Chemical and Energy Stocks Rise

Elena
26 Oct, 2005
New York City

Among the companies reporting today, Boeing posted a Q3 income rise which tops estimates, despite a revenue decline. Kerr-McGee posted third-quarter profit jump, beating estimates. Amerada Hess Corp released higher quarterly income, but misses estimates. WellPoint released quarterly profit growth, exceeds expectations. Sprint Nextel swings to profit on 39% revenue increase.

U.S. MARKET AVERAGES

Oil report, Amazon and Boeing led lower opening but market quickly reversed the direction. Recently the three main averages have been posting modest gains only.

Shares of Dow component Boeing fell 3% after the company reported a surge in profit, but, excluding one-time items, its earnings per share fell below analysts' forecasts. The company also reported a revenue decline. Amazon's shares fell after the online retailer reported quarterly profit soared, but earnings per share also came in below Wall Street estimates.

A government report showed that distillate stocks fell by 1.6 million barrels last week, but crude stockpiles jumped by 4.4 million barrels compared with a forecast for a rise of 1.9 million barrels. Oil prices have only risen slightly, but energy stocks have been steadily rising since the oil report release. The oil space stands out as a leader, climbing 2.8%.

Home builders sold off after the 10-year bond approached 4.57% yield driving home builder stocks lower. Hovnanian declines about 1%, Lennar is down 2.1%.

The HMO sector is currently down about 1.1%. The gold sector has erased early gains and is now moving to the downside.

Despite disappointing guidance, shares of DuPont ((DD)) were sent higher on news of earnings and a $5 billion stock buyback plan. The best performing Dow component is extending its advance, climbing 2.7%. T Rowe Price Group ((TROW)) is posting a gain of 1.2% on 41% profit growth. Another gainer is Air Products & Chemicals ((APD)), currently up 2.5%. Caterpillar ((CAT)), has reversed from last-week’s decline, posting a gain of 1.7%. Alcoa ((AA)) and JP Morgan ((JPM)) are showing gains of 1.8% and 1.2%, respectively.

MOVERS AND SHAKERS

Dow component Boeing ((BA)) reported higher third-quarter earnings, but its sales decreased 4% following a strike. The company posted third-quarter net income of $1.01 billion, or $1.26 a share, compared with $456 million, or 56 cents, for the same period a year ago. Boeing’s shares fell 1.5%.

Car maker DaimlerChrysler ((DCX)) beat its rivals General Motors ((GM)) and Ford Motor ((F)) with its third-quarter results. The company’s stock gained 0.7%.

Amazon’s ((AMZN)) quarterly earnings decreased 44% and its fourth-quarter sales estimates were below Wall Street expectations. The company’s stock dropped 11%.

Citigroup upgraded International Paper ((IP)) to “buy” from “hold”. The company is expected to gain today.

ECONOMIC NEWS

Crude oil inventories advanced sharply in the latest week, according to government data released Wednesday, adding to a recent streak of gains. Stocks of gasoline climbed as well, though only slightly.

The Department of Energy's Energy Information Administration revealed that crude oil inventories climbed by 4.4 million barrels for the week ended October 21, rising to 316.4 million barrels from the 312.0 million barrels recorded in the previous week. This followed an advance of 5.6 million barrels for the prior week. Oil inventories are 12.3% higher than their levels of the same time last year.

Gasoline inventories posted a week-over-week advance of 200,000 barrels, the government said, adding to the previous week's advance of 2.9 million barrels. Gasoline stocks are now 3.9% below their levels of last year. Inventories of distillate fuel oil fell by 1.6 million barrels in the most recent week.

INTERNATIONAL MARKET NEWS

Asian-Pacific benchmarks ended mixed with the Nikkei rising 0.9% on the back of strong resource-related stocks like JG Corp. and Chyoda Corp. Among the other regional markets, Australia’s All Ordinaries climbed 1.1%, Hong Hong’s Hang Seng closed flat, while South Korea’s Kospi declined 0.2%.

European markets closed higher on resource stocks, upbeat forecast from DaimlerCrysler and Wall Street gains. The German DAX 30 gained 0.6%, the French CAC 40 added 0.4%, and London’s FTSE 100 rose 0.9%.

ENERGY, METALS, CURRENCIES

Crude oil futures rose with heating oil jumping sharply on oil inventory report. Light sweet crude December contract rose 36 cents to $62.80 a barrel on the Nymex. Heating oil climbed 2.5%, or 5 cents to $1.9375 a gallon. Gasoline added 2 cents to $1.6725.

Gold was mixed in European trading. In London gold closed at $471.80 per troy ounce, down from $471.85. In Zurich it finished at $472, down from $472.35. In Hong Kong the precious metal rose $5.30 to close at $472.35. Silver closed at $7.83, up from $7.78.

In European trading the U.S. dollar climbed against its major counterparts. The euro was quoted at $1.2071, down from $1.2096. The dollar changed hands at 115.76 yen, up from 114.88. The British pound was trading at $1.7749, down from $1.7844.

EARNINGS NEWS

Kerr-McGee Corp. ((KMG)), oil and gas company, posted Q3 net income of $3.09 a share, up from 5 cents a share in the year-ago period on higher sales of oil and natural gas, beating analyst estimate of $2.64 a share. Excluding results from discontinued operations in the North Sea and elsewhere, earnings totaled $2.53 a share, up vs. 95 cents. Revenue advanced slightly to $1.208 billion from $1.202 billion.

Amerada Hess Corp. ((AHS)), oil and gas exploration company, reported Q3 net income of $2.60 a share, up vs. $1.74 a share in the year-earlier period on revenue growth, missing analyst estimate of $3.31 a share. The company added that hurricane activity in the Gulf of Mexico reduced Q3 exploration and production earnings by around $25 million, and generated exceptional costs of $14 million, after tax.

WellPoint Inc. ((WLP)), health insurer, announced net income advanced to $1.02 per share, up from 85 cents per share in the same period last year, beating analyst estimate, excluding special items, by a penny.

Sprint Nextel Corp. ((S)), communication products and solutions provider, posted Q3 earnings of 23 cents a share, up from a loss of $1.32 a share in the year-ago period on 35% revenue growth, on a consolidated basis. On an adjusted basis, if not for certain items, the company gained 29 cents a share, topping its year-ago equivalent profit of 25 cents a share. On a pro forma basis, the company posted adjusted earnings of 25 cents a share.

Starwood Hotels & Resorts Worldwide ((HOT)), hotel chain, announced that Q3 net profit dropped 64% compared with the year-ago period to 17 cents a share despite 11.9% revenue growth. Excluding a tax expense on repatriating earnings and a tax expense related to its 1998 sale of ITT World Directories, earnings would have been 58 cents a share, topping analyst estimate of 52 cents a share. Same-store revenue per available room rose 13.2% in North America and 11.9% worldwide, the company stated. Starwood is looking for EPS before items of $2.27 for 2005 and $2.70 in 2006, with $6 billion in 2005 revenue.

Cardinal Health Inc. ((CAH)), health care industry company, posted Q3 net income of 53 cents a share, up from 49 cents a share in the same period last year on 9% revenue growth, missing analyst estimate of 72 cents a share. Earnings from continuing operations came in at 54 cents a share, up vs. 51 cents a share.

Pixar Inc. ((PX)), specialty gases and surface coatings manufacturer, posted Q3 net income of 33 cents a share, down from 53 cents in the same period last year. Earnings for Q3 incorporated a charge of 28 cents a share, largely related to Praxair's plan to repatriate $1.1 billion of foreign profits under the federal Jobs Creation Act of 2004. Adjusted earnings per share of 61 cents a share were in line with analysts’ forecasts of 60 cents. The company announced that hurricanes Katrina and Rita reduced earnings by about 3 cents a share. Sales in Q3 totaled $1.89 billion, up 13% from the prior year's $1.67 billion.

EnCana Corp. ((ECA)), natural gas producer, reported that Q3 net profit dropped 38% to 30 cents a share from the year- ago period. The company announced Q3 results incorporated a $604 million hedging hit and a $166 million gain from foreign exchange rates. Revenue net of royalties rose 33% to $3.09 billion.

Lear Corporation (LEA)), automotive interior systems supplier, reported Q3 a net loss of $11.17 per share, down vs. a net income of $1.26 per share for the comparable period in 2004. Excluding the impairment and restructuring charges, Lear would have reported a net loss of 10 cents per share.

Lear Corporation ((AGR)), automotive interior systems supplier, reported Q3 a net loss of $11.17 per share, down vs. a net income of $1.26 per share for the comparable period in 2004. Excluding the impairment and restructuring charges, Lear would have reported a net loss of 10 cents per share.

Diamond Offshore Drilling, Inc. ((DO)), drilling company, reported Q3 net income of 60 cents per share, up from 2 cents per share in the same period a year ago on revenue growth. Q3 results of current quarter reflect the impact of hurricanes Katrina and Rita. The Company recorded a Q3 after-tax gain of 16 cents per share, related to insurance proceeds from the previously reported casualty loss of the 300-ft. jack-up Ocean Warwick.

Air Products ((APD)), gases, chemicals and equipment company, reported Q4 net income of 79 cents a share, up from 73 cents a share in the year-ago period on 5% revenue growth and improved pricing and energy costs pass-throughs, topping analysts’ expectations of 77 cents a share. The company added the impact of recent hurricanes cut earnings by 6 cents a share.