U.S. Stocks Rebound on Nordstrom, HP Earnings

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

S&P 500, Nasdaq, and Dow jumped 0.5% at the opening on better than expected housing starts, and strong than expected earnings from HP and Nordstrom. October housing starts increased 3% from September but fell 16% from a year ago. Freddie Mac reported $2 billion quarterly loss. Nordstrom expanded its stock buyback plan by $1 billion to $2.5 billion. Hewlett Packard reported 15% increase in revenue and operating income of 38% in the fourth quarter.

[R]9:45AM New York – U.S. stocks open higher on increased October housing starts and Hewlett Packard and Nordstrom earnings surprised the market.[/R]

U.S. housing starts increased 3% in October from the previous month to a seasonally adjusted 1.229 million annual rate after it was revised lower to 11.4% to 1.193 million according to the Commerce Department. Housing starts in October fell 16% from a year ago. October building permits declined 6.6% to a 1.178 million annual rate from September

Freddie Mac reported third quarter loss of $2 billion after it said that market value of securities it holds has declined in value by $8.1 billion. The company also added that it may reduce its quarterly dividend in the fourth quarter.

Hewlett Packard ((HPQ)) jumped 2% at the opening after it reported fourth quarter revenue increase of 15% to $3.7 billion and operating earnings increase of 38% to $2.6 billion and earnings per share increase to 81 cents from 60 cents.

Nordstrom ((JWN)) jumped 10% after it reported third quarter earnings of $165.7 million or 68 cents per share compared to $135.7 million or 52 cents a year ago. Total sales increased 5.3% and comparable sales in the quarter inched 2.2% higher. The company expanded its stock-buyback program by $1 billion to $2.5 billion.

D R Horton, home builder, ((DHI)) added 5% after it reported smaller than expected loss. The company reported in the fourth quarter loss of $50.1 million or 16 cents per share compared to income of $277 million or 88 cents per share a year ago.

Euro edged to a record high against dollar and gold jumped $11.50 to $789.50 per ounce. Front month oil contract increased 95 cents to $95.64 per barrel.

Asian markets closed lower ahead of the U.S. housing starts report. Philippines led the decliners with a sharp drop of 2.9% followed by losses in India of 1.8%, in Australia of 1.7%, and in Korea of 1.1%. Hong Kong and Japan led the gainers in the region with a rise of 1.1%.Singapore added 0.8%.

European markets ahead of the U.S. opening were trading mildly higher. Norway led the gainers in the region with a rise of 0.9% followed by increases in Germany of 0.8%, in France and Italy of 0.7%, and in UK of 0.4%.

Broker-dealer firm ICAP jumped 10% after it said that the annual profit will be ahead of analysts estimate on higher than normal market volatility.

European banks jumped after a week of decline however the banks gave up most of the gains at the opening by mid-day trading. Barclays jumped 3%, BNP Paribas increased 2%, and Commerzbank edged up 0.6%.

Real estate companies rebounded after a week of decline. U.S. commercial realty brokers have lost more than 50% of their value in the last three months of trading. CB Richard Ellis has lost 50% from its peak and Jones La Salle has declined 30% from its recent highs.

[R]5:00AM New York, 7:00PM Tokyo – Tokyo stocks rebounded on weak yen, falling metal prices, and the U.S. private equity investments.[/R]

Deals and weakening yen leads Tokyo up 1.12%. The Financial Services Agency considers relaxation of bank investment restrictions.[/R]

Japanese stocks recovered from a 1.5% slump by mid-day to close up 1.12% on deals and a weakening yen.

In Tokyo trading Nikkei 225 gained 1.12% or 168.96 to 15,211.52, while the Topix Index gained 12.66 to 1,469.27.

In the first section of the Tokyo Section Exchange 11 billion shares worth 1.2 trillion yen were traded and in the second section 394 million shares value at 5.7 billion yen changed hands.

Of the Nikkei 225 stocks 148 gained, 67 retreated, and 10 were unchanged. Shinsei Bank Limited led gainers, rising 9.34% after the U.S. investment fund J.C. Flowers & Company announced its plans to raise its stake in Shinsei Bank Limited to help its capital base.

Exporters also gained as the yen weakened from 109.76 to 110.14 against the dollar.

Metal prices declined as comments by Governor of the China Central Bank Zhou Xiaochuan that the central bank would continue to “withdraw liquidity” to cool economic expansion stoked expectations demand for metals might fall. Copper futures plunged 5.4% as a result. However, Sumitomo Metal Mining and Nippon Mining gained 4.26% and 1.49% respectively.

Canon Incorporated rose 0.18%, Honda Motor Corporation climbed 1.32% and Sony Corporation rose 0.19%.

Shinsei Bank Limited shareholders agreed on an offer led by U.S investment fund J.C. Flowers & Company LLC to increase its equity in the financial institution to 32.6% for 202 billion yen. The offer, at 425 yen per share, is at a 17% premium at yesterday’s closing price. Shinsei Bank will sell 50 billion yen worth of new shares as part of the deal.

Nasdaq.com reported yesterday that Japan’s Financial Services Agency is considering relaxing rules to allow banks to fully trade commodities and futures and ad releasing a ban on bank involvement in greenhouse gas emission trading. The move is meant to broaden bank’s operations by investing in non-financial firms operated through subsidiaries.

Nikkei News reported today Cerberus Partners LP owned Aozora Bank Limited will ally with Sumitomo Trust & Banking Company in real estate, capital management and private equity investments. The tie-up would allow Sumitomo Trust and Aozora’s debt collection unit to boost corporate clients list and give Aozora’s customers access to loans and property backed loans.

Bloomberg news reported today that Boeing is in talks with Toray Industries to expand a $6 billion contract and supply carbon-fiber sheet for the 787 Dreamliner, the passenger jet whose production is scheduled to begin in November next year. Toray Chief Executive Officer Sadayuki Sakakibara said the company might raise production of re-inforced plastic sheets to supply 14 787 a month in 2010.


Of the Nikkei 225 index shares, Shinsei Bank Limited led the gainers with a rise of 9.34%, followed by rises in Chuo Mitsui Trust of 7.77%, in Tosoh Corporation of 6.99%, in Sojitz Corporation of 6.75, and in Mitsubishi UFJ Nicos of 6.64%.

Yokohama led the decliners in the Nikkei 225 index stocks with a loss of 4.29%, followed by losses of 3.40% in Nippon Sheet Glass, 3.16% in Sumpo Japan Insurance, 2.99% in Tokai Carbon Company, and 2.65% in Shimizu Corporation.

Goldman Sachs yesterday lowered its rating to ‘sell’ on Citigroup and estimated that the bank may have to record a loss on collaterized debt obligations up to $15 billion over the next two quarters, adding to $11 billion in writedowns this month.