Citi, Wachovia, Schwab Shine

Elena
17 Oct, 2005
New York City

A number of major companies released quarterly results. Citigroup posted 35% Q3 earnings rise of $1.38 per share on higher revenue. Commerce Bancorp released Q3 13%earnings growth of 45 cents a share, meeting estimates. GM posted wider Q3 loss of $1.92 a share, missing estimates of a loss of 87 cents. Schwab reported 16 cents profit vs. loss of 3 cents a year ago and Wachovia reported Q3 profit of $1.06 vs. 96 cents a year ago.

U.S. MARKET AVERAGES

The Dow is the most notable gainer in the early going, rising 0.5%, while Nasdaq is up only 0.1%. General Motors has been driving the sentiment since pre-market trading, giving a boost to the Dow component and the broader market. Later Altria joined in and continued raising the sentiment. The owner of the Philip Morris cigarette maker soared on news that the Supreme Court has rejected a government appeal. Even though General Motors released wider Q3 profit loss, the company’s shares jumped as the car maker announced that it had reached a tentative agreement with the United Auto Workers union to cut health-care costs.

A large number of major companies released quarterly results. Except for GM’s report, the market received upbeat news. Citigroup posted 35% profit increase on a revenue rise of 15%. Wachovia also released quarterly results, posting Q3 profit growth.

A threat of a new tropical storm on Gulf of Mexico oil and gas production has caused additional worries.

Rising crude oil prices sent energy stocks higher to make them the most notable movers to the upside in the early going. The sector is up 1.3%.

The sector, standing out as a leader is the Utilities sector, up 1.6%.

Tobacco stocks have jumped higher on news that the Supreme Court has rejected a government appeal. Dow component Altria ((MO)), owner of the Philip Morris cigarette maker, is showing an advance of more than 5%, to set a new 52-week high.

Auto stocks are also showing significant strength, thanks to GM's ((GM))) deal with its union.

Drug stocks have further weakend and the sector is currently down by 1%. Chemical, biotech and retail stocks are showing some weakness.

Bio-Logic Systems ((BLSC)) is one of the biggest gainers in the early going after it agreed to be acquired by Natus Medical (BABY: chart) for $8.77 per share. The stock is currently up 46%.

Gen-Probe ((GPRO)) is one of the most notable decliners on news released late Friday that the FDA has asked for more information about its investigational PROCLEIX ULTRIO assay. The stock is showing a loss of 8%.

MOVERS AND SHAKERS

Dow component Citigroup Inc ((C)) reported earnings this morning. According to the report, the banker’s earnings from continuing operations came below Wall Street predictions, because of expenses connected to Hurricane Katrina. Revenue was above analyst estimates, due to an increase in corporate and investment banking business and a gain of $2.12 billion on the sale of life insurance and annuities. Citigroup’s stock added 1%.

Wachovia Corp ((WB)) also posted quarterly results. Both adjusted earnings and revenue topped Wall Street estimates. Wachovia posted earnings of $1.67 billion, or $1.06 a share. The company’s earning results were $1.26 billion, or 96 cents a share, a year ago. Wachovia’s stock was up 1.3% on Friday.

General Motors Corp ((GM)) gained because of the news that it has made an agreement with the United Auto Workers' union to reduce health care costs. By this reduction the company will save $15 billion. The car maker also said it is planning to sale its financial unit GMAC. In another report the company announced a third-quarter loss that was more than expected.

Doughnut seller Krispy Kreme Doughnuts’s ((KKD)) stock lost nearly 30% after the company said its unit Freedom Rings LLC has filed for Chapter 11 bankruptcy protection.

Brokerage Legg Mason upgraded Anheuser-Bud ((BUD)) to “hold” from “sell”, primary due valuation. The beer giant’s stock is expected to gain today.

Home improvement retailer Pier 1 Imports Inc. (PIR) was upgraded by Lehman Bros. to “equal-weight” from “underweight”. The financial broker citied as a reason limited downside potential to the company’s share price.

INTERNATIONAL MARKET NEWS

Asian-Pacific benchmarks closed largely in the negative territory on a fourth-day decline in bank shares as Prime Minister Junichiro Koizumi’s controversial visit to a shrine, provoked criticism from neighboring countries, causing concerns over the successful completion of the economic reforms. The Nikkei lost 0.2%, South Korea’s Kospi shed 1.2%. Taiwan’s Taipei’s Weighted Index was the biggest loser, down 2.4%, on tech stocks, hurt by the disappointing fourth-quarter earnings.

European markets finished higher, boosted by energy sector and strength in early U.S. trading. Rising crude oil prices lifted energy stocks, such as BP, Royal Dutch Shell, and Total. The market sentiment was also supported by a strong earnings report from Philips Electronics. The German DAX 30 gained 0.3%%, the French CAC 40 added 0.4%, and London’s FTSE 100 rose 0.4%.

ENERGY, METALS, CURRENCIES

Oil prices rose about $1 as another tropical storm, called Wilma, gathered strength in the Caribbean, threatening to hit the vulnerable oil platforms and refineries in the Gulf of Mexico. Light sweet crude for November delivery rose 97 cents to $63.60 a barrel on the Nymex. London Brent gained 57 cents to $60.05.

In European trading gold prices advanced. In London gold December contract closed at $474.30 per troy ounce, up from $466.70. In Hong Kong gold gained $1.70 to close at $472.4. Silver opened at $7.84, up from $7.62

In European trading the U.S. dollar gained strength against its major counterparts. The euro was quoted at $1.2030, down from $1.2092. The dollar changed hands at 114.78 yen, up from 113.92. The British pound was trading at $1.7538, down from $1.7689.

EARNINGS NEWS

Commerce Bancorp Inc. ((CBH)), banking services company, reported a Q3 net income of 45 cents a share, 13% up from 42 cents a share in the year-earlier period, matching analyst estimate of 45 cents a share.

Citigroup Inc (C), financial services company, posted that Q3 earnings advanced 34.6% to $1.38 a share on 14.7% revenue growth up boosted by a 34.6% rise in corporate and investment banking revenue. Earnings from continuing operations of 97 cents a share missed expectations for 99 cents despite that the revenue figure topped forecasts of $20.5 billion.

Eaton Corporation ((ETN)), diversified industrial manufacturer, reported Q3 net income of $1.30 per share, a rise of 19 %, compared with net income of $1.09 per share in the same time last year on 10% sales growth. Net income in both periods incorporated charges for restructuring activities related to the integration of acquisitions. Before these restructuring charges, Q3 operating earnings per share were $1.33, an 18% rise compared with $1.13 per share in the year-ago period.

Hasbro Inc. ((HAS)), toymaker, reported Q3 earnings of 47 cents per share, up 4 % from 43 cents per share in the year-ago period on 4 % revenue growth, boosted by strong sales of games and """"""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""Star Wars"""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" products, though the company missed analysts’ forecasts of earnings of 51 cents per share. The year-ago results were restated in view of the adoption of new accounting rules.

Wachovia Corp. ((WB)), banking and retail brokerage firm, reported Q3 net income of $1.06 per share, up from 96 cents in the year-earlier period on 19% revenue growth and an increase in consumer banking and its other segments. Excluding merger-related charges, earnings reached $1.09 per share. The company's adjusted profit beat the analyst estimate of $1.07 per share.

CORPORATE NEWS

General Motors ((GM)), car maker, has reached a tentative deal with the United Auto Workers union to cut health-care costs. The agreement is expected to cut its retiree health care liabilities by about $15 billion. In addition, GM stated that the agreement would cut its annual employee health care expense by about $3 billion. The annual cash savings from the agreement are projected to be $1 billion.