Lower Oil,Gold; Visa Rises, Borders Falls

123jump.com Staff
20 Mar, 2008
New York City

U.S. stocks edged higher in the morning on continued weakness in crude oil and metals prices. Crude oil, gold, and natural gas fell more than 3% in the morning trading. FedEx reported lower earnings and guided current quarter earnings to decline. Borders Group fell 12% after reporting earnings decline and financing from activist investor Pershing Square. Visa stock rose 6% on the second day of trading.

[R]10:00AM New York – U.S. stocks edged higher in the morning on continued weakness in oil and metals prices. European markets weaken on a surprise quarterly loss forecast at Credit Suisse.[/R]

U.S. stocks in the morning trading edged higher as metals and crude oil prices continue to slide. Dow Jones Industrial Average rose 0.5%, S&P 500 and Nasdaq index increased 0.6% in the morning trading.

Visa Inc ((V)) on the second of trading jumped $3.42 of 6% to $59.93. The largest credit card payment processing company priced 406 million shares at $44 on Wednesday and raised $18 billion in the largest U.S. initial public offering.

Crude oil front month contract fell 2.8% or $2.80 to $99.80, gold declined 2.9% or $27.70 to $917.60 and natural gas fell 2.8% or 25 cents to $8.77.

Cocoa futures dropped 10% in the morning trading as other agricultural commodities declined. Soybean, sugar, and wheat futures fell 3.5%.

Jobless claims at the end of the week on March 15 rose 22,000 to 378,000 according to the Labor Department. If economy continues to weaken, these claims can increase above 400,000. Economists expect job claims to rise above 450,000 in summer months.

Borders Group ((BGP)) dropped 12% after it reported fourth quarter income from continuing operations was $84.7 million or $1.44 per share compared to $87.7 million or $1.45 per share a year ago. The company also received $42.5 million of financing commitment and an offer to purchase international businesses for at least $125 million.

Borders also issued to Pershing Square 14.7 million warrants to purchase company common stock at $7.00 per share for a term of 7.5 years. These warrants represent 19.99% of the fully-diluted shares of the company on a pro forma basis.

FedEx ((FDX)) reported third quarter earnings per share of $1.26 compared to $1.35 a year ago. The package delivery company revenue in the quarter rose 10% to $9.44 billion and net income declined 6% to $393 million.

FedEx stock fell in the morning but recovered to 47 cents rise to $86.85.

FedEx guided fourth quarter earnings between $1.60 and $1.80 per share compared to $1.96 a year ago and lowered its capital spending plan to $3 billion.

“Our fourth quarter earnings outlook has been impacted by higher than anticipated fuel prices and a weak U.S. economy,” said Alan B. Graf, Jr., FedEx Corp. executive vice president and chief financial officer. “Looking ahead to our fiscal 2009, we are expecting a continuation of fourth quarter trends, which would result in limited earnings growth next year. We are scrutinizing all expenses and investments to realign them with the current environment.”