AMR and United Down 25%, Crude at $132

123jump.com Staff
21 May, 2008
New York City

U.S. stocks struggled after the release of weekly petroleum report. Crude oil surged above $132 a barrel on the decline in crude oil supply at the end of the last week. Airlines stocks fell after AMR, the parent of American Airlines decided to lower 12% of its capacity and retire 75 planes. AMR suggested $15 fee for each checked bag. UAL plunged 25% and Delta and Jet Blue declined as well.

[R]1:20PM New York – Weekly inventories report showed a decline in supply but a larger fall in demand. AMR falls 20%.[/R]

Stock struggled in the morning trading as crude oil reached another high after the release of weekly petroleum inventories report. The supply of various petroleum products have declined by 1.3% from a year ago but the demand has beginning to decline between 0.7% and 5.6%. Stocks in general were lower and retailers, restaurants and consumer discretionary fell. AMR Corp, the operator of American Airlines will cut its capacity by 12% and retire 75 planes and will charge $15 fee to check a bag.

Crude oil futures surge above $132 a barrel as investors worried that crude oil demand may exceed supply. Long term futures of the crude oil rose after the weekly inventory report from the Energy Department showed a fall in supplies at the end of last week by 5.4 million barrels to 320.4 million barrels. Inventories of gasoline fell 0.8 million barrels in the last week and are now at the lower half of the weekly average. Distillate and commercial fuel inventories rose 0.7 million barrels and are in the lower half of the average range.

While the supplies have remained relatively stable the demand for various grades of crude has started to decline. Till the demand falls more than 5% to 10% the crude oil and gasoline prices are expected to remain at elevated levels.

Total products supplied over the last four-week period have averaged 20.3 million barrels per day, down by 1.3% compared to the similar period last year. Over the last four weeks, motor gasoline demand has averaged 9.3 million barrels per day, down by 0.4% from the same period last year.

Distillate fuel demand has averaged nearly 4.2 million barrels per day over the last four weeks, up 0.7% from the same period last year. Jet fuel demand is 5.6% lower over the last four weeks compared to the same four-week period last year.

AMR Corp ((AMR)) fell $1.63 to $6.57 on the planned layoffs, capacity reduction and expected slowdown in the business on the rise in crude oil prices. Delta Air Lines dropped 11% to $6.2, UAL Corp fell 15% to $9.80, Jet Blue dropped 5% to $4.46 and Southwest Airlines declined 2% to $12.72.

Earnings review

BJ''s Wholesale Club, Inc, a warehouse club operator reported first quarter sales increased 12.3% to $2.26 billion from $2.06 billion a year ago. Net income in the quarter increased 26% to $17.19 million or 29 cents per diluted share compared to net income of $13.65 million or 21 cents per share, a year ago.

BJ''s Wholesale Club, Inc stock ((BJ)) dropped $1.10 to $37.75.

Brown Shoe Company, Inc, the footwear maker reported first quarter sales decreased 2.1% to $554.5 million from $566.3 million a year ago. Net income in the quarter decreased 25.3% to $7.2 million or 17 cents per diluted share compared to net income of $9.6 million or 22 cents per share, a year ago.

Brown Shoe Company, Inc stock ((BWS)) declined 31 cents to $14.95.

Eaton Vance Corp the manager of investment funds reported second quarter revenues rose 5.1% to $273.4 million from $260.2 million a year ago. Net income in the quarter increased 56.57% to $53.2 million or 43 cents per diluted share compared to net income of $23.1 million or 17 cents per share, a year ago.

Eaton Vance Corp stock ((EV)) dropped 56 cents to $39.94.

Ross Stores, Inc, operator of two chains of discount retail apparel and home accessories stores reported first quarter sales rose 9.36% to $1.56 billion from $1.41 billion a year ago. Net income in the quarter increased 15.72% to $79.5 million or 60 cents per diluted share compared to net income of $67.0 million or 48 cents per share, a year ago.

Ross Stores, Inc stock ((ROST)) fell 16 cents to $34.75.

The Talbots, Inc, the women''s apparel retailer reported first quarter sales decreased 5.73% to $542 million from $573 million a year ago. Net income in the quarter decreased 69.23% to $1.6 million or 3 cents per diluted share compared to net income of $5.2 million or 10 cents per share, a year ago.

The Talbots, Inc stock ((TLB)) stock added 24 cents to $7.68.

World markets

In Tokyo Nikkei 225 Index closed lower 233.79 or 1.65% to 13,926.30, in Hong Kong Hang Seng index increased 290.83 or 1.16% closed to 25,460.29. In Australia ASX 200 index lower 84.70 or 1.43% to close 5,823.40. In Malaysia KL Composite index decreased 6.23 or 0.48% closed to 1,281.20.

In South Korea Kospi Index decreased 25.64 or 1.37% to close at 1,847.51, in Thailand SET index closed higher 10.37 or 1.19% to 884.19 and Indonesia JSE Index edged decreased 16.25 or 0.65% to 2,494.71. Sensex index in India increased 12.98 or 0.08% to 17,243.16.