Dollar On the March

123jump.com Staff
09 Nov, 2005
New York City

AFTER THE CLOSE: Cisco reported 20 cents vs. 21 cents in the fiscal first quarter. Cosi Inc, restaurant chain, reported loss of 6 cents vs. 12 cents in the third quarter. JDS Uniphase reported loss of 4 cents vs. 10 cents a year ago. Tho stock jumps 4%. Whole Foods reported same store sales up 13.4%, increases dividend and issues special dividend of $4 and earnings of 13 cents vs. 45 cents and a two-for-one stock split. Mittal Steel reported 64 cents vs. $2.07 a year ago.

U.S. MARKET AVERAGES

Market averages were sensitive to oil and earnings.

Market averages for the most part traded in the positive are but with little conviction and support from the volume. Program trading drove most of the trading during day. Oil price remained volatile during the day as traders responded to the oil inventory data released by the government. The initial reaction of the traders to sell was soon overcome as traders reconsidered the small fall in the distillate inventories. At close, oil prices and stocks in the sector rose by a modest amount.

U.S. dollar has risen close to 12% against Euro for the year and continued its climb against Euro and Japanese Yen for the day. Talk of higher interest rates in the U.S. has only strengthened the case for the U.S. dollar. However the twin deficit, budget and trade deficit may come back to haunt the dollar.


The gold sector has extended gains of the week and for the day up 1.8%. However, the sector remains comfortably within a recent trading range. Bank and broker/dealer stocks are showing modest gains as well.

The disk drive sector which has recently been volatile, is continuing falling and is now showing decline of 1.3%. The housing space is easing lower, extending Tuesday's sell off.

King Pharmaceuticals ((KG)) has jumped to a new 52-week high on quarterly results. Pixar ((PIXR)) and Hansen Natural ((HANS)) have reached new peaks on the back of strong earnings reports.

In contrast, Marvel Entertainment ((MVL)) has dropped sharply to a new 52-week low on earnings release EchoStar ((DISH)), which has been falling since mid-September is setting a fresh nadir, additionally dragged by disappointing quarterly results.

PepsiCo reduced its year-end forecast and announced it will restructure some operations to cut costs. PepsiCo said the changes will cost $65 million to $85 million before taxes, or 3 cents per share.

Federated Department Stores Inc., operator of the Macy's and Bloomingdale's department store chains, rose 5% after it reaffirmed its financial forecast for the fourth quarter and reported that its third-quarter profit climbed more than fivefold from last year, aided by a large gain from an asset sale.

Pixar Animation Studios Inc. ((PIXR)) reported Tuesday a rise in quarterly profit and revenue above Wall Street expectations. Its shares jumped 11% at the close.

American International Group Inc. ((AIG)), the world's largest insurer by market value, said it will delay the release of its third-quarter results until November 14, giving it time to correct errors.

MOVERS AND SHAKERS

The comic book licensor Marvel Entertainment ((MVL)) posted a 29% decrease in third-quarter net income and projected a sharp profit drop, within a range of $0.37-$0.52 a share, in 2006. The company’s stock lost almost 24%.

The insurer AIG ((AIG)) announced it will have to review its financial results again and will delay its 10-Q filing by five days, after finding errors that resulted in a $500 million understatement of third-quarter results. AIG will restate results for the years ended December 31, 2004, 2003 and 2002, along with selected data for 2001 and 2000 and quarterly financial results for 2004 and the first two quarters of 2005. The company’s stock fell 1.4%.

The animation studio Pixar ((PIXR)) reported quarterly earnings that came above the estimates, resulted from a higher gain from its film library. The company’s stock soared 6.3%.

Home Depot ((HD)) was upgraded by the financial broker Piper Jaffray. The company’s stock was up 1%.

ECONOMIC NEWS

Crude oil inventories advanced again in the latest week, according to government data released Wednesday, continuing 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 4.5 million barrels for the week ended November 4, rising to 323.6 million barrels from the 319.1 million barrels recorded in the previous week. This followed an advance of 2.7 million barrels for the prior week. Oil inventories are 12.8% higher than their levels of the same time last year.

Gasoline inventories posted a week-over-week gain of 4.2 million barrels, the government said, adding to the previous week's advance of 1 million barrels. Gasoline stocks are now just 1.6% below their levels of last year. Inventories of distillate fuel oil fell by 100,000 barrels in the most recent week.

INTERNATIONAL MARKET NEWS

Asian-Pacific benchmarks ended mixed. The Nikkei advanced 0.3% on tech stocks after three sessions of decline. The tech sector got a boost from news that Samsung Corp. would spend $45 billion on research and development in the following 5 years. Across the region, Hong Kong’s Hang Seng was the biggest gainer, up 1.4%. South Korea’s Kospi inched up 0.1%, while Australia’s All Ordinaries fell 0.6%.

European markets closed mostly down, hurt by weaker telecom sector with Deutshe Teliecom posting losses on earnings news and France Telecom down on takeover speculations. The German SAX 30 inched up 0.05%, the French CAC 40 lost 0.5%, and London’s FTSE shed 0.4%.

OIL, METALS, CURRENCIES

Crude oil prices were sent back to over $60 a barrel by strong heating oil after falling to an intraday low of $58.50 on a better-than-expected oil inventory report. Light sweet crude December delivery gained 27 cents to $59.71 a barrel on the Nymex. Heating oil rose and then closed at unchanged at $1.7785 a gallon. Gasoline advanced over 3 cents and settled near unchanged levels to $1.5623.

Gold prices climbed in European trading. In London the precious metal closed at $463.65, up from $461.30. In Zurich gold rose to $462.45 from $460.30. In Hong Kong gold gained $4.90 to close at $462.25. Silver traded at $7.46, down from $7.62.

The U.S. dollar traded higher against all major currencies. The euro was quoted at $1.1731, down from $1.1785. The dollar bought 117.36 yen, up from 117.12. The British pound traded at $1.7388, down from $1.7434.

EARNINGS NEWS

Federated Department Stores Inc. ((FD)), retailer, reported that Q3 net income rose to $1.79 a share, up from 42 cents in the year-ago period, topping analyst forecast of 23 cents a share. Income from continuing operations amounted to 36 cents on an adjusted basis.

Bayer ((BAY)), pharmaceutical company, reported that Q3 net income soared to 493 million euros from 52 million euros in the same period last year on 19.1% revenue growth euros, topping analysts’ forecasts of 291 million euros. The company raised earnings expectations for the second time this year in view of its net income growth and with EBIT before special items doubling to 691 million euros. If not for special gains of 179 million euros, mostly from pension plan changes, Bayer stated that its healthcare and material science divisions had the biggest earnings contribution.

Steris Corp. ((STE)), medical products maker, announced Q2 net income dropped 13.1% to 24 cents a share on higher raw material costs and fuel prices and despite 7.4% revenue growth The company expects earnings between $1.30 and $1.34 a share on a 6% to 8% revenue rise for the fiscal year.

Marvel Entertainment Inc. ((MVL)), comic-book company, posted Q3 net income of 23 cents a share, down from 30 cents in the same period a year ago, missing analyst estimate of 30 cents a share. Sales also dropped to $81.1 million from $135.2 million, reflecting a big drop in both licensing and toy sales. The company slightly lifted its 2005 guidance to full-year earnings of $1.02 to $1.07 a share, as opposed to $1.01 to $1.06 previously.

[Foster Wheeler ((FWLT)), fuels facilities designer, posted a Q3 loss of 35 cents a share, up vs. a loss of $103.23 a share in the same period a year ago despite revenue decline. The results include a $40.2 million accounting charge. Unfilled orders advanced to $3.07 billion from $1.81 billion while new orders booked increased to $942.2 million from $280.6 million.

Mills Corp ((MLS)), real estate investment trust, reported a Q3 loss of 61 cents a share, down from a year-agonet income of 95 cents a share. The company’s funds from operations per share for Q3 were 45 cents a share, down vs. 97 cents a year before, missing on that basis analyst estimate of $1.06 a share.

King Pharmaceuticals, Inc. ((KG)), pharmaceutical products manufacturer, reported that it reversed to a Q3 profit of 50 cents a share, up from a loss of 3 cents a share in the same period last year on 31% revenue growth. If not for one-time items, the company’s earnings would have been 52 cents a share, up from 34 cents a share in the year-earlier quarter, topping analyst forecast for earnings of 33 cents a share.

Morningstar Inc. ((MORN)), a provider of independent investment research, announced that its Q3 profit soared 84% to 17 cents a share, up from 10 cents a share in the same period last year on revenue growth missing analyst estimate of 19 cents a share.

The Interpublic Group ((IPG)), advertising company, posted a narrower Q3 loss of 24 cents a share, up from a restated loss of $1.21 a share in the year-ago period despite 5.1% revenue decline.