Volatile Trading

Elena
08 Nov, 2005
New York City

Auto parts maker Visteon caused concerns over the automotive sector, reporting third-quarter narrower loss of $1.58, but missing analyst expectation of a more modest loss. Home builder Toll Brothers is another disappointment of the day as the company projected lower sales and profit for the following year.

U.S. MARKET AVERAGES

U.S. stocks dropped on Tuesday as a disappointing outlook from leading home builder Toll Brothers Inc. raised concerns that the housing sector may be slowing. Shares of Toll Brothers plunged 11.5% after the luxury home builder posted record fourth-quarter revenue, but projected lower deliveries and earnings for the following year. The slide in Toll Brothers'' shares sent the Dow Jones U.S. Home Construction Index down 6.1%. Shares of another large home builder, Hovnanian Enterprises Inc. fell 5.7%.

The housing sector continues to be the most notable decliner, mainly due to the warning released by Toll Brothers. Retail and gaming stocks also continue to post considerable losses. Networking, insurance and bank stocks are showing modest losses as well. The airline space is also posting a decline of 1%, though it remains in a trading range that has held it for nearly a week.

Energy stocks are also conspicuous decliners of the day, dragged by falling oil prices. Disk drive stocks are still generally in positive territory, while the semiconductor space has slipped back below the unchanged mark.

Bitstream ((BITS)) is among the best performers, rising 34% on a quarterly report, showing a profit versus a loss last-year same period

Riviera Holdings ((RIV)) is among the day's worst performers, down 20% after it revealed its third-quarter results and said it has concluded the formal process of exploring strategic alternatives, without announcing any transaction.

The 10-year yield is down about 7.4 basis points to 4.567%, reversing its gains of late last week.

MOVERS AND SHAKERS

Investor Icahn revealed that he and affiliates control 9.3% of Fairmont Hotels & Resorts ((FHR)). Icahn urged Fairmont to seek strategic options, including a sale of the company or some of its hotels and other assets, declaration of a dividend, or execution of a stock buyback. Fairmont gained 3.5%.

Toll Brothers ((TOL)) lowered its forecast for homes to be delivered in 2006, pointing a harder regulatory environment, community-opening delays and softening demand in some markets. The company’s stock dropped almost 11%.

The aluminum producer Alcan ((AL)) reported a decrease in third-quarter net income, because of seasonal lull and the loss of some product categories due to the spinoff of its ex-unit Novellis ((NVL)). Alcan’s stock dropped 0.3%.

The fast food retailer McDonald''s ((MCD)) announced its worldwide same-store sales increased 3.4% in October, with U.S. same-store sales achieved a 3% growth. McDonald''s stock is likely to gain today.

INTERNATIONAL MARKET NEWS

Asian-Pacific benchmarks closed mixed with the Nikkei falling 0.2% on declining oil prices which sent oil companies lower and on banking shares sell-off. Awaited economic data later in the week also weighed on sentiment. Among the regional gainers, Hong Kong’s Hang Seng rose 0.3%, South Korea’s Kospi gained 0.7%, and Australia’s All Ordinaries climbed 0.9%.

European markets closed largely flat as gains from auto and mining stocks, accompanied by solid earnings were offset by losses in chemical and utility stocks. Lower start of U.S. equity markets also weighed on sentiment. The German DAX 30 lost 0.3%, the French CAC 40 ended flat%, followed by London’s FTSE 100 which also closed flat.

OIL, METALS, CURRENCIES

Crude oil prices further declined on warmer, reducing heating fuel demand and on expectations of another inventories increase. Light sweet crude December delivery fell 37 cents to $59.10 a barrel on the Nymex. Heating oil lost a penny to trade at $1.7725 a gallon. Gasoline slightly fell to $1.542. Natural gas lost 25 cents to $11.62 per 1,000 cubic feet. London Brent lost 22 cents to $57.82.

Gold advanced in European trading. In London the precious metal closed at $461.30 per troy ounce, up from $456.50. In Zurich gold rose to $460.30 from $457.65. In Hong Kong gold fell $0.10 to close at $457.35. Silver closed at $7.62, up from $7.46.

The U.S. dollar traded higher against the euro and pound but down versus the yen. The euro was quoted at $1.1762, down from $1.1793. The dollar bought 117.27 yen, down from 117.62. The British pound traded at $1.7403, down from $1.7434.

EARNINGS NEWS

Watson Wyatt & Co. ((WW)), consulting firm, announced Q1 profit from continuing operations rose 1% to 36 cents a share compared with the year-ago quarter. Revenue soared 52%. The company raised its fiscal-year earnings outlook to the range of $1.74 to $1.76 a share up from an earlier guidance of $1.67 to $1.69 a share.

Western Gas Resources Inc. ((WGR)), natural gas systems & facilities operator, announced Q3 net income of 88 cents a share, almost double the 47 cents a share in the same period last year on revenue growth and stronger volume and prices, beating analyst estimate of 74 cents a share.

Church & Dwight ((CHD)), household products company, reported Q3 net income of 51 cents a share up from 42 cents a share in the year-ago period on 5% sales growth, beating analysts’ expectations of 45 cents a share. The company expects damage caused by the summer''s hurricanes to cut 6 to 7 cents off Q4 earnings although it still expects 2005 earnings of $1.75 a share.

Visteon Corp. ((VC)), auto parts maker, reported Q3 loss narrowed to $1.58 a share, from $11.48 a share despite 0.4% revenue decline, missing analyst estimate of $1.34 a share. The company''s attributed its narrower loss to the lack of $1.3 billion in charges over deferred tax asset valuations and asset impairments, and the company highlighted a growing proportion of revenue coming from outside of Ford Motor Co.

Magna International Inc. ((MGA)), automotive systems supplier, announced Q3 net income advanced to $1.44 a share, up from $1.37 a share in the same period last year on 12% revenue growth. North American vehicle production rose 2% and European vehicle production went down 6%, it said. The company sees lower earnings per share in 2005 excluding items on sales between $22.3 billion and $22.9 billion.

Sanofi-Aventis ((SNY)), French drugmaker, posted a 28.7% increase in adjusted net profit at 1.92 billion euros, with sales up 11.6% to 7.2 billion euros. Generic competition hurt Allegra sales by 0.4% in Q3 at constant rates, but top drugs Lovenox and Plavix had sales growth of 13.8% and 22.8%, accordingly. Sanofi-Aventis reaffirmed its forecast of at least 20% earnings per share growth for 2005.

51job Inc. ((JOBS)), Chinese HR company, reported that Q3 net income dropped 29% to 7 cents per U.S. listed share, on a foreign currency translation loss, with revenue rising 21% to RMB161 million ($19.9 million). The company’s adjusted earnings of 12 cents per U.S. share as well as its revenue topped analyst estimate.

Princeton Review Inc. ((REVU)), print and online products manufacturer, posted Q3 net income of 4 cents a share, up from a year-ago loss of 2 cents a share on changes in operations and new personnel and on 18% revenue growth.

Cincinnati Bell Inc. ((CBB)), telecommunications equipment and services provider, stated that it reversed to a Q3 loss of 19 cents a share, down vs. a net profit of 6 cents in the year-earlier period on 2% lower revenue, missing analyst estimate of 5 cents a share. Excluding a $92 million pretax loss to extinguish debt earnings amounted to 3 cents a share.

Landry''s Restaurants ((LNY)), restaurants operator, posted Q3 earnings of 73 cents a share, down from 74 cents a share in the same period a year ago despite revenue growth, a missing analyst estimate by a penny. Same-store sales declined 0.9%.

Young Broadcasting Inc. ((YBTVA)), television stations operator, reported that Q3 loss almost doubled from year ago levels to $1.03 a share from 61 cents a share a year ago on revenue decline.

Cablevision Systems Corp. ((CVC)), cable television systems operator, announced that its Q3 loss went slightly down to $62.9 million, or 22 cents a share, from $63.2 million, or 22 cents a share in the same period last year, missing analyst estimate of a loss of 8 cents a share. Revenue increased 11.2%.