Initial Jobless Claims Fall

Elena
20 Oct, 2005
New York City

Asian-Pacific markets rebounded from yesterday

U.S. MARKET AVERAGES

U.S. stock futures point to a lower opening of the session, rebounding from yesterday’s market rally with solid gains when the three major averages advanced on upbeat earnings news, crude oil drop and positive economic data. The market sentiment is overshadowed by the mixed picture on the earnings front, painted by a number of giant companies, which delivered earnings before the opening bell. Investors have to digest quarterly profit decline from Pfizer and cautious Q4 outlook from Nokia, as well as better-than-expected earnings of Coca Cola Co. and Nestle’s sales growth.

While earnings news will likely dominate Thursday's trading, a few economic reports are expected as well. Weekly employment data is set to be released before the opening bell. Economists expect initial jobless claims to come in at 370,000 for the week ended October 15, a decline compared to the previous week's level of 389,000. In the afternoon, the Philadelphia Fed is scheduled to announce its survey of manufacturing activity in the region. After a sharp drop in September to a level of 2.2, economists expect the Philly Fed's headline index to advance to about 10.

ECONOMIC NEWS

In the week ending Oct. 15, the advance figure for seasonally adjusted initial claims was 355,000, a decrease of 35,000 from the previous week's revised figure of 390,000. The 4-week moving average was 376,000, a decrease of 20,000 from the previous week's revised average of 396,000.
The advance seasonally adjusted insured unemployment rate was 2.3 percent for the week ending Oct. 8, an increase of 0.1 percentage point from the prior week's unrevised rate of 2.2 percent.

The advance number for seasonally adjusted insured unemployment during the week ending Oct. 8 was 2,894,000, an increase of 36,000 from the preceding week's revised level of 2,858,000. The 4-week moving average was 2,852,250, an increase of 59,000 from the preceding week's revised average of 2,793,250.

INTERNATIONAL MARKET NEWS

Asian-Pacific benchmarks rebounded from heavy losses yesterday to close generally higher, reacting to a broad U.S. markets rally on the back of positive news on the corporate and economic front. The Nikkei bounced off a six-day decline to finish up 0.5%. Across the region, Hong Kong’s Hang Seng added 0.3, South Korea’s Kospi climbed 0.8%, and China’s Shanghai Composite gained 0.1% on economic growth data.

European markets regained strength at mid-day trading after posting heavy losses Wednesday. Stocks were lifted by higher close of U.S. equity markets yesterday, lower crude oil prices, improved Nestle sales, and SAP earnings. The German DAX 30 rose 1.7%, the French CAC 40 climbed 1.5%, and London’s FTSE 100 gained 1.3%.

ENERGY, METALS, CURRENCIES

Crude oil declined on news that gasoline stocks rose in the previous week and on eased concerns over Hurricane Wilma which appears to steer away from vulnerable oil production facilities in the Mexican Gulf. Light sweet crude November delivery fell 19 cents to $62.22 a barrel. Heating oil lost 1 cent to $1.9036 a gallon. Gasoline traded at $1.6800. London Brent December contract traded at $58.78.

In European trading gold prices keep the falling trend. In London dealers fixed the recommended price of $464 per troy ounce, down from $465. In Hong Kong the precious metal lost $4.20 to close at $463.95. Silver opened at $7.67, up from $7.66.

In European trading the U.S. dollar traded mixed against its major counterparts. The euro was quoted at $1.1975, down from $1.1976. The dollar changed hands at 115.45 yen, down from 115.47. The British pound was trading at $1.7673, up from $1.7616.

EARNINGS NEWS

Coca-Cola Co. ((KO)), soft-drink producer, posted stronger-than-expected Q3 net income of 54 cents a share, up from 39 cents in the year-ago period on 8% revenue growth, beating analysts’ forecasts by a penny. The latest earnings incorporated a net charge of 3 cents. That breaks down to a 4-cent charge to write down Philippines assets and a 1-cent benefit related to the favorable resolution of tax matters.

Nokia Corp ((NOK)), mobile-phone maker, reported that Q3 net income advanced 29% to 20 cents a share, topping analysts’ forecasts by a penny. Sales increased 18% and mobile phone sales went up 15%, with network sales up 2%. Mobile phone operating margin dropped to 16.9% from 18.8% and the average selling price fell to 102 euros from 108 euros a year ago. The number of units sold in Q3 advanced to 66.6 million units. Owing to the strong volume growth, Nokia raised its global forecast for the fiscal year to 780 million units.

Danaher Corp ((DHR)), manufacturer of professional instrumentation and industrial technologies, posted Q3 net income of 70 cents a share, up from 62 cents in the same period a year ago on 12.5% sales growth, matching analysts’ forecasts of 70 cents a share.

Pfizer Inc. ((PFE)), healthcare products manufacturer, reported Q3 net profit dropped 52% to 22 cents a share on 5% revenue decline due to generic drug sales and lower sales of the selective COX-2 inhibitors. Worldwide Lipitor revenue increased 6%. Pfizer's adjusted earnings of 51 cents topped analysts’ forecasts of 48 cents a share, while revenue didn’t meet the $12.5 billion forecast. Pfizer reduced adjusted EPS to $1.92 to $1.94 range and diluted EPS to a $1.02 to $1.04 range. Analysts expected $1.98 a share in earnings for the year.

Bank of New York Corp ((BK)), commercial banking and financial services provider, announced that Q3 net income advanced 10% to 51 cents a share, up from 46 cents a share in the year-ago period on growth in securities revenue and net interest income, beating analyst estimate of 49 cents a share.

Ford Motor Co ((F)), auto maker, posted a Q3 loss of 15 cents a share, down from net profit 15 cents a share a year ago despite sales growth, missing analyst estimate of a loss of 10 cents a share. The operating loss in Q3 was 10 cents a share, down from an operating income of 27 cents a share in the year-ago period.

Eli Lilly Co. ((LLY)), drug producer, posted Q3 earnings of 73 cents a share, up from a profit of 69 cents a share in year-ago period on 10% sales growth, beating analysts’ forecasts of a profit of 71 cents a share. The company added that its new products gave its results a boost in Q3, contributing 18% of total sales.

Alaska Air Group, Inc. ((ALK)), airline business holding company, posted Q3 net income of $2.71 per share, up vs. $2.29 per share in Q3 of 2004. Both the 2005 and 2004 results include certain significant items related to mark-to-market fuel hedge accounting adjustments, refunds of navigation fees and restructuring activities that impact the comparability of the quarters. Apart from the impact of these items, net income would have been $2.16 per share for Q3 of 2005, up from net income of $1.58 per diluted share in Q3 of 2004.

McDonald's Corp. ((MCD)), restaurant chain, announced that Q3 net earnings dropped from last year’s to 58 cents per share, from 61 cents per share, but were in line with a better-than-expected forecast the company stated last week. Last year's results incorporated a tax benefit of 7 cents per share. Apart from a gain for selling a stake in an unnamed foreign market, McDonald's gained 56 cents per share. On that basis, analysts expected earnings of 55 cents a share before last week's announcement.