Tech Stocks Lift U.S. Indexes, Trade Deficit Up

123jump.com Staff
10 Apr, 2008
New York City

U.S. stocks edged higher on a rise in tech stocks. Intel surged 4%. Yahoo and AOL are in merger talks and Microsoft and News Corp are likely to offer its revised bid. In the economic news, February trade deficit rose 5.7% to $62.32 billiion and deficit with China, Japan, Canada, Mexico and euro zone nations increased. Initial jobless claims at the end of last week fell. Same store sales in March declined on weak apparel sales.

[R]1:15PM New York – Tech stocks strength rally lifted Nasdaq index. U.S. trade deficit rose and same store sales in March declined.[/R]

Economic news

The U.S. deficit rose 5.7% to $62.32 billion from revised January deficit of $58.96 billion. Higher crude oil prices and larger volume of imported cars contributed to the rise. Imports in the month rose 3.1% to $213.7 billion and exports rose 2% to $151.4 billion.

Even though average crude oil price rose 67 cents per barrel, crude oil volume decreased to 286.48 million barrels from 322 million barrels.

Trade deficit with China declined to $18.36 billion from $20.3 billion in January and but with Japan rose to $6.88 billion from $6.59 billion. Trade deficit with the euro zone rose to $6 billion from $5.12 billion. Trade gap with Nafta countries rose to above $11 billion. Canada increased to $6.45 billion from $5.86 billion and with Mexico increased to $5.5 billion from $5.14 billion.

Initial claims for jobless benefits at the end of last week declined 53,000 to 357,000 but the four-week average of initial claims rose 2,500 to 378,250.

Same Store sales declines

Same store sales in March lagged, as consumers held tight grip on their wallets. Discount retailers saw surge of new customers as consumers shifted from department stores shopping.

Wal-Mart Stores, Inc same store sales rose 0.7%, excluding fuel same and lifted its first quarter forecast between 74 cents and 76 cents from 70 cents to 74 cents. Sam’s Club sales in the month declined by 0.7% on one day less in the month hurting sales between 2 and 2.5%. Wal-Mart, domestic stores sales, rose 0.9% on rising sales of groceries and pharmaceuticals. Target same stores sales declined by 4.4%.

Costco Warehouse reported March same store sales increased 7% across all stores and at domestic stores rose 3%. Including gasoline, sales at domestic locations rose 5%.

Kohl’s same store sales plunged 15.5% and sales at Saks fell 2.9%.

Apparel retailers suffered one of the worst declined in years, and third monthly sales decline in a row. Sales at Nordstrom fell 9.1%. Sales at Abercrombie & Fitch and American Eagle Outfitters declined 10% and 12% respectively.

Gap Inc same store sales declined 18% and sales at Old Navy chain plunged 27% and at domestic Gap stores fell 14%.

Circuit City and Pier 1 earnings

Circuit City Stores, Inc electronics gadgets retailer said sales in fourth quarter ended February 29, 2008 decreased 7.7% to $3.65 billion from $3.95 billion in the prior year and comparable store sales plunged 10.4%. For the fourth quarter, net sales for the domestic segment decreased 8.8% to $3.45 billion from $3.78 billion last year, with comparable store sales decreasing 11.3%.

Net earnings in the quarter from continuing operations totaled $4.5 million, or 3 cents per share, compared with a net loss of $7.2 million, or 4 cents per share a year ago.

Circuit City ((CC)) stock fell 2% or 9 cents to $4.48.

Pier 1 Imports, Inc. ((PIR)), a specialty retailer of home furnishings said that total sales for the fourth fiscal quarter declined 7.8% to $436.7 million from $473.7 million in the year ago quarter. Comparable store sales increased 2.5% for the quarter. Merchandise margins in the fourth quarter were 48.1% of sales, up from 40.6% in the year ago quarter.

Net income from continuing operations of $13.7 million or $0.16 per share for the fourth quarter ended March 1, 2008 versus a net loss of $58.7 million or $0.67 per share for the year ago period.

For the fiscal year 2008, total sales declined 6.9% to $1.5 billion, down from $1.6 billion in fiscal 2007. Net loss from continuing operations of $96.0 million, or $1.09 per share compared with $ 227.6 or $2.60 per share in fiscal year 2007.

Pier 1 ((PIR)) stock gained 35 cents to $7.24.


European rate decisions

The Bank of England has, for the third time in three months reduced the benchmark interests rate by 0.25 percentage point to 5% while the European Central Bank left the rates unchanged at 4%.

Asian markets

In Tokyo Nikkei 225 Index closed lower 166.59 or 1.27% to 12,945.30, in Hong Kong Hang Seng index increased 202.53 or 0.84% closed to 24,187.10. In Australia ASX 200 index lower 73.80 or 1.34% to close 5,446.40. In Malaysia KL Composite index increased 20.45 or 1.67% closed to 1,248.19.

In South Korea Kospi Index increased 9.93 or 0.57% to close at 1,764.64, in Thailand SET index closed lower 5.21 or 0.63% to 820.98 and Indonesia JSE Index edged increased 55.85 or 2.56% to 2,235.93. Sensex index in India decreased 95.41 or 0.60% to 15,695.10.