Rising Yields and Falling Oil

123jump.com Staff
07 Nov, 2001
New York City

For the last three sessions, rising yields on ten-year bond and falling price of crude has been the theme. Energy sector after rising for a week has begun to move lower. TXU Corp rose 7% on stock split and confirmed earnings guidance. Casino stocks advanced during the session as Singapore released financial terms for the casino project on the island. AFTER THE CLOSE: El Paso Energy reports wider loss. NetEase reports 8 cents, stock falls 15%.

U.S. MARKET AVERAGES

Drop in Oil and Bond yields near three-year high.

Traders sold energy stocks as prices of crude oil, gasoline and natural gas fell. On a third day in a row energy stocks suffered the sell-off followed a decline in oil below $60 per barrel. Consumer discretionary and transportation sector stock, benefiting from the falling price, rose in the session.

With the news on Guidant and Johnson & Johnson $25 billion deal in trouble and heading for the court, market sold stocks of Guidant ((GDT)) and J&J ((JNJ)). Guidant declined 4.6% and Johnson & Johnson lost 1.4% in the session’s trading.

Texas Utility ((TXU)) announced the two for one split and confirmed the earnings guidance for the fiscal 2005.

Bond yields on ten-year bonds are below 4.67% reached on Friday, and closed at 4.63%. However, the trend for the higher yield has not been broken.


MOVERS AND SHAKERS

The software giant Microsoft ((MSFT)) has appeared to be the main participant in the talks about the possible sale of a stake in America Online, a Time Warner ((TWX)) unit, according to The New York Times. Microsoft’s stock added 0.2% and Time Warner’s stock was up 0.6%.

Tivo ((TIVO)) and Yahoo ((YHOO)) plan to make an agreement that will connect Yahoo''s online service to TiVo''s set-top boxes, according to The New York Times. Tivo’s stock jumped 13% and Yahoo’s stock gained almost 1%.

The search engine Google ((GOOG)) is modifying some of its internet services for use on wireless devices. Starting today users of more than 100 types of cell phones can access Google''s map database, according to a Wall Street Journal report. The company’s shares were up about 4%.

INTERNATIONAL MARKET NEWS

Asian-Pacific benchmarks fell across the region on consolidation of last-week gains. The Nikkei declined 0.1% but still held above 14,000 on cautious trading. Among the other regional markets, Hong Kong’s Hang Seng was the biggest loser, down 1.5%, followed by Singapore’s Straits Times, falling by 0.6%, and South Korea’s Kospi, down 0.3%. China’s Shanghai Composite slightly advanced on a tentative agreement between China and U.S, while the Indian market rose 1.7%.

European markets closed in the green on deal talk, stronger dollar and falling oil prices. The German DAX 30 added 0.6%, London’s FTSE 100 advanced 0.7%, and the French CAC 40 added only 0.1% as gains were limited by oil major Total and insurance stocks. The euro fell to an 18-month low below $1.18.

OIL, METALS, CURRENCIES

Crude oil prices slid below $59 a barrel on unusually warm weather and easing worries about the winter season heating fuel demand. Light sweet crude December delivery fell to $58.60 a barrel. Heating oil lost 4 cents to $1.755 a gallon. Gasoline fell 7 cents to trade at $1.542. Natural gas dropped 2%, or nearly 24 cents to $11.18 per 1,000 cubic feet.

Gold traded higher in Europe. In London the precious metal closed at $456.85 per troy ounce, up from $456. In Zurich gold rose to $457.65 from $455.85. In Hong Kong gold fell $4 to close at $457.45. Silver closed at $7.46, down from $7.49.

The U.S. dollar strengthened against most of its major counterparts. The euro was quoted at $1.1792, down from $1.1821. The dollar bought 117.83 yen, down from 118.24. The British pound traded at $1.7433, down from $1.7510.

EARNINGS NEWS

Radica Games ((RADA)), video-game maker, announced that Q3 net profit soared 67% to 51 cents a share from the year-ago period. Sales climbed 30% on continued strength in the electronic games category.

U.S. Concrete, Inc. ((RMX)), concrete and related products producer, reported that Q3 net profit advanced 13% to 31 cents a share from the year-ago quarter. Sales climbed 16.2% on higher ready-mix concrete prices and sales volumes. The company expects Q4 earnings in the range of 6 cents to 11 cents a share.

Sierra Pacific Resources ((SRP)) posted Q3 net earnings of 33 cents a share, down from 49 cents a share in the same period last year on revenue growth and improved sales and customer growth from its power subsidiaries, missing analyst estimate of 49 cents a share. The company incurred one-time charges for costs and fees connected with the early conversion of Sierra Pacific''s 7.25% convertible notes issued in 2003.

Pilgrim''s Pride Corp ((PPC)), poultry producer, posted fiscal Q4 net income of $1.12 a share slightly down from $1.13 in the year-ago period on revenue decline and lower sales, beating analyst view of $1.08 a share If not for non-recurring items, the year-ago earnings were 99 cents a share.

Kerzner International Ltd ((KZL)), casino and destination-resorts operator, posted a Q3 net loss of 14 cents a share, up from last year''s loss of 33 cents a share on revenue growth.. On an adjusted basis, the company would have gained 28 cents a share, up from 11 cents a year before, and beating on that basis analyst expectations of a net profit of 22 cents a share.

Beverly Enterprises ((BEV)), provider of healthcare services to the elderly, posted Q3 earnings of 18 cents a share, down from 20 cents a share in the same period last year on 11% revenue growth. If not for non-recurring items, the company would have earned 24 cents a share, matching analyst estimate.

Pinnacle Entertainment Inc. ((PNK)), casino operator, reported that it reversed Q3 net income of 12 cents a share, from a year-earlier loss of 9 cents on revenue growth On an adjusted basis, the company’s loss widened to 9 cents a share, from 7 cents in the comparable period last year.

Dreyer''s Grand Ice Cream Holdings ((DRYR)), ice cream producer, reported a Q3 loss of 78 cents a share up from a loss of 81 cents a share in the year-earlier period on 10% revenue growth

J&J Snack Foods Corp ((JJSF)), snack items producer, announced fiscal Q4 net income advanced to $1.06 a share, up from 96 cents a share in the year-ago period on higher sales. J&J stated continued strong performance in food services. In addition, warm weather helped the ICEE and frozen-dessert product lines.

CORPORATE NEWS

Flyi Inc low-fare operator of independence air, filed for Chapter 11 bankruptcy protection Monday. The airline hopes to enter into a court-supervised auction process to attract a new investor or purchaser in the next 60 days. As analysts have speculated for months with its bankruptcy filing, the airline’s shares have traded at less than $1 for months. Shares closed at 19 cents Friday on the Nasdaq Stock Market.

Microsoft Corp. appears to be the front-runner in talks about the potential sale of a stake in America Online. Several issues could hinder reaching an agreement. The New York Times reports one issue is whether such an alliance would be another risky partnership for Time Warner Inc. The company is also looking at whether a new partner at AOL could help Time Warner navigate the digital world.