Blue Chip Rally

Elena
02 Nov, 2005
New York City

The Department of Energy reported another increase in crude oil inventories of 2.7 million barrels, rising to 319.1 million barrels in the week ended Oct 28. Time Warner reported 80% Q3 profit jump of 19 cents a share on 6% revenue growth, exceeding estimates of 17 cents a share. The company said it was lifting its stock buyback plan by $7.5 billion to $12.5 billion. Electronic Arts rises 5.3% and Symantec

U.S. MARKET AVERAGES

Following an idle start of Wednesday session, markets resumed the bullish tone and have rallied for the last couple of hours. The three major averages are holding their intraday highs led by the Nasdaq, the biggest gainers of all, currently up 1%. Nine of the ten major sectors are posting gains, providing the market with a broad leadership. Yet, the Consumer Discretionary sector stands out as the most conspicuous mover to the upside with a gain of 1.3%, lifted by Time Warner which posted an 80% income rise and boosted its buyback plan by $7.5 billion. Support was also provided by better-than-expected oil inventory report which said that crude oil inventories rose 2.7 million barrels to 319.1 million barrels.

The Financial sector has risen 0.9% on wide-board buying and strength in American International Group ((AIG)) and American Express ((ATC)), advancing despite weakness in the Treasury markets, sending the 10-year note to seven-month highs. Tech sector has advanced 0.8% on strength in semiconductors and hardware stocks and a 7.7% earnings-inspired jump in Electronic Arts' ((ERTS)).

The housing sector has come off its intraday highs but still shows a gain of more than 2.7%. Semiconductor stocks have advanced through the morning, sending the sector up 2.3%.

Energy stocks are among the best performers of the day, following the release of weekly petroleum inventory report. The oil service sector is leading the group higher, with an advance of 1.8%.

Erasing yesterday’s losses on Dell’s warning, Apple ((AAPL)) has resumed its upward momentum. The stock is extending its 52-week high with a nearly 4% advance. Earnings-inspired UnumProvident ((UNM)) has also set a new peak. SanDisk ((SNDK)), Schlumberger ((SLB)) and St. Jude Medical ((STJ)) are other notable gainers reaching fresh highs.

Falling by more than 14% on earnings news, WMS Industries ((WMS)) has reached a new 52-week nadir. Leadis Technology ((LDIS)) is also moving to a fresh low.

On the corporate news front, Deutsche Telekom said it won't launch a bid for the British mobile operator O2, clearing the way for Spain''s Telefonica to buy the firm for $31.5 billion.

Time Warner topped forecasts by reporting an 80 percent increase in net profit or 19 cents a share, with revenue up 6% , beating estimates of 17 cents a share. Time Warner also said it was lifting its stock buyback plan by $7.5 billion to $12.5 billion.

MOVERS AND SHAKERS

Media and entertainment giant Time Warner Inc. ((TWX)) posted profit results that beat expectations, with net income increasing 80% on a 6% rise in revenue. The company also lifted its buyback plan by $7.5 billion. Time Warner’s stock gained 2.1%.

Sun Microsystems Inc. ((SUNW)) posted sales that fell slightly of analyst forecast. The company’s adjusted quarterly loss of $18 million was in line with the consensus estimate of analysts review by Thomson First Call. Sun Microsystems’s stock dropped 1.6%.

Security software maker Symantec Corp. ((SYMC)) reported a second-quarter loss, caused by costs related to its acquisition of Veritas Software and a weak sales outlook. The company''s disappointing results were followed by downgrades by financial brokers. Symantec’s stock lost as much as 11.7%.

Knight Ridder Inc. ((KRI)) was upgraded by Deutsche Bank. The financial broker said the possibility of a sale of the company is high after its biggest investor called on it to put itself up for sale. The sale call came from Private Capital Management, which beneficially owns 19% of the company''s stock. Knight Ridder is likely to be in focus today.

ECONOMIC NEWS

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

The Department of Energy''s Energy Information Administration revealed that crude oil inventories climbed by 2.7 million barrels for the week ended October 28, rising to 319.1 million barrels from the 316.4 million barrels recorded in the previous week. This followed an advance of 4.4 million barrels for the prior week. Oil inventories are 12% higher than their levels of the same time last year.

Gasoline inventories posted a week-over-week gain of 1 million barrels, the government said, adding to the previous week''s advance of 200,000 barrels. Gasoline stocks are now 3.3% below their levels of last year. Inventories of distillate fuel oil fell by 200,000 barrels in the most recent wee

INTERNATIONAL MARKET NEWS

Asian-Pacific benchmarks finished broadly higher across the region. The Nikkei hit a four-year high for a second consecutive session, reaching 13,894,78 points. Among the other regional gainers, Singapore’s Straits Times climbed 1.8%, South Korea’s Kospi rose 1.6%, and Hong Kong’s Hang Seng added 0.2%.

European markets finished mostly higher on strength in U.S. markets, gains from Deutsche Telecom and Credit Swisse Group. The German DAX 30 rebounded from earlier losses to close up 0.7%, London’s FTSE 100 advanced 0.3%., but the French CAC declined 0.1%.

ENERGY, METALS, CURRENCIES

Crude oil further slipped on oil inventory report, showing another increase in oil and gasoline supplies. Light sweet crude December contract fell 35 cents to $59.50 a barrel on the Nymex. Heating oil fell 1 cent to $1.7926 a gallon. Gasoline declined 2 cents to $1.582.

Gold futures closed higher in Europe. In London gold was traded at $461.75 per troy ounce, up from $459.60. In Zurich it finished at $462.80, up from $459.40. In Hong Kong the precious metal lost $4.70 to close at $461.25. Silver closed at $7.49, down from $7.82.

In European trading the U.S. dollar was mixed against its major counterparts. The euro traded at $1.2034, up from $1.2014. The dollar changed hands at 116.85 yen, up from 116.63. The British pound was trading at $1.7702, up from $1.7656.

EARNINGS NEWS

Time Warner Inc. ((TWX)), media and entertainment company, announced that Q3 net income advanced 80% to 19 cents a share, up from 11 cents a share in the year-ago period on 6% higher revenue, beating analyst estimate of 17 cents a share. The company lifted its buyback plan by $7.5 billion. Adjusted operating profit before depreciation and amortization rose 9%, in view of the increases of 21% at networks and cable, 6.9% at the AOL Internet unit and 9.1% in publishing. Filmed entertainment dropped 30% due to difficult prior-year comparisons.

Alliant Techsystems, Inc. ((ATK)), defense contractor announced that Q2 profit advanced 34% to $1.01 a share from the year-earlier period. Sales increased 15% on strong demand for ammunition, rocket motors and precision munitions. The company envisages fiscal-year earnings in the range of $4.48 to $4.58 a share on revenue of $3.1 billion.

Citizen Communications ((CZN)), telecom operator, reported that it reversed to a Q3 profit of 11 cents a share, up vs. a loss of 4 cents a share in the same period last year despite a revenue decline.

Beazer Homes USA ((BZH)), homebuilder, reported fiscal Q4 earnings of $3.61 a share, up from $1.82 a share in the year-ago period on revenue growth, topping analyst estimate of $3.11 a share. Home closings advanced 24%, new orders increased 16% and the sales value rose 25%. For fiscal 2006, the company anticipates earnings of $10.50 a share, vs. analyst expectations of $10.44.

Dean Foods ((DF)), dairy products produce, posted Q3 net income of 67 cents a share, up from 25 cents a share in the year-earlier period, beating analyst estimate of 51 cents a share. Earnings from continuing operations amounted to 43 cents a share, up vs. 24 cents. Sales advanced to $2.65 billion from $2.58 billion. The company estimated earnings of 52-55 cents a share for Q4 and added that higher fuel costs will be in the range of $35-$40 million.

Huntsman Corp ((HUN)), chemicals maker, posted a Q3 loss of 14 cents a share, down from a profit of 10 cents a share in the year-ago period despite revenue growth, missing analyst forecasts of a profit of 28 cents a share. On a continuing operations basis, the company gained 35 cents a share, up slightly from a profit of 33 cents a share a year-ago.

Playboy Enterprises ((PLA)), magazine publisher, posted Q3 earnings of 10 cents a share, up from a profit of 6 cents a share in the same period last year on revenue growth and a significant decline in interest expense following the refinancing of its debt. The company missed analysts’ forecasts for a profit of 11 cents a share.

Devon Energy Corp, ((DVN)), an oil and gas producer, reported Q3 net income of $1.63 a share, up from $1.06 a share in the year-ago period, missing the analyst estimate of $1.80 a share.The company stated that its net income incorporates special items, which reduced earnings by 24 cents a share. If not for the items, Devon would have gained $1.87 a share.

Omnicare Inc, ((OCR)), pharmaceutical producer, posted Q3 net income of 54 cents a share, up from 52 cents a share in the year-earlier period on revenue growth, missing analyst expectations of 64 cents a share. Adjusted earnings amounted to 64 cents, up from 57 cents in the prior year period.

Inverness Medical Innovations Inc, ((IMA)), maker of diagnostic products, announced that its Q3 loss widened to 25 cents a share, from 14 cents in the same period last year despite revenue growth. On an adjusted basis, the company reported a loss of 11 cents, down vs. a loss of 6 cents.