U.S. Stocks Battle Recession Worries

123jump.com Staff
08 Feb, 2008
New York City

U.S. stocks fell in the afternoon trading as European markets fell and more than expected rise in wholesale inventories put investors in defensive mood. Dow and S&P 500 fell more than 1% and Nasdaq declined 0.3%. Industrial, consumer driven, real estate, and energy stocks fell. Tech stock retreated from their highs reached in the morning, as Google, RIM, and Apple lost most of the early gains. Gold surged.

[R]1:30AM New York – Earnings from Cott, Weyerhaeuser, and Beckman Coulter declined.[/R]

U.S. market averages fell in the afternoon the day’s low after the fears recession gripped investors. Latest data on rising wholesale inventories put investors on defensive. Tech stocks remained firm, but as broader stocks declined, sellers began to swamp tech stocks as well.

Google, Apple, and Research in Motion, three tech stocks favored by momentum investors retreated from their highs in the morning. Dow Jones Industrial Average fell 1%, Nasdaq declined 0.3%, and S&P 500 lost 1%.

Earnings Update

Beckman Coulter ((BEC)) maker of bio medical testing equipment reported 69 cents per share earnings a decline of 29% on 11% rise in sales in the fourth quarte.

Brush Engineered Materials ((BW)) reported fourth quarter 2007 sales of $236.3 million, up $28.4 million or 14% compared to the fourth quarter of 2006. Net income for the fourth quarter was $12.3 million or $0.60 per share, diluted.

Chindex International ((CHDX)) revenue for the third quarter ended December 31, 2007 was $36.0 million, a 19% increase over revenue of $30.3 million in the quarter ended December 31, 2006. Net income from continuing operations for the quarter ended December 31, 2007 was $3.9 million or earnings per basic share on continuing operations of $0.50 compared to $0.7 million or $0.10 per share a year ago.

Cott Corporation ((COT)) revenues in the fourth quarter were $412.4 million, up 3.1% from $400.1 million in the comparable prior year period. This increase was primarily due to an 18.0% improvement in the International division, principally in the U.K., while revenues in North America were down 2.5%.

Net loss in the fourth quarter was $76.8 million or $1.07 per diluted share, compared to a net loss of $29.6 million or $0.41 per diluted share in the fourth quarter of 2006.

Lubrizol Corporation ((LZ)) earnings from continuing operations for the fourth quarter ended December 31, 2007 were $59.7 million, or $.86 per diluted share, including after tax restructuring and impairment charges of $0.6 million, or $.01 per diluted share.

Comparable earnings from continuing operations for the fourth quarter of 2006 were $21.4 million, or $.31 per diluted share, which included after tax restructuring and impairment charges of $28.4 million, or $.41 per diluted share, consisting primarily of a $.37 per diluted share non-cash charge related to the impairment of the Noveon trade name.

Weyerhaeuser ((WY)) reported net earnings of $790 million for 2007, or $3.59 per diluted share, on net sales of $16.3 billion. This compares with net earnings of $453 million for 2006, or $1.84 per diluted share, on net sales of $18.7 billion.

For the fourth quarter 2007, net loss of 63 million, or 30 cents per diluted share, on net sales of $3.9 billion compared to $507 million, or $2.12 per diluted share, on net sales of $4.8 billion.

Wheat Prices Soar

Wheat prices rose to a record rise after the U.S. Department of Agriculture estimated that the wheat inventories will be at 60-year low of 272 million bushels. The latest projection shows a 7% decline from the earlier projection in January and 40% lower from a year ago. Wheat futures rallied to the daily limit of 30 cents for the fifth session in a row and closed up 16% for the week. Wheat prices at mid-day were trading at $10.93 per bushel, up 30 cents in Chicago and in Kansas were up 30 cents to $11.4025 per bushel.

The World Agricultural Supply and Demand Estimates report released today by U.S. Dept of Agriculture noted the following.

“Projected U.S. wheat ending stocks for 2007/08 are lowered 20 million bushels this month as a reduction in feed and residual use is more than offset by higher projected exports.

At 272 million bushels, this year''s ending stocks are the lowest since 1947/48. Ending stocks as a percentage of use (stocks-to-use) at 12 percent would be the lowest since 1946/47. Feed and residual use is projected 5 million bushels lower as high prices and tight supplies reduce the expected residual.

Exports are raised 25 million bushels with hard red spring wheat increased 20 million and soft red winter wheat increased 5 million. The season-average farm price projection is unchanged at $6.45 to $6.85 per bushel, well above the record of $4.55 per bushel in 1995/96.”

Wholesales Inventories Rise

December 2007 sales of merchant wholesalers were $376.6 billion, down 0.7% from the revised November level and were up 10.6% from the December 2006 level. The November preliminary estimate was revised downward $1.1 billion or 0.3%.

Total inventories of merchant wholesalers were $411.6 billion at the end of December, up 1.1% from the revised November level and were up 6.1% from a year ago. The November preliminary estimate was revised upward $0.8 billion or 0.2%.

End-of-month inventories of durable goods were up 0.9% from last month and were up 1.9% from last December. Inventories of motor vehicle and motor vehicle parts and supplies were up 3.5% from last month, and inventories of metals and minerals, except petroleum, were up 1.7%.

International Markets

In Tokyo Nikkei 225 Index closed lower 189.91 or 1.44% to 13,017.24, in Australia ASX 200 index increased 61.30 or 1.10% to close 5,658.00. Markets in Hong Kong were closed today.

Thailand SET index closed higher 13.27 or 1.67% to 806.44. Sensex index in India decreased 62.00 or 0.35% to 17,464.89. Markets of South Korea and Indonesia were closed today.

In London FTSE 100 Index closed higher 59.90 or 1.05% to 5,724.10, in Paris CAC 40 Index decreased 14.15 or 0.30% to close at 4,709.65 and in Frankfurt DAX index higher 33.56 or 0.50% to close at 6,767.28. In Zurich trading SMI increased 26.94 or 0.36% to close at 7,446.95.