ((SCMR)), provider of telecommunications switching technology, announced that net income for Q4 advanced to 1 cent a share, up from a loss of 3 cents in the year-ago period on revenue growth.

The Dress Barn Inc. ((DBRN)), women's apparel retailer, reported Q4 net income of $1.08 per share, up from 45 cents per share in the same time a year ago. Apart from a number of exceptional items, the company would have gained 45 cents a share, in line with analysts’ expectations. Sales advanced 48% to $307.1 million.

Gannett Co., Inc. ((GCI)), media company, posted Q3 net income of $1.13 a share, down vs. $1.16 a share in the comparable period last year despite 4% revenue growth, but in line with analysts’ forecasts. Earnings in the most recent quarter were $1.14 a share including income from discontinued operations. The company also announced September pro forma operating revenues of nearly $670 million, up 1.1%.

Helen of Troy ((HELE)), cosmetics firm, announced that Q2 net income dropped to 30 cents a share down from 57 cents a share in the year-ago period on net sales decline, missing analyst forecasts of 50 cents a share.

Temple-Inland Inc ((TIN)) announced that net income would amount to 32 cents a share for Q3, including a 13-cents-a-share charge in items, related mostly to Hurricanes Katrina and Rita, missing the analyst estimate of 42 cents per share. The company stated that hurricane damage would cut the lumber company's pre-tax income by $27 million. About $12 million of the amount will be recorded as reduced operating income, primarily in the company's corrugated packaging operation.


CORPORATE NEWS

Inco Ltd., the world's second largest producer of nickel, offered to acquire Falconbridge Ltd., one of the world's top miners and smelters of copper and nickel. in a cash and stock deal. The deal will combine two of Canada's top mining companies and form the world's largest nickel producer. Under terms of the deal, Falconbridge shareholders will receive 0.6713 Inco shares, a cash payment or a combination of shares and cash valued at 33.94 Canadian dollars ($28.80) for each Falconbridge share they own. The companies said the acquisition should lead to annual savings of $350 million per year by the end of 2007.