Oil, Gold, and Tech Stocks Lift U.S.Markets

123jump.com Staff
14 Jan, 2008
New York City

U.S. stock averages rose after a rally in commodities prices and better than expected earnings from IBM. Tech stocks rose higher after IBM fourth quarter sales rose 10% and earnings gained 24%. Sandisk, Intel, Hewlett Packard, and Cisco closed higher. Sears lowered its earnings outlook for the fourth quarter hurting stocks in the retail sector. Wellcare Health Plans jumped 20% after several states renewed contracts. Gold closed above $900 and crude oil in Nymex closed up $1.49.

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

North American Markets indexes

Tech rally sparked by a better than estimated fourth quarter earnings from IBM lifted broader averages. Sears Holdings and Harman International closed sharply lower on lowered earnings estimates.

Dow Jones Industrial Average rose 171.85 or 1.36% to a close of 12,778.15, S&P 500 closed up 15.23 or 1.09% to 1,416.25, and Nasdaq Composite Index traded up 38.36 or 1.57% to a close of 2,478.30.

In Toronto TSX Composite closed up 58.81 or 0.43% to close at 13,691.38.

Of the 30 stocks in Dow Jones Industrial Average, 25 closed higher, 5 closed lower, and none was unchanged.

Merck led the decliners in the index with a fall of 1.6% followed by losses in Altria Group of 0.9%, and in Pfizer and Wal-Mart of 0.5%.

IBM led the gainers in the index with a rise of 6% followed by increases in Intel of 5%, in Alcoa of 3.4%, in DuPont of 3%, and in Hewlett Packard of 2.7%.

Of the stocks in S&P 500, 335 closed higher, 161 fell, and 4 were unchanged.

Twelve stocks fell more than 3% and eighty two stocks rose more than 3%.

Harman International led the decliners in the index with a fall of 37% followed by losses in Compuware of 13%, in Schering Plough of 7.5%, and in Tiffany of 5.11%.

Sandisk led the gainers in the index with a rise of 6.9% followed by increases in Terex of 6.8%, in Manitowoc of 6.6%, and in Big Lots of 6.5%.

South American Markets Indexes

In Latin Markets Argentina led the decliners in the region with a rise of 2.37% followed by increases in Brazil of 0.4%.

Colombia led the decliners in the index with a loss of 2.2% followed by losses in Venezuela of 1.8%, in Chile of 0.7%, in Mexico of 0.50%, and in Peru of 0.44%.

European Markets

In London FTSE 100 Index closed higher 13.70 or 0.22% to 6,215.70, in Paris CAC 40 Index increased 32.10 or 0.60% to close at 5,403.51 and in Frankfurt DAX index closed higher 14.07 or 0.18% to close at 7,732.02. In Zurich trading SMI added 33.68 or 0.41% to close at 8,193.36.

Asian Markets

In Tokyo, financial markets were closed. In Hong Kong Hang Seng index decreased 398.88 or 1.48% closed to 26,468.13, in Australia ASX 200 index edged lower 1.60 or 0.03% to close 5,980.00.

In South Korea Kospi Index decreased 16.39 or 0.92% to close at 1,765.88, in Thailand SET index closed lower 5.32 or 0.67% to 791.15. Sensex index in India decreased 99.40 or 0.48% to 20,728.05. Singapore based Strait Times index declined 2.11% or 69.20 to close at 3,218.14, Philippines PSE index declined 0.61% or 21.42 to close at 3,482.28, and Kuala Lumpur Index in Malaysia declined 9.18 or 0.61% to close at 1,507.04.

Bond Yields were unchanged on 10-year U.S. bonds to 3.78% and 30-year bonds decreased to 4.36%.

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

Crude oil increased $1.49 to close at $94.18 per barrel for a front month contract, natural gas increased 16 cents to $8.37 per mBtu, and gasoline futures increased 4.94 cents to close at 236.97 cents per gallon.

Gold increased $9.00 in New York trading to close at $906.70 per ounce, silver closed up 5.5 cents to $16.42 per ounce, and copper for front month delivery increased 3.5 cents to 333.90 per pound and in London copper futures increased $109.50 to $7,288.00.

Dollar edged record low against euro to $1.4867 and lower against yen to 108.190 yen.



[R]1:00PM New York, 6:00PM London- U.K. manufacturing output prices rose 5% on the year in December.[/R]

U.K. stocks advanced on home builders after Balfour Beatty announced that its full year earnings were at the top end of the analyst expectations as demand for construction and engineering services soared.

In London trading FTSE 100 rose 0.22% or 13.7 to 6,215.70.

Of the 102 FTSE stocks 67 gained and and 35 declined.

Hammerson Plc led advancers with a rise of 9.27% spurred by positive outlook in the construction sector. Taylor Wimpey gained 3.73%.

The Office of National Statistics reported on its website site today that the output annual inflation for all manufactured products rose 5% in December, while input price annual inflation climbed from 10.9% in November to 11.3% in December.

Month-on-month output prices measure for all manufactured products surged 0.5% buoyed by rises in petrol and food products.

Also the “narrow” output prices showed an annual increase of 2.5%, with the seasonally adjusted measure soaring 0.4% between November and December.

According to the ONS, the input prices measure of U.K. manufacturers’ materials and fuels increased 1.0% as prices of home produced food products and imported parts gained as well, while on a seasonally adjusted basis the index edged up 0.5% between November and December.

Furthermore, the “narrow” input prices measure rose 3.7% in the year to December and in seasonally adjusted terms the index rose 0.6% between November and December.

The BBC reported today that former Chief Executive of Lloyds Ron Sandler is expected to be appointed by the government to run troubled lender Northern Rock. The news fueled the speculation that Northern Rock may be nationalized.

However, Bloomberg news quoted Prime Minister Gordon Brown’s spokeswoman Michael Ellam saying the government will keep its options open. Ellam said, “We have always made it clear that, in terms of Northern Rock’s future, all options are on the table, including nationalization.”

Shareholders of the bank will vote tomorrow at an extraordinary meeting in Newcastle on a proposal that requires shareholder approval prior to asset sale.

Of the FTSE 100 index shares Hammerson led advancers with a rise of 9.27% followed by gains in Persimmon of 6.87%, in Liberty International Plc of 6.45%, in British Land Corporation of 5.06%, and in Enterprise Inns of 4.51%.

Imperial Tobacco led decliners of the FTSE stocks with a drop of 3.92% followed by losses in London Stock Exchange of 3.41%, in Shire Plc of 3.22%, in Wolseley Plc of 2.50%, and in Cable & Wireless of 2.31%.

Other retailers also slumped on speculation that consumer spending is easing. Sainsbury fell 1.49% and Tesco lost 1.41%.

JJB Sports Plc announced today in a trading update on its Web site that the company had lowered its forecasts for second half pretax profits after cutting prices by 90% in December and January to clear slow moving merchandise.

Second half pretax is expected to be fractionally lower than 27.4 million pounds profit a year ago.

Sales at the retailer however rose 2.5% in the six weeks ended January 6, while same store revenue increased 2.2% in the 23-weeks ended January 6.

Bloomberg news reported today that Thomson Corporation and Reuters Group Plc announced in a Regulatory News Service statement today that the planned purchase of Reuters will be completed in the second quarter when the U.S. Department of Justice and European Commission issue their rulings.

Thomson had earlier expected the Justice Department and the E.U. regulators to make a determination on tomorrow and on March 10 respectively. Reuters closed down 1.65%.



[R]12:00PM New York – U.S. market averages jumped higher on higher earnings from IBM.[/R]

U.S. stocks moved in the higher territory after better than expected earnings from IBM. Market managed to overcome earnings warning from Sears Holdings as retail stocks fell further.

Dow Jones Industrial Average gained 113.40 to 12,722.14, Nasdaq increased 25.25 to 2,465.42, and S&P 500 added 9.62 to 1,410.88.

IBM ((IBM)) jumped $6.03 to $103.70 after it reported sales increase of 10% and earnings rise of 24% in the fiscal fourth quarter.

Tech stocks rallied on the IBM earnings news.

Intel ((INTC)) added 85 cents to $22.85, Cisco increased 37 cents to $26.25, Microsoft edged 27 cents higher to $34.16, and Hewlett Packard advanced $1.08 to $46.08.

Sears Holdings ((SHLD)) declined $6.17 to $90.01 after it issued fourth quarter earnings guidance sharply lower than the previous estimate. The earnings are likely to decline as much as 51%. Same-store sales for the nine-week period ending on January 5, 2007 declined 2.4%.

Retailers took another dive after the earnings warnings from Sears Holdings.

Apple Inc ((AAPL)) added 3.75 to $176.39 after rising as high as $178.24 ahead of the Macworld conference in San Francisco. Apple in the past has used the gathering to release new products.

Harmon International ((HAR)) plunged 33% or $22.80 to $46.17 after the company lowered its earnings forecast for the fiscal 2008 between $3.00 and $3.10. In the press release the company said, “The change in guidance was prompted primarily by a major shift in the market for portable navigation devices. In recent months this sector has experienced significant pricing pressure which is affecting the entire industry.”

Gold increased $12.10 to $909.80 for an ounce and crude oil on New York Mercantile Exchange increased $1.21 to $93.90.

Newmont Mining ((NEM)) gained $1.77 to $56.50, Barrick Gold ((ABX)) gained 58 cents to $51.78, Cleveland-Cliffs Inc ((CLF)) jumped $5.20 to $94.54, and Great Northern Iron Ore ((GNI)) added $3.49 to $124.00.

Dollar fell to a record low against the euro to $1.4876 after the Fed Chairman Bernanke speech was interpreted by the currency traders as a possible interest rate reduction at the next meeting.


[R]11:00AM New York - Sears Holdings Corp stock plunges 10% after company cut fourth quarter earnings guidance.[/R]

Sears Holdings Corp ((SHLD)) warned fourth quarter earnings may fall, as much, as 51% after reporting sales fell sharply at two of its units late last year.

At Sears, same-store sales, or sales at stores open at least a year, slid 2.4% for the nine weeks to January 5, 2008.The drop reflected a reduction in home appliances sales, which Sears Holdings attributed to the slowing housing market and increased competition.

Kmart reported a decline of 4.2%. Total domestic comparable stores sales dropped 3.5% during the review period.

The company expects fourth quarter to February 2, 2008 net earnings in the range of $350 million and $470 million. This will translate into per share earnings of between $2.59 and $3.48.

Sears reported a profit of $820 million, or $5.33 per share in the year ago quarter.

Analysts polled by Thomson Financial predicted fourth-quarter earnings of $4.43 per share and a full-year profit of $6.64 per share.

Shares of Sears plunged 10.1% or $9.67 to $85.59 in pre-market trading Monday but recovered in the morning to $89.60.

In the past 52 weeks, the stock has traded in the range $90.80 to $195.18. Financial analysts surveyed by Thomson had one-year price target of $131.40 before the the earnings warning.

For the fiscal 2008, Sears estimated profit between $744 million and $864 million and earnings are estimated between $5.13 and $5.96 per share.

Domestic merchandise inventory is expected to fall below 2007 position of $9.2 billion despite a $160 million inventory increase at Kmart''s pharmacy operations.

Excluding Sears Canada, the company expects to close the year with positive cash flow of $1 billion or more.

Sales fell across the board, said the company, with higher declines in the Sears apparel and tools segments, and the Kmart seasonal units.

Sears said that the slow-down in sales was due to competition and added economic pressures on consumers as home prices fell include the housing market problems, falling employment rates and other consumer credit worries, Sears said.

Gross margin fell 200 basis points, as a result of holiday promotions, markdowns and higher sales from the home electronics unit that has a lower margin rate.

In the ten weeks to January 11, 2008 Sears spent $513 million buying back 4.9 million ordinary shares. The company is holding $223 million for additional share buybacks.

Sears joins a growing list of several firms that have warned of weaker profits as consumer spending slows on rising food and energy costs and worries related to housing market grows. Most apparel retailers and department store stocks have fallen nearly 40% or more in the last six months of trading.


[R]9:00AM New York – IBM rose in the pre-market trading on higher than expected earnings.[/R]

IBM ((IBM)) stock jumped $10.34 in the pre-market trading after it reported better than expected revenue and earnings in the fourth quarter.

Fourth quarter 2007 revenue rose 10% to $28.9 billion and earnings per share increased 24% to $2.80 from a year ago.

For the year 2007 fully diluted earnings per share of $7.18 an increase of 18% compared to $6.06 in the year 2006 and revenue jumped in the period 8% to $98.8 billion. Revenue on constant currency rose 4%.

“The broad scope of IBM’s global business --- led by strong operational performance in Asia, Europe and emerging countries --- drove these outstanding results,” said Samuel J. Palmisano, IBM chairman, president and chief executive officer.

[R]6:00AM New York, 6:00PM Hong Kong – Honk Kong Stocks fell after tracking the losses in the U.S. markets on Friday.[/R]

Stocks in Hong Kong closed lower after American Express and Capital One increased reserves and several retailers reported lower than estimated same sales growth during the holiday period.

The benchmark Hang Seng Index dropped 1.48% or 398.88 at 26,468.13, while the China Enterprises index of H shares, or Hong Kong-listed shares in mainland companies, plunged 2.23% at 15,480.10.

Daily turnover on main-board was HK$109.7 billion compared to HK$128.7 billion on January 11.

Dow Jones Newswires reported director-general of fiscal finance at the National Development and Reform Commission Xu Lin said China has set a preliminary target of 8% for economic growth this year, adding that government is also planning to keep increases in consumer price index at 4.6%.

Final targets will be announced at the National People’s Congress meeting in March. China recorded CPI inflation of about 5% in 2007.

Bloomberg news reported today that China’s Vice Finance Minister Li Yong said yesterday in Beijing that the government plans efficiently to coordinate fiscal and monetary policies this year to improve trade surplus and mop up excess liquidity.

China’s government is trying to cool economic growth that soared 11% last year. Trade surplus narrowed to $22.7 billion in December from $26.2 billion in November but the annual trade surplus surged 48% in 2007 to $262 billion.

The Standards news reported today that Invesco chief economist John Greenwood said yesterday that currency appreciation is not an effective measure to alleviate inflationary pressure in the long-term as it will invite more speculation activity.

Property companies rose on increased speculation that the U.S. will cut its benchmark interest rate after American Express Company and Tiffany & Company lowered earnings forecasts.

The city''s bourse operator Hong Kong Exchanges fell 6.1% on a sell-off sparked by investor fears of a weakening market.

Shipping lines fell after the Dry Baltic Index, which gauges freight charges, fell to a 10- month low by 4.6% last week. China COSCO slumped 8.3% to HK$20.45, Pacific Basin declined 6.84% to HK$9.95 and Sinotrans Shipping HK edged lower 5.28% to HK$5.38.

However, Xiamen Port climbed 16.2% to HK$2.51 after the Nationalist Party''s win in Taiwan elections boosted prospects of growing trade between China and Taiwan.

China Mobile fell after the company’s Hong Kong based spokeswoman Rainie Lei said that the company has discontinued talks with Apple Incorporated to launch the iPhones in China.

According to Sina.com Web site, the talks fell apart after Apple demanded 20% to 30% of the fees to provide data services to iPhone users. China Mobile slipped 2.76% to HK$130.20 on the news. China Unicom fell 3.43% to HK$18.04.

Foxconn posted the biggest decline among blue chip stocks plummeting 6.13% to HK$14.08.

Energy stocks also declined after crude oil prices for February delivery fell 1.1% to $92.69. Sinopec Corp shed 4.77% to HK$9.98 at the close of trade.

Retailer Esprit Holdings closed down 5.26% to HK$90.95 on fears that a declining consumer spending in the U.S. will hurt earnings.

[R]3:00AM New York, 7:00PM Sydney - ASX 200 index declined 0.03% due to effects of U.S. economic slow-down.[/R]

ASX 200 index lost 0.03% or 1.6 to close at 5,980.

Midwest Corporation Ltd a takeover target of China''s Sinosteel Corporation said that it is waiting for the confidentiality agreement signed by Sinosteel before releasing accounts. Midwest had agreed to release its financial statements on December 9, 2007.

Midwest said there discussions with Sinosteel had no potential to result in a transaction.

Sinosteel put in a bid of $5.60 cash for each Midwest share, valuing it at $1.19 billion or higher than offered by the rival bid from Murchison Metals for a swap of 1 for every 1.08 stock. Murchison share closed up 7.1%.

Paladin Energy Ltd''s share fell 1% despite the company reporting that it is on track to produce 2.6 million pounds of uranium oxide from its Langer Heinrich mine in Namibia during 2008.

The company produced 650,562 pounds during the first half ending in December 31 against a target of 650,000 pounds.

Production during the December quarter increased to 390,807 pounds of uranium oxide sharply lower than earlier target due to technical problems. The company is still targeting to raise its annual production capacity to 3.7 million pounds.

Primary Health Care Ltd''s increased its stake in its takeover target Symbion Health Ltd to 37.47% from 36.15%.

Primary made a $2.7 billion takeover bid for Symbion which translates to $4.10 per share, which Symbion rejected as too low. Primary''s offer, which was again extended last week, remains open until February 7.

Primary''s current offer is conditional upon achieving acceptances totaling 90 per cent of its target''s shares.

Rival suitor Healthscope with a stake in Primary of 11.91% is still considering to revising its offer.

Allegiance Mining Ltd today indicated that it would make a formal recommendation regarding Zinifex Ltd''s unsolicited takeover offer shortly and reiterated its advice to shareholders to take no action.

The company cited the recent vote of support from its largest shareholder, China''s Jinchuan Group Ltd, as a sign of the strength of the relationship between the companies.

Jinchuan on Friday backed helped in rebuffing Zinifex Ltd''s unsolicited takeover offer, implying in a letter that it would not accept the up to $744.93 million bid.

Zinifex launched an all-cash offer of 90 cents per Allegiance share on December 17 and pledged to increase the bid to $1 per share if it acquired more than 30 per cent of its target, or gained board approval, an offer that Allegiance said was """"opportunistic"""".

Under an off-take agreement, Jinchuan will buy all nickel concentrates produced by Allegiance. The target hopes to start producing nickel at its Avebury project in Tasmania in the first quarter of this year.

MFS Ltd shares rose by 16% today after the group received an $830 million offer from City Pacific Ltd to buy its financial services business. Analysts are looking for a higher bid. The offer values one City Pacific share at $3.70 per share or $1.30 billion.

Woolworths is the first retailer to join the ranks of the top global 25 retailers.

Deloitte 2008 Global Powers of Retailing report identified the 250 largest retailers globally for the year 2006-2007. Woolworths improved its ranking to 25th position from 29th but Coles Group ranking fell to 31st from 30th.

Fairfax regional newspapers in New South Wales may face a journalist strike next week if the demand for 11% pay hike is not met.

The strike was expected to affect the Western Advocate in Bathurst, Dubbo''s The Daily Liberal, the Northern Daily Leader in Tamworth, the Maitland Mercury and the Central Western Daily in Orange.

The Australian dollar rose marginally today on speculation that local rates may be revised higher ahead of the release of inflation data.

At the close, the Australian dollar was trading at $0.8944 against American currency, up from Friday''s close of $0.8940.

Of the ASX 200 index shares, Lynas Corp Limited led the gainers with a rise of 11.6% followed by increases in MFS Limited of 11%, in Toll Holdings Limited of 7.6%, in Asciano Group of 7.5%, and in Murchison Metals of 7.1%.

Of the ASX 200 index stocks, Centennial Coal led the decliners with a fall of 40.4% followed by losses in Sundance Resource of 9.2%, in Flight Centre of 5.5%, in Mincor Resource of 5.4% and in Timbercorp Limited of 5%.