U.S. Stocks Rise on Earnings, Stimulus Plan

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

U.S. stocks edged higher on better than expected earnings and rising metals and energy prices. Nasdaq led the indexes with a rise of 1.9% followed by increases in S&P 500 of 1.01% and 0.9% in Dow Jones. U.S. lawmakers release a stimulus package to revive the flagging consumer spending. The plan aims to rebate between $300 and $1,200 per household with adjusted gross income lower than $150,000 and raise mortgage cap limit for Fannie Mac and Freddie Mac to $730,000 in select cities.

[R]4:00PM New York, 10:00PM Frankfurt, 8:00AM Sydney – U.S. stocks gained after Nokia, AT&T, and Lockheed Martin and others. Commodities and energy prices rose.[/R]

North American Markets indexes

Dow Jones Industrial Average rose 108.44 or 0.88% to a close of 12,378.61, S&P 500 closed up 13.47 or 1.01% to 1,352.07, and Nasdaq Composite Index traded up 44.51 or 1.92% to a close of 2,360.92.

In Toronto TSX Composite closed up 249.83 or 1.97% to close at 12,907.23.

Of the 30 stocks in Dow Jones Industrial Average, 17 closed higher, 13 closed lower, and none was unchanged.

AT&T led the decliners in the index after it reported earnings with a loss of 3.4% followed by losses in Wal-Mart of 2.8%, in JP Morgan Chase of 2.08%, in Merck of 2%.

Alcoa led the gainers in the index with a rise of 5.5% followed by increases in Microsoft of 4.3%, in Hewlett Packard of 3.5%, in Intel of 3.35%, and in Citigroup of 2.4%.

Of the stocks in S&P 500, 260 closed higher, 238 fell, and 2 were unchanged.

One hundred and eighteen stocks rose more than 3% and one hundred and seventeen stocks fell more than 3%. Seven stocks closed above 10% in the index.

Ambac led the decliners in the index with a fall of 16% followed by losses in MBIA of 15%, in Sovereign Bancorp of 9%, in Family Dollar of 7%, in Southwest Air of 6.4%, in EBay of 6.3%, and in Expeditors International of 6.2%.

LSI Corp led the gainers in the index with a rise of 22% followed by increases in Teradyne of 14.5%, in Molex of 13%, in Symantec Corp of 11%, in National Oil Varco of 10.8%, in Consol Energy of 10.7%, Qualcomm Inc of 10%.

South American Markets Indexes

In Latin Markets Brazil led the decliners in the region with a gain of 5.95% followed by increases in Chile of 5.80%, in Colombia of 4.93%, in Argentina of 3.98%, and in Peru of 2.41%. Venezuela added 0.55% and Mexico increased 0.82%.


Asian Markets


In Tokyo Nikkei 225 Index closed higher 263.72 or 2.06% to 13,092.78, in Hong Kong Hang Seng index decreased 550.90 or 2.29% closed to 23,539.27, in Australia ASX 200 index higher 168.10 or 3.11% to close 5,580.40.

In South Korea Kospi Index increased 34.58 or 2.12% to close at 1,663.00, in Thailand SET index closed lower 12.07 or 1.63% to 728.58, and Indonesia JSE Index edged increased 40.42 or 1.63% to 2,516.70. Sensex index in India decreased 372.30 or 2.12% to 17,221.74.

European Markets

In London FTSE 100 Index closed higher 266.50 or 4.75% to 5,875.80, in Paris CAC 40 Index increased 280.22 or 6.04% to close at 4,916.98 and in Frankfurt DAX index higher 381.86 or 5.93% to close at 6,821.07. In Zurich trading SMI increased 334.84 or 4.55% to close at 7,690.97


Bond Yields increased on 10-year U.S. bonds to 3.66% and 30-year bonds rose to 4.36%.

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

Crude oil rose $2.62 to close at $89.61 per barrel for a front month contract, natural gas increased 21 cents to $7.82 per mBtu, and gasoline futures increased 3.60 cents to close at 228.70 cents per gallon.

Gold increased $28.10 in New York trading to close at $911.20 per ounce, silver closed up 48 cents to $16.445 per ounce, and copper for front month delivery increased 13 cents to 320.20 per pound and in London copper futures increased $144.00 to $6,904.00.

Dollar edged lower against euro to $1.47523 and gained against yen to 106.9001.


[R]1:30PM New York, 7:30PM Frankfurt – Nokia trades higher after better than expected earnings report.[/R]

Nokia ((NOK)) reported fourth quarter sales increased 34% to 15.72 billion euros and 5% rise in sales in mobile phone division to 7.4 billion euros. Mobile handset device unit sales increased 48%. Nokia estimated device market share increase to 40% on increasing operating margin.

Nokia reported fourth quarter earnings per share of 47 euro cents, a rise of 57% from 206 on 15.7 billion euro an increase of 34%.

Nokia operating margin in the quarter increased to 15.9%, up sequentially from 14.6% in Q3 2007, excluding special item and reported operating cash flow of 2.7 billion euros.

Nokia device volumes in the quarter increased to133.5 million units, up 20% sequentially and up 27% year on year on estimated industry device volumes of 336 million units, up 17% sequentially and up 16% year on year.

Nokia estimated device market share of 40%, up from 39% in Q3 2007 and up from 36% in Q4 2006. Nokia said that the average selling price increased to 83 euros, up from 82 euros in third quarter 2007.


[R]1:00AM New York, 7:00PM – European markets rallied but Societe Generale reported a huge loss on fraudulent trading and subprime losses.[/R]

U.S. stocks in the morning trading edged higher as market extended its rally from yesterday in large and mid cap stocks.[/R]

In London FTSE 100 Index closed higher 266.50 or 4.75% to 5,875.80, in Paris CAC 40 Index increased 280.22 or 6.04% to close at 4,916.98 and in Frankfurt DAX index higher 381.86 or 5.93% to close at 6,821.07. In Zurich trading SMI increased 334.84 or 4.55% to close at 7,690.97

Societe Generale reported a huge loss and company blamed it on trading fraud while eBay offered a softer outlook on earnings.

Societe Generale reported subprime loan loss of $3 billion and blames one trader to engage in a fraud of 4.9 billion euros or $7.1 billion. Market index futures trader named Jerome Kerviel, 31 years of age, engaged in European index futures trading and covered his losses exploiting his intricate knowledge of bank’s risk control procedures.

SG also reported subprime loan write-down of 2.05 billion euro. The combined loan losses and fraud charges will reduce profit in 2007 to between 600 million and 800 million euros.


Lockheed Martin Corporation ((LMT)) today reported fourth quarter 2007 net earnings of $799 million or $1.89 per diluted share, compared to $729 million or $1.68 per diluted share in 2006.

Net sales were $10.8 billion in both the fourth quarter of 2007 and 2006.

Cash from operations for the fourth quarter of 2007 was $420 million, compared to $333 million in 2006.

Net earnings for the year ended December 31, 2007 were $3.0 billion or $7.10 per share, compared to $2.5 billion or $5.80 per share in 2006.

Net sales for the year ended December 31, 2007 were $41.9 billion, a 6% increase over the $39.6 billion in the comparable 2006 period.

Cash from operations for the year ended December 31, 2007 was $4.2 billion, compared to $3.8 billion in 2006. Return on Invested Capital (ROIC) was 21.4% for the year ended December 31, 2007 compared to 19.2% in 2006.

[R]10:00AM New York, 7:30PM Mumbai – Sensex fell on the weakness in mid and large cap stocks.[/R]

Stock markets declined on the weakness in large and mid cap stocks. Reliance Energy and Reliance Industries fell.

The BSE 30-share Sensex declined 2.1% or 372.33 to 17,221.74. The broader CNX S&P Nifty slipped 3.3% or 169.95 to 5,033.45.

As 2,328 shares on the BSE declined, 400 stocks advanced and 16 shares remained unchanged. Of the Sensex index, 23 stocks fell and 7 climbed.

Trading turnover on the BSE was 6,364 crore rupees as compared to 7,133 crore rupees on Wednesday and on the National Stock Exchange stood at 17,209 crore rupees.

Reliance group of stocks dominated trading. Reliance Natural Resources was the most active share on the BSE with turnover of 408 crore rupees followed by Reliance Industries, Reliance Petroleum, Reliance Energy and Reliance Capital.

The Finance Minister said there was a need to moderate capital inflows without hurting the flow of capital that stimulates the economy. The government is worried that capital flows in the country are adding stoking inflation.

Of the BSE share Reliance Energy led the decliners in the Sensex index. The country''s largest power utility in terms of net profit fell 9.3% to 1,805 rupees. National Thermal Power Corporation lost 8.8% to 204 rupees.

Reliance Industries slid 2.8% to 2,484.7 rupees.

Hindalco lost 6.7% to 150.05 rupees, Oil & Natural Gas Corporation shed 5.5% to 937 rupees, and Wipro declined 6.05% to 405 rupees.

Housing Development Finance Corporation gained 3.13% to 2,611 rupees in a volatile trading and led the gainers in the Sensex index.

Of the Sensex stocks, Satyam Computer Services added 2.01% to 401 rupees, cement maker ACC was up 1.7% to 762 rupees, and Reliance Communications increased 1.1% to 621.25 rupees.

ICICI Bank lost 1.4% to 1,135.05 rupees on reports, ICICI Securities, the investment banking and broking unit of ICICI Bank reportedly aims to raise up to $1 billion through a pre-IPO placement of shares.

State Bank, the country''s largest commercial bank surged 0.9% to 2,345 rupees.

Larsen & Toubro slipped 5.2% to 3,555 rupees despite securing orders worth 1,057 crore rupees from the Gulf region on Wednesday.

Hindustan Unilever declined 3% to 183.9 rupees after trading as high as 203 rupees.

Bharti Airtel climbed 0.6% to 852 rupees on high volume of 16.70 lakh shares. A single block of 12.72 lakh shares (or 1.272 million) was executed in the stock on BSE at 850.5 rupees.

DLF lost 2% to 905 rupees.


[R]6:00AM New York, 6:00PM Hong Kong - Hong Kong trade deficit increased to HK$27.4 billion in December. China trade surplus rises and GDP in 2007 rose at 11.4%. Inflation remains a major threat.[/R]

Stocks in Hong Kong plummeted on a government report showing that trade deficit widened and on rising expectations that credit market turmoil will persist.

In Hong Kong trading Hang Seng Index declined 2.3% or 550.90 at 23,539.27, while the China Enterprises Index plunged 2.61% at 12,933.20.

Daily turnover on the main-board was HK$142.4 billion compared to HK$156.4 billion yesterday.

The Hong Kong government reported on its website today that export shipments rose 8.2% year to HK$232 billion in December from a year ago, while imports soared 10.3% to HK$259.7 billion, yielding a trade deficit of HK$27.4 billion.

Exports to China spiked 21.7% in December from a year earlier.

According to the government report, cumulative exports last year gained 9.2% from a year earlier. However imports gained 10.3% driven by rising oil prices.

Trade deficit in 2007 stood at HK$180.5 billion.

National Bureau of Statistics reported today in Beijing that the China’s Gross Domestic Product in 2007 increased to 11.4% from the revised 11% in 2006 to 24.66 trillion yen ($3.41 trillion).

China’s foreign trade soared 23.5% to $2.17 trillion. Exports edged up 25.7% to $1.22 trillion, while imports grew 20.8% to $955.8 billion and trade surplus advanced 47.7% to $262 billion.

China’s industrial output in 2007 rose 3.7% to Rmb 2.89 trillion and 13.4% at Rmb 12.14 trillion, while the tertiary sector advanced to 9.63% at Rmb 9.63 trillion.

The statistics office also added that production at major enterprises, with annual sales of Rmb 5 million, surged 18.5% from a year ago, with aggregate profit reaching Rmb 22.95 trillion.

Spending on fixed assets in 2007 increased by 25.7% to Rmb 13.72 trillion.

Inflation remains a major threat to the Chinese economy. Inflation in 2007 tripled to 4.8% from 2006 on food price increase of 12.3% in 2007. Consumer price index in December fell to a growth of 6.5% from 6.9% in November and is running above the central bank target of 3%.

Financial stocks declined on remarks by Chief Executive of the Hong Kong Monetary Joseph Yam Chi-kwong today that notwithstanding the aggressive interest rate cut by the U.S. Federal Reserve it will take time before the situation normalizes.

Kwong added that the credit crunch is being caused by capital inadequacies at financial institutions rather than the pricing of credit.

Bank of China Communications shed 0.45% to HK$8.86, HSBC Holdings declined 0.69% at HK$115.40 and China Life slipped 3.3%.

The Hong Kong Exchanges and Clearing jumped 4.2% on speculation that China will permit mainland investors to invest in Hong Kong stocks in the second quarter.

China Oilfield Services slumped 12% after reporting today that it failed to expand offshore.


Asian Markets Update

In Tokyo Nikkei 225 Index closed higher 263.72 or 2.06% to 13,092.78, in Hong Kong Hang Seng index decreased 550.90 or 2.29% closed to 23,539.27, in Australia ASX 200 index higher 168.10 or 3.11% to close 5,580.40.

In South Korea Kospi Index increased 34.58 or 2.12% to close at 1,663.00, in Thailand SET index closed lower 12.07 or 1.63% to 728.58, and Indonesia JSE Index edged increased 40.42 or 1.63% to 2,516.70. Sensex index in India decreased 372.30 or 2.12% to 17,221.74.


[R]5:00AM New York, 7:00PM Tokyo - Japan’s December trade surplus declined 20.9% from a year ago to 877.8 billion yen in December.[/R]

In Tokyo trading Nikkei 225 surged 2.06% or 263.72 to 13,092.78.

In the first section of the Tokyo Stock Exchange 10.8 billion shares worth 1.2 trillion yen were traded and in the second section 305 million shares valued at 4.9 billion yen changed hands.

Of the Nikkei 225 stocks 185 gained, 36 declined, and 3 were unchanged.

Buyers returned to the market and realty, export sensitive, and automobile companies led the gainers. Mitsui Fudosan led gainers with an advance of 10.05%.

Japan’s Ministry of Finance revealed on its website today that exports in Japan rose 6.9% from 6.9 trillion a year earlier to 7.4 trillion yen in December, while imports rose 12.1% year on year from 5.8 trillion yen to 6.5 trillion yen. Trade surplus in December fell 20.9% from 1.1 trillion yen from a year earlier to 877.9 billion yen.

Combined exports to China and Hong Kong in 2007 rose to 17.4 trillion yen, with exports to mainland China rising 19% to 12.8 trillion yen.

However exports to U.S. in 2007 fell for the first time in four years by 0.2% in 2007 to 16.9 trillion yen, ceding its biggest export market status for Japan’s shipments to China.

The finance ministry added that total exports in 2007 rose 11.6%to 83.9 trillion yen leveraged by shipments of cars, steel and telecommunications equipment. Conversely, imports rose by 8.6% to a record 72.12 trillion yen, driven by a 7.4% gain in crude oil imports.

December exports to the U.S. fell for the fourth straight month by 4.5% from a year earlier to 1.42 trillion yen and exports to China grew 8.4% in December to 1.16 trillion yen.

Exports to the European Union also declined to 2.4% rise in December from a year ago from 8.2% rise in November.

The Financial Times reported yesterday that New York Insurance Superintendent Eric Dinallo engaged banking executives yesterday in a bid to pool an initial capital of $5 billion to support specialist insurers known.

Dinallo ultimately intends to persuade financial institutions to commit as much as $15 billion to support insurance and help buffer against future losses and write-downs.

Analysts estimate that if bond insurers continue to lose ratings it will result in more than $200 billion in losses in CDO bonds will be forced on bank’s balance sheets.

Of the Nikkei 225 index shares Mitsui Fudosan led advancing stocks with a rise of 10.05% followed by gains of 9.59% in Daiwa House Industries, of 9.28% in Mitsui Sumitomo Insurance, of 9.09% in Sumco Corporation, and of 8.62% in Chiyoda Corporation.

Tokyu Land Corp shed 8.45% and Mitsubishi Estate Company tumbled 8.37%.

Chiyoda Corporation rose after UBS AG upgraded the stock’s rating from “neutral” to “buy”, citing reduced raw material and labor costs.

Advantest Corporation led a decliners in Nikkei 225 index shares with a drop of 9.15% followed by losses of 5.93% in Nippon Paper Group, of 4.24% in Kikkoman Corporation, of 2.51% in Seven & I Holdings, and of 2.16% in Konica Minolta.

Advantest Corporation plunged after the Nikkei reported that the chipmakers operating profit might fall 40% in the current fiscal year ending in March 2008.


Australian shares gained today, following US stock markets that surged in late trade overnight after the Federal Reserve''s emergency cut in interest rates on Tuesday. Centro Properties Group''s new boss

Mr Glenn Rufrano rules out sale of the company''s assets. Zinifex Ltd registers growth in zinc production. National Australia Bank denies being Allco Finance Group''s direct lender. Newcrest Mining Ltd announces cut in its full-year output forecast. Orica Ltd rules out further acquisitions. $800 million equivalent ($701 million) revolving loan for Australian investment firm Babcock & Brown Infrastructure Ltd launched to general syndication.

[R]3:00AM New York, 7:00PM Sydney - ASX 200 index rose 3.1% after gains in financial counters.[/R]

ASX 200 index gained 3.1% or 168.1 to close at 5,580.40.

The Preliminary market turnover was 2.42 billion shares worth $9.43 billion, with 1070 shares moving up, 367 moving down and 248 unchanged.

Troubled shopping centre operator Centro Properties Group''s new boss Mr Glenn Rufrano today ruled out any sale of the company''s assets at this stage after expressing optimism that the company''s request to bankers for more time to refinance $3.9 billion in maturing debt would be approved.

He indicated that Centro is considering the sale of its investment in Centro Australian Wholesale Fund and in Centro America Fund with assets of $2.6 billion and $1.1 billion under management, respectively. Rufrano could not put a figure on the amount of equity Centro is expected to receive.

Rufrano replaced Andrew Scott as Centro''s chief executive last week. He had been with the company for nine months prior to his appointment.

Centro shares have lost 94% of their market value since mid-December after it failed to refinance its severe debt load.

Shares in Centro gained 35.2% while those in Centro Retail Group were up 22.5%.

The world''s third-largest zinc mining company, Zinifex share rose 11% today after it reported growth in zinc production during the second-quarter.

Zinc production rose 2.9% amid continuing demand from China. According to the company''s statement zinc output was 147,288 metric tons in the three-months ended December 31, up from 143,116 tons a year earlier.

The increase represents an 8% rise for the half while lead production rose to 18,863 tons, from 14,565 tons. Zinifex grossed than $2 billion in cash after selling its smelters in October and needs new sources to replace dwindling reserves in Australia.

According to Zinifex, the average price of zinc fell 19% to $2,623 a metric ton in the quarter compared with the previous quarter representing a 37% fall from the same period a year earlier when the price for the metal averaged to a record level at $4,142 a ton.

Zinifex last month made a $775 million bid for Allegiance to gain control of its Avebury nickel mine in Tasmania where output is due to start in March.

The National Australia Bank today denied that it is a direct lender to Allco Finance Group, but has lending relationships with entities associated with the finance house. NAB said it had provided a margin loan facility of about $110 million to Allco Principle Investment, which is one of Allco''s major shareholders.

The bank advised the stock exchange in a statement that the loan did not involve the sale of any shares and that it did not anticipate any material loss at the moment.

NAB said it also had a $95 million fully secured facility with property investor Rubicon Holdings, which was recently acquired by Allco, with $65 million of the $95 million credit facility has been drawn. The bank added that it had other lending relationships to entities in which API or Rubicon-held equity interests.

Allco shares jumped 24% on the news after falling 26% in yesterday’s trading. The shares dropped 26% yesterday after Allco''s largest shareholder, was forced to dump stock by margin calls from two of its lenders. Shares in Allco managed fund, Allco Max Securities and Mortgage Trust fell 18.5% while NAB shares rose by 4.6%.

Australia''s largest independent gold mining company, Newcrest Mining Ltd stock fell 2.6% after the company announced a cut in its full-year output forecast and raised cost estimates at its largest project Telfer by 9%. Telfer is the largest gold mine in Australia.

Newcrest said costs rose to $607 an ounce from $446 per ounce in the previous quarter. Work at the site at the $1.5 billion Telfer project in Western Australia has been hampered by delays and cost overruns.

Company said gold production in fiscal 2008 might be trimmed by 54,000 ounces to between 430,000 ounces and 450,000 ounces on limited trucks and harder variety of ore to process.

Lihir Gold Ltd gained 3.1%.

Australian explosives maker, Orica Ltd, today ruled out making further large acquisitions after spending $2.1 billion since 2005 building its mining services business.

Chief Executive Officer Graeme Liebelt told reporters that they might engage in smaller deals. He said their decision had nothing to do with debt markets or the state of their balance sheet but wanted to focus on consolidating the recently acquired businesses. The company has acquired twelve companies in the last three years.

The acquisitions positioned the company as the main supplier of explosives, chemicals and bolts to large companies including mining giants, Rio Tinto Group and BHP Billiton Ltd.

Mining services now account for Orica''s fastest-growing source of revenue and has grown 82% between the years 2004 and 2007.

Local press in Australia reported that $800 million equivalent ($701 million) revolving loan for Australian investment firm Babcock & Brown Infrastructure Ltd was launched to general syndication today.

The sources said around $414 million of the loan would help fund the company''s 32% share of $2.5 billion acquisition of National Gas Pipeline Company of American. The balance of the loan would be used to refinance an existing bridging facility.

Australia & New Zealand Investment Bank, Commonwealth Bank of Australia, Dresdner Kleinwort and Royal Bank of Scotland were reported to have been mandated lead arrangers and have fully underwritten the facility.

The loan is divided into a US$500 million tranche evenly split into maturities of three and five years, and a $235 million tranche that also divides into three- and five-year maturities.

Potential lenders have been invited to commit $75 million equivalent or $50 million equivalent. Responses are due in early February.

Of the ASX 200 index shares, Centro Retail Group led the gainers with a rise of 38.8% followed by increases in Centro Properties of 35.2%, in Allco Finance Group of 29.4%, in Babcock & Brown of 20.8%, and in Compass Resource of 16.6%.

Of the index stocks, Perilya Ltd led the decliners with a fall of 5.4% followed by losses in Sims Group Ltd of 4.1%, in Transpacific Industries of 4.1%, in Boart Longyear G of 3.9% and in Austar United of 3.2%.