Stocks on the Defensive, Personal Income Rises

123jump.com Staff
27 Jun, 2008
New York City

U.S. stocks traded in a tight range with no direction after losing 3% in the previous session. The U.S. decline set-off a worldwide sell-off with India and China losing nearly 5% and Brazil declining 3%. Higher losses and charges at banks, rising inflation and stagnating economies are dragging stocks in the U.S. and around the world. Lehman increased estimate of losses at Merrill Lynch. Crude oil traded above $140 a barrel.

[R]10:30AM New York – U.S. stocks see-sawed in the morning as investors still digest possibilities of more losses and write downs at banks.[/R]

U.S. stocks edge cautiously higher in the morning trading after a steep loss in Thursday’s trading. The 3% decline in major indexes roiled financial markets in Asia. India and China plunged 4.3% and 5.3% respectively and Japan and Hong Kong fell 2% and 1.8% respectively.

KB Home ((KBH)) fell 71 cents to $17.44 after it reported revenue decline of 55% and net loss increased more than 60% to $255 million. Yesterday, Lennar reported revenue fall of 61% but reported a narrower loss.

International Gaming & Technology ((IGT)) dropped $1.87 to $25.43 as other casino related stocks declined. MGM Mirage ((MGM)) fell 99 cents to $35.61, Las Vegas Sands ((LVS)) dropped $1.43 and Wynn Resorts ((WYNN)) declined $2.51 to $80.99.

Steelcase, the office furniture maker ((SCS)) declined $1.37 to $10.12 after it reported first quarter revenue rise of 0.9% and net income decline of 34%.

Personal Income in May Rises

Personal income and personal consumption expenditures increased in May after tax rebates boosted personal income. The income in May rose 1.9% and disposable income rose 5.7% and real disposable income rose 5.3% compared to an increase of 0.1% in April. Personal consumption expenditure rose 0.8% in the month and real expenditure rose 0.4% compared to 0.2% in April.

The real personal disposable income increased after the federal government issued tax rebates $48.1 billion in May and $1.9 billion in April.

Private wage and salary disbursements increased $15.9 billion and government wages and salary payment rose $3.7 billion in the month. In April private disbursements had declined $9.6 billion and government disbursements had increased $4 billion.

Asian Markets Review

In Tokyo Nikkei 225 Index closed lower 277.96 or 2.01% to 13,544.36, in Hong Kong Hang Seng index decreased 413.32 or 1.84% closed to 22,042.35. In Australia ASX 200 index lower 70.00 or 1.32% to close 5,237.00. In Malaysia KL Composite index decreased 13.35 or 1.11% closed to 1,190.54.

In South Korea Kospi Index decreased 33.21 or 1.93% to close at 1,684.45, in Thailand SET index closed higher 1.34 or 0.17% to 775.73 and Indonesia JSE Index edged decreased 18.78 or 0.80% to 2,332.11. Sensex index in India decreased 619.60 or 4.30% to 13,802.22.

Earnings Review

AZZ incorporated, a manufacturer of electrical products and a provider of galvanizing services, reported first quarter revenues increased 33% to $100 million from $75.4 million a year ago. Net income in the quarter increased 59.40% to $10.1 million or 82 cents per diluted share compared to net income of $4.1 million or 34 cents per share, a year ago.

AZZ incorporated ((AZZ)) in the last one year traded as high as $41.58 in July 2007 and as low as $24.18 in September 2007. Based on the yesterday’s closing price the company has a market cap of $391.64 million. AZZ stock surged $7.33 to $39.60.

KB Home, one of America’s largest homebuilders reported second quarter revenues declined 54.77% to $639.1 million from $1.41 billion a year ago. Net loss in the quarter was $255.9 million or $3.30 per diluted share compared to net loss of $148.7 million or $1.93 per share, a year ago.

KB Home ((KBH)) in the last one year traded as high as $40.71 in June 2007 and as low as $15.76 in January 2008. Based on the yesterday’s closing price the company has a market cap of $1.62 billion.

Shaw Communications Inc, the second largest Canadian cable and satellite TV company reported third quarter revenues increased 11.35% to $792 million from $702 million a year ago. Net income in the quarter rose 39% to $128 million or 30 cents per diluted share compared to net income of $92 million or 21 cents per share, a year ago.

Shaw Communications Inc ((SJR)) in the last one year traded as high as $28.79 in November 2007 and as low as $16.18 in March 2008. Based on the yesterday’s closing price the company has a market cap of $8.21 billion. Shaw stock ((SJR)) rose 27 cents to $19.25.

Steelcase Inc, manufacturer of office furniture and complementary products and services reported first quarter revenues increased 0.9% to $815.7 million from $808.5 million a year ago. Net income in the quarter declined 34.22% to $22.1 million or 16 cents per diluted share compared to net income of $33.6 million or 23 cents per share, a year ago.

Steelcase Inc ((SCS)) in the last one year traded as high as $19.31 in June 2007 and as low as $10.50 in April 2008. Based on the yesterday’s closing price the company has a market cap of $1.55 billion.