Jobless Claims Sharply Drop

Elena
17 Nov, 2005
New York City

Stock advanced on upbeat economic data. The Fed Reserve, informed that U.S. industrial production rose unexpectedly by 0.9% in October, fueled by manufacturing output. In another report, the Labor Department said that initial jobless claims dropped to 303,000, their lowest level since April, versus expected decline of 322,000. In less positive report, the Dept of Commerce said that new construction of U.S. homes fell 5.6% to seasonally adjusted annual rate of 2,014 million.

U.S. MARKET AVERAGES

Stocks gained ground on Thursday, rebounding from two weak sessions. Averages rose on economic data, which offered a broadly positive take on economy easing concerns over Katrina’s and Rita’s impact on it.

A report, released by the Fed Reserve, informed that U.S. industrial production rose unexpectedly by 0.9% in October, fueled by manufacturing output.

The Labor Department reported that initial jobless claims dropped to 303,000, their lowest level since April, versus expected decline of 322,000.

In less positive report, the Department of Commerce said that new construction of U.S. homes fell more than expected in October. The decline stands at 5.6% to seasonally adjusted annual rate of 2,014 million. Building permits dropped 6.7%.

The utilities sector has sharply risen in the early going, with the Dow Jones Utilities Index climbing by nearly 1.2%. The gold sector is extending yesterday’s gains, climbing another 2%.

The slide in GM ((GM)) continues as the automaker extends its multi-year low with a loss of more than 1%. Altria ((MO)) is another Dow drag, dropping by more than 2% on an analyst downgrade.

On the sector level, there are very few standouts to the downside. The semiconductor sector is showing some slight losses.

Among stocks in focus today, chip equipment maker Applied Materials reported a 46% decline in quarterly profit, though it beat analyst estimate by a penny. The company also said new orders rose 15%, above the company''s earlier target.

In corporate news, IMS Health agreed to let Holland''s VNU N.V. cancel its $7 billion acquisition of it, as a majority of VNU shareholders opposed the deal. IMS Health in response said its board has approved the buyback of 10 million more shares, on top of its existing plan that still allows for 4.4 million shares to be bought back.

J.P. Morgan cut oil producer ConocoPhillips to neutral from overweight, saying higher capital spending may pressure returns and that production lags peer group.

In the first hour of trading, the Dow Jones industrial average rose 14.81, or 0.14%. The Standard & Poor''s 500 index rose 3.88, or 0.32%, and the Nasdaq composite index rose 9.62, or 0.44%.

Bonds fell, with the yield on the 10-year Treasury note rising to 4.51% from 4.47% late Wednesday.

MOVERS AND SHAKERS

The Children''s Place Retail Stores ((PLCE)) boosted its 2005 profit outlook after posting strong third-quarter results. The company posted sales that were 57% more than a year ago. Its stock upped 3.5% yesterday.

The retailer Williams-Sonoma ((WSM)) also lifted the bottom of its 2005 profit forecast range after it posted third-quarter results that were slightly above Wall Street estimates. The company’s stock gained 1.4% yesterday.

The food and tobacco leader Altria Group Inc. ((MO)) was downgraded by Goldman Sachs to “in-line” from “outperform”. The finacial broker said the break-up of the company may come much later than expected. Altria’s stock dropped 2.7%.

The oil company ConocoPhillips ((COP)) was downgraded by J.P. Morgan to “neutral” from “overweight”. The brokerage said the company’s higher capital spending may pressure returns, while production delays its peer group. J.P.Morgan also told clients that the company is too big to purse smaller upstream projects that would add meaningful volume growth to its smaller domestic peers. Conoco’s stock lost 0.6%.

ECONOMIC NEWS

Industrial production rose during October, according to data released by the Federal Reserve Thursday, bouncing back from a slide in September that had been caused in large part by hurricanes and a strike at Boeing.

The Federal Reserve reported that industrial production advanced by 0.9% in October, reversing a portion of September''s 1.5% decline. Economists had expected an increase of about 1%. The central bank attributed a large portion to the rise in output to hurricane-related recoveries and the resolution of a strike at a major aircraft producer, by which it meant Boeing.

The Department of Labor released its report on initial jobless claims in the week ended November 12 on Thursday, showing a bigger than expected decrease.

The report showed that jobless claims fell to 303,000 from the previous week''s revised figure of 328,000. Economists had expected claims to edge down to 325,000 compared to the 3326,000 originally reported for the previous week.

The new jobless claims included 19,000 claims related to hurricanes Katrina, Rita and Wilma, bringing the total number of layoffs caused by the storms to 561,400. Hurricane related claims have been declining in recent weeks after peaking at 108,000 in the third week in September.

INTERNATIONAL MARKET NEWS

Asian-Pacific benchmarks finished mostly in the positive with the Nikkei in the lead, rising 1.7% and hitting a fresh four-year high of 14,411,79 on strong dollar and bargain hunting. Hong Kong’s Hang Seng was another gainer, climbing 0.9%, followed by South Korea’s Kospi, up 0.2% after reaching an all-time peak of 1,272,80. The only decliner was Taipei’s Weighted Times, down 0.4%.

European markets advanced at mid-day dealings, supported by merger-and-acquisition news and rising commodities prices which boosted companies like BP and Rio Tinto. The automotive stocks slightly offset gains as the sector fell on Renault’s cautious profit outlook. The German DAX 30 rose 0.9%, the French CAC 40 climbed 0.6%, and London’s FTSE 100 gained 0.7%. The euro slipped to $1.665.

OIL, METALS, CURRENCIES

Crude oil prices hit $58 a barrel on cold weather in Europe and winter season supply concerns. Light sweet crude December delivery rose 12 cents to $58 a barrel in electronic trading on the Nymex. London Brent gained 11 cents to $56.11.

Gold prices neared an 18-year high in European trading. In London the precious metal was fixed at $480.75 per troy ounce, up from $475.75. In Zurich gold advanced to $481.28 from $476.45. In Hong Kong gold rose $7 to close at $479.65. Silver traded unchanged at $7.78.

The U.S. dollar traded mixed against other major currencies. The euro was quoted at $1.1669, down from $1.1686. The dollar bought 118.84 yen, down from 119.05. The British pound traded at $1.7178, up from $1.7163.

EARNINGS NEWS

Claire''s Stores, Inc ((CLE)), retailer, reported Q3 net profit jumped 40% to 38 cents a share, from the year-ago period. Sales rose 10% and same-store sales 9%, partly on the success of the retailer''s back-to-school merchandise. The group stated it sees Q4 earnings excluding tax costs in the range of 66 cents to 68 cents a share on sales up between 5% and 6%.

Vivendi Universal ((V)), French media and telecommunications group, stated Q3 profit from continuing operations dropped 36% to 894 million euros ($1.04 billion) from the year-ago quarter. Earnings without minority interests fell 36% to 647 million euros. Adjusted earnings went 17% down to 525 million euros. Sales for the period advanced 12% to 4.87 billion euros.

Limited Brands Inc ((LTD)), retailer, reported a Q3 loss of 3 cents per share, down from a year-ago profit of 16 cents per share on weakness in its apparel division, which led to steep markdowns on merchandise. Sales were flat at $1.89 billion. Same-store sales dropped about 3 %.

Williams-Sonoma, Inc ((WSM)), home products seller, announced that Q3 net income advanced 30% to 31 cents a share, on 14.5% revenue growth, beating analyst estimate of 30 cents a share. Comparable store sales increased 4.4% and footage advanced 10.6%.

Johnson Outdoors Inc ((JOUT)), outdoor recreation company, announced that Q4 net earnings improved to a net loss of 39 cents per share, up vs. a net loss of 44 cents per share for the prior year period. Sales rose to $77.1 million in Q4, an increase of 2% compared to $75.6 million for the same period last year.

Shoe Carnival, Inc. ((SCVL)), retailer of value-priced footwear and accessories, announced record sales and earnings for Q3. Net income rose 39.5% per share to 53 cents from 38 cents per share in the comparable period last year. Net sales for Q3 increased 12.3 % to a record $182.7 million from $162.7 million last year. Comparable store sales increased by 8.3 % for the 13-week period. Gross profit margin for latest quarter advanced to 29.5% from 29.1 % a year-ago. Selling, general and administrative expenses, as a percentage of sales, dropped to 23.1 % from 24.1 % for the comparable period.

The Children''s Place Retail Stores, Inc ((PLCE)), apparel and accessories retailer, reported Q3 net income of $1.02 a share, up from 65 cents a share in the year-earlier period topping analyst estimate of 91 cents a share. If not for a one-off gain of $1.7 million, the company would have gained 96 cents a share. Sales for the quarter soared 57%. Same-store sales increased 6% over year-ago levels.

The J. M. Smucker Co. ((SJM)), jelly maker, posted Q2 net income of 79 cents a share, up 14% from 69 cents a share in the year-earlier period. The company reported a 3% rise in revenue to, missing analysts’ forecasts of 81 cents a share.