Techs and Resource Stocks Rally

123jump.com Staff
06 Nov, 2007
New York City

U.S. stocks closed higher on late rally in tech stocks. Nasdaq jumped 1% at close and lifted broader index S&P 500 by more than 1% and Dow Jones Industrial Average by 0.7%. Resource stocks reached a new high lifted by three decade peaks in silver and gold. Oil closed at a record high on oil production shut down in North Sea. MasterCard, Google, and Exxon Mobil surged. Asian markets closed higher led by a rebound in Asia. European markets closed higher led by resource stocks.

[R]4:00PM New York, 10:00PM Frankfurt, 8:00AM Sydney[/R]

U.S. averages opened weak and traded lower by mid-day. In the late afternoon tech stocks lifted the averages as Nasdaq jumped 1% at close. Intel, Nortel, and Cisco led the tech gainers on higher than average volume. Resource stocks surged in the U.S. and Europe after oil closed at a record high and gold reached 27-year high.

European markets closed higher on resource stocks. Asian markets rebounded led by a rise in Hong Kong, Korea, and Thailand. Alibaba.com soared on its first day of trading in Hong Kong.

MasterCard surged 7% or $13.47 to $199.40 after Deutsche Bank raised its price target to $250 and revised its earnings revenue estimates. Google added $16.41 to close at $741.79 after Sanford Bernstein raised its price target to $850 from $720.

Blue Nile ((NILE)) fell in the after hours trading to $65 after it reported revenue rise of $67.4 million or 26.5% increase and earnings per share of 18 cents, an increase of 63.6%. The company expects to earn between 40 cents and 45 cents in the fourth quarter and generate revenue between $316 million and $322 million in 2007 and earn between $1.00 and $1.05 per share.


[R]Global Markets Indexes[/R]

Dow Jones Industrial Average closed up 117.54 or 0.87% to a close of 13,660.94, S&P 500 edged higher 1.20% or 18.10 to 1,520.27, and Nasdaq Composite Index traded up 30.00 or 1.07% to a close of 2,825.18. In Toronto TSX Composite gained 97.19 or 0.68% to close at 14,370.56.

Of the 30 stocks in Dow Jones Industrial Average, 19 closed higher, 11 closed lower, and none were unchanged.

Citigroup led the decliners in the index for the second day in a row with a loss of 3.2% followed by losses in Verizon of 0.84%, in Microsoft of 0.8%, and AT&T of 0.77%. AIG led the gainers with a rise of 3% followed by increases in Exxon Mobil of 2.98%, in JP Morgan of 2.95%, and Intel of 2.4%.

Of the stocks in S&P 500, 291 closed higher, 206 fell, and 3 were unchanged. Nine stocks fell more than 3% and fifty four stocks rose more than 3%.

Tenet Healthcare led the gainers in the index with a rise of 19% followed by increases in Ambac of 17%, in MBIA of 9%, Archer Daniels Midland and MGIC of 7.4%, in Janus of 7.1%, and in Fannie Mae, Hess, and Expeditors International of 6.5%. Cognizant Technology led the decliners with a loss of 19.4% followed losses in Sun Microsystems of 9.8%, and Symantec of 5.1%. Yahoo dropped 4.9%. Morgan Stanley, Whole Foods, and Dillards dropped 3.5%.

In London FTSE 100 Index closed up 13.50 or 0.21% to 6,474.90, in Paris CAC 40 Index increased 24.80 or 0.44% to close at 5,709.42, and in Frankfurt DAX index added 19.64 or 0.25% to close at 7,827.19. In Zurich trading SMI increased 62.54 or 0.72% to close at 8,770.29.

In Tokyo Nikkei 225 Index retreated 19.29 or 0.12% to close at 16,249.63, in Hong Kong Hang Seng index closed up 495.81 or 1.71% to 29,438.13, in Australia ASX 200 closed up 45.70 or 0.69% to close 6,628.00.

Sensex in India fell 190.11 or 0.97% to 19,400.67. In South Korea Kospi Index increased 38.48 or 1.91% to close at 2,054.24, Thailand closed up 13.45 or 1.54% to 886.31, and Indonesia closed up 29.42 or 1.11% to 2,681.90. Philippines lost 1.18 or 0.03% to 3,773.63, Singapore added 12.92 or 0.35% to 3,683.10, and Malaysia increased 4.38 or 0.32% to 1,389.11.

In Latin Markets Brazil led the gainers with a rise of 2.45% followed by increases in Colombia of 1.3%, and in Mexico of 0.90%. Argentina led the decliners with a loss of 1.7%, in Argentina of 1.66% followed by losses in Peru of 0.5%, and Chile of 0.18%.

Bond Yields increased on 10-year U.S. bonds to 4.36% and 30-year bonds gained to 4.65%.

[R]Commodities, Metals, and Currencies[/R]

Crude oil added $2.57 to close at $96.55 per barrel for a front month contract, up 46.5% for the year, natural gas decreased 17 cents to $7.83 per mBtu, and gasoline futures increased 5.74 cents to close at 243.85 cents per gallon.

Gold edged higher $12.60 in New York trading to close at $823.40 per ounce, silver closed up 59 cents to $15.38 per ounce, and copper for front month delivery added 3.95 cents to $334.15 per pound and in London trading closed down $32 to $7,410.00

Dollar edged lower against euro to $1.4554 and higher to 114.49 yen.


[R]2:00PM New York – Church Dwight and theStreet.com soar 10% but Cognizant Technology fell 21% after the release of earnings.[/R]

Church & Dwight ((CHD)) reported third quarter sales increase of 12% to $580.40 million. Sales excluding the impact of the currency and acquisition rose 6% from a year ago. Earnings in the quarter increased to $51.70 million from $38.7 million a year ago. Earnings per share increased to 75 cents from 57 cents a year ago.

At quarter-end, the Company had total outstanding debt of $867 million and cash of $179 million for a net debt position of $688 million. This compares to total debt of $933 million and cash of $110 million for a net debt position at December 31, 2006 of $823 million.

James R. Craigie, Chairman and Chief Executive Officer, commented, “We are raising our previously announced earnings per share goal of $2.34 to $2.36 to $2.42 to $2.44, including the gain on the property sale, which is equivalent to a 17% to 18% increase over 2006 results. Included in our full year earnings goal is a fourth quarter charge of approximately $0.04 per share, relating to the reorganization of our Canadian business as we continue to take actions to streamline the Company.”

Church & Dwight ((CHD)) increased 10.6% to $51.35 in the morning trading.

Cognizant Technology Solutions Corporation ((CTSH)) reported third quarter revenue increase of 48% to $558.80 million, earnings of $96 million compared to $61 million, and earnings per share of 32 cents compared to 20 cents a year ago.

European business rose 90% from a year ago, 24% from the previous quarter and now account for 17% of total revenue in the quarter.

The company guided fourth quarter 2007 revenue between $590 million and $595 million. Fourth quarter 2007 diluted earnings per share expected to be $0.31 on a GAAP basis, and $0.34 on a non-GAAP basis, which excludes a stock-based compensation expense of $0.03.

Fiscal 2007 revenue expected to be between $2.125 billion and $2.13 billion, up over 49% compared to 2006. Fiscal 2007 diluted EPS expected to be $1.14 on a GAAP basis, and $1.24 on a non-GAAP basis, which excludes the impact of stock-based compensation expense of approximately $0.10.

Cognizant ((CTSH)) stock fell as low as $31.15 or 21% on the earnings news.

The Street.com ((TSCM)) reported third quarter revenue of $16.1 million, an increase of 24% from a year ago from $12.9 million. Net income in the quarter increased 22.6% to $3.8 million, excluding one time tax benefit, from $3.1 million a year ago. Earnings per share in the quarter increased to 13 cents from 11 cents a year ago.

Net income, inclusive of a non-cash income tax benefit of $16.0 million related to the recognition of a deferred tax asset on a portion of the Company’s net operating loss benefits, was $19.8 million, or $0.67 per fully diluted share, as compared to $3.1 million, or $0.11 per fully diluted share, in the third quarter of 2006.

The company recently acquired for $20.7 million, internet branding and web design services company Promotions.com, generated $2.3 million in the two months since the acquisition on August 2, 2007.

In August, 2007 The Company’s wholly owned subsidiary, Stockpickr.com became the first financial social networking site to surpass 100,000 user-generated portfolios, making it the fastest growing financial social networking Web site. Today, the number of portfolios stands at more than 125,000,


Marketing services and paid services revenue in the third quarter of 2007 accounted for 43% and 57% of total revenue, respectively. This compares to a revenue mix of 29% for marketing services and 71% for paid services in the third quarter of 2006. For the nine months ending September 30, 2007, marketing services and paid services revenue accounted for 38% and 62%, respectively, as compared to 29% and 71% in 2006.

TheStreet.com reported a 97% year-over-year increase in non-financial advertising revenue in the quarter. Non-financial advertising revenue represents 49% of total advertising revenue in the quarter, up from 30% in the third quarter of 2006.


[R]10:30 AM New York – The U.S. stocks edged higher in the early trading.[/R]

U.S. stocks edged higher in the morning after thirty minutes of trading. Dow Jones Industrial Average edged 28 to 13,574, Nasdaq increased 3.5 to 2,798, and S&P 500 gained 4.84 to 1,507.

Sun Microsystems fell 5% after reporting lower than expected earnings and 1% decline in sales. Archer Daniels Midlands lost 1% after reporting 9.5% rise in third quarter earnings. ADM reported earnings of $411 million or 68 cents compared to $403 million or 61 cents on revenue increase of 36% to $12.38 billion.

Asian markets recovered after a day of weak trading on the worries related to the U.S. sub-prime crisis.

South Korea led the gainers in the region with a rise of 1.9% followed by increases in Hong Kong of 1.71%, in Thailand of 1.54%, in Pakistan and Indonesia of 1.1%, and in Singapore of 0.35%. India led the decliners with a fall of 1% followed by fractional declines in Taiwan, Japan, and Sri Lanka.

European markets edged higher led by mining and energy stocks. Norway le the gainers in the region with a rise of 1.9% followed by increases in Spain and Switzerland of 0.8%, in U.K. and France of 0.7%, and in Germany and Italy of 0.6%.

RTP led the sector with a rise of 4%, followed by increases in BHP Billiton of 3% followed by increases in Xastra of 1.9%, and Vedanta Resources of 1.5%.

Marks & Spencer increased 3.0% after the earnings report and it said that it will buy back 1 billion pounds of stocks.

Swiss Re rose 2% after reporting third quarter earnings after it reported earnings of Sfr1.47 billion compared to Sfr1.55 billion from a year ago.

BMW reported third quarter profit of 803 million euros compared to 452 million euros a year ago on 19% rise in revenue to 13.78 billion euros. BMW fell 3% after the news.

Crude Oil rose $2.06 to $96.04, gold increased $13.60 to $824.40, and natural gas increased 7 cents to $8.07.

[R]6:00AM New York, 7:00PM Tokyo - Tokyo closed 0.12% lower on sell off of high-tech stocks. Japan’s Leading Index for outlook of business conditions slumps to a decade low.[/R]

Japan’s stock index retreated from a 0.4% gain in the morning session to close 0.12% down on sell-off in tech stocks.

In Tokyo trading Nikkei 225 slid 0.12% or 19.29 to 16,249.63, the lowest since September 18, while the broader Topix Index fell 0.03% to 1,574.59.

In the first section of Tokyo Stock Exchange 9.6 billion shares worth 1.2 trillion yen were traded and in the second section 338 million shares valued 6.4 billion yen changed hands.

Of the Nikkei 2225 stocks, 106 rose, 112 declined, and 7 traded unchanged. Of the index stocks, 16 shares lost 2%. Fujikura Limited led decliners, plunging 13.60%, followed by Softbank Corp fell 6.54%.

Cabinet Office reported today in its report Indexes of Business Conditions for September that the Leading Index, which is a key gauge for outlook of the economy, plunged to a decade low at 0% in September from 27.3% in August. The index is a collective measure of leading indicators including new job offers, stock prices, and housing starts.

The Coincident Index plummeted to 66.7% from 85.0% Lagging Index fell to 25.0% from 40% in that order.

The statistics for the index of inventory ratio to final finished goods, producer goods for the mining and manufacturing sector and total floor area of housing construction starts were negative. In addition, the consumer confidence index remained negative.

According to the Cabinet Office, the index of industrial production for mining and manufacturing and producers shipments was positive in September, while for Tertiary Industrial Activity, which measures business services, was unchanged in the month under review. Furthermore, business expenditure on plant and equipment was unchanged and unemployment was negative.

Bloomberg news reported today the Ministry of Finance said it has boosted wheat and barley import budget by 23% or 55 billion yen to 298 billion yen for the fiscal year 2008 ending in March. The increase reflects record jumps in the grains prices. The government spent 203 billion in the fiscal 2007.

Wheat prices have risen 58% this year as bad weather affected output in producing countries, lowering global stockpiles to decline to a 32-year low.

The yen traded firmer against the dollar at 114.64 from 114.67 and 166.52 from 166.54 against the euro.

Of the Nikkei index stocks, Toppan Printing led the gainers with a rise of 9.15%, followed by rises in Clarion Company Limited of 8.38%, in GS Yuasa Corp of 7.85%, in Furukawa Company Limited of 4.71% and Yokogawa Electric of 4.10%.

Financial stocks also gained, buoyed by consumer lenders after Goldman Sachs raised the rating of Acom from “sell” to “buy” and Takefuji to “buy” from “neural”. Last week, Nikkei News reported that consumer lenders might report profits for the first time in eighteen months in the first half of the year. Mitsubishi UFJ Financial Group, which holds 13% equity in Acom, rose 0.29%. Mizuho Financial Group also firmed 0.34%.

Fujikura Limited led decliners, falling 13.60%, followed by losses of 6.54% in Softbank Corporation, 4.14% in Daiichi Sankyo, 3.28% in Honda Motor Corporation and 3.18% in Chugai Pharmaceutical.

Chugai Pharmaceutical slumped after it reported that it would slash in half the winter supply of Tamiflu in Japan to meet demand for six million people.

Japan Airlines today raised its profits for the fiscal year 2008 ending in March by 37% to 48 billion yen compared to 35 billion yen, projected earlier. It maintained net income forecast at 11.5 billion yen. Net income for the quarter ended September fell 59% to 11.6 billion yen. The company is expected to save 50 billion yen this year through a staff reduction.

JAL is also under investigation by the anti trust division of the U.S. Department of Justice and European Union Commission for anti-competitive practices in the cargo industry.