Modest Gains Ahead of Holiday

Elena
21 Nov, 2005
New York City

Stocks have little changed in morning trading and are expected to remain quiet in this holiday-shortened week. General Motors was in the focus after it announced a plan to cut 30,000 jobs and Boeing also attracted attention, revealing a deal worth $9.7 billion. In earnings news, Campbell Soup posted Q1 2006 profit rise, beatig expectations. Hastings Entertainment'''''''' Q3 income beat expectations, but the stock sharply fell on lowered 2005 revenue outlook.

U.S. MARKET AVERAGES

U.S. stocks have been hovering near the flat line and posting modest gains throughout the morning sessions. Gains were limited by the fact that many market participants were absent ahead of the Thanksgiving day.

A gauge of the U.S. economy rose more than expected and the approaching holiday shopping raised hopes about strong year-end spending. Market sentiment was also influenced by news that the world's largest automaker General Motors Corp was taking radical restructuring steps.

There was only limited stock market interest in the better-than-expected leading economic indicators index. The New-York based Conference Board said that its index of leading indicators rose 0.9% to 137.9 in October after a downwardly revised 0.8% decline in September, slightly exceeding economists' expectations of a 0.8% increase.

The housing sector has risen steadily through the session, and is now up about 1.4%. Helped by increasing oil prices, the energy sector has also been strong throughout the session and is currently up 1.1%, giving support to the broader market.

Incyte Corp. ((INCY)) is one of the best performers of the day after it announced a research and license deal with Pfizer ((PFE)). The stock is currently posting a gain of 35%.

AMD ((AMD)) has set a new 52-week high, extending a peak set last week. Smith International ((SII)) is also building on last week''s gains to establish a new peak. Express Scripts ((ESRX)) has ticked above a recent trading range to set a fresh high.

Symantec ((SYMC)) has fallen to a new 52-week low, reacting to a Bear Stearns comment initiating coverage on the stock at Underperform. Corinthian Colleges ((COCO)) is at a fresh nadir, after revealing that its Florida Metropolitan University unit has received a subpoena from the Florida Attorney General''s office.

In corporate news, Campbell Soup Co. ((CPB)) reported adjusted first quarter earnings per share rose 7% and that it will buy back $600 million in stock Plane maker Boeing ((BA)), which announced $4.6 billion worth of 787 midsized aircraft sales to leasing buyers. J.P. Morgan Securities downgraded the athletic shoe maker NIKE Inc ((NKE)) to ‘neutral’ from ‘overweight’ and the company’s share are expected to fall.

MOVERS AND SHAKERS

General Motors ((GM)) announced a plan to eliminate 30,000 manufacturing positions from 2005 through 2008 in order to reduce its assembly capacity in North America. The company expects to reduce capacity by an additional 1 million units by the end of 2008, bringing its target down to 4.2 million units, a level that would represent a 30% decrease from 2002 levels. Company’s stock climbed 1.6%

Boeing ((BBA)) received a $780-million order for six 787-8 Dreamliners from Low-Cost Aircraft Leasing. The company said that deliveries are set to begin in September 2009. Boeing’s shares rose 1.5%.

Viragen ((VRA)) released initial studies of its Multiferon treatment that showed significant antiviral activity against the H5N1 strain of the avian flu virus. The early-stage in vitro studies found Multiferon to be significantly more active against the virus than recombinant alpha interferon, recombinant beta interferon or ribavirin, the Plantation. The stock jumped 12.3%.

ECONOMIC NEWS

The Conference Board released its report on leading economic indicators in the month of October on Monday, showing that its index of leading indicators rose in line with economist estimates.

The report showed that the leading index rose 0.9 percent in October, offsetting the 0.8 percent decrease seen in September. Economic had been expecting the index to increase by 0.9 percent.

The Conference Board said that the increase by the index reflected fewer initial jobless claims and an increase in average weekly hours in manufacturing.

The report also showed that the coincident index increased 0.1 percent in October following a 0.3 percent increase in September. The lagging index increased 0.8 percent in October.

INTERNATIONAL MARKET NEWS

Asian-Pacific benchmarks finished mixed on continuous decline of oil prices and solid U.S. markets gains Friday. In early trading the Nikkei hit a five-year high of over 14,800 to close up 0.4%, led by technology and automakers stocks, also supported by stronger dollar. Across the region, Hong Kong’s Hang Seng finished flat, South Korea’s Kospi fell 0.3%, and Singapore straits Times lost 0.5%.

European markets closed generally in the positive on strong resources sector and mildly positive U.S. trading. Gains were limited by British drug maker GlaxoSmithKline, which fell 0.4% on new labels for its asthma drugs, proposed by the FDA. The German DAX 30 added 0.3%, CAC 40 gained 0.4%, and London’s FTSE inched down 0.1%.

OIL, METALS, CURRENCIES

Crude oil prices climbed on snowy weather forecast and expectations of higher heating oil demand. Light sweet crude for January delivery rose 69 cents to $57.90 a barrel. Heating oil rose 3 cents to $1.728 a gallon. Gasoline added 2 cents to $1.481. Natural gas gained 17 cents to $11.580 per 1,000 cubic feet. London Brent advanced 58 cents to $55.46.

European Gold closed mixed after climbing close to $500 on renewed investor interest as rally in precious metal continues. In London the precious metal finished unchanged at $484.70 per troy ounce. In Zurich gold advanced to $487.75 from $486.25. In Hong Kong gold fell $3.50 to close at $484.95. Silver traded at $8.13, up from $7.73.

The U.S. dollar traded in a mixed fashion against major currencies. The euro was quoted at $1.1753, down from $1.1764. The dollar bought 118.78 yen, down from 119.15. The British pound traded at $1.7193, up from $1.7169.

EARNINGS NEWS

Perry Ellis International, Inc. ((PERY)), apparel company, reported Q3 net income of 80 cents per share, up from 72 cents per share in the year-ago period on 37% revenue growth.

G. Willi-Food International Ltd ((WILCF)), food products distributor, announced Q3 net income of NIS 0.41($ 0.09) per share, an increase of 52% year-over-year, and declared a cash dividend of 12 cents per share on 2% revenue growth. Gross margins for the latest quarter were 26.5% compared to 21.8% in the year-ago period.

CBRL Group Inc. ((CBRL)), restaurant chain operator, reported a Q1 for fiscal 2006 net income of 51 cents a share, down from 57 cents in the same period in fiscal 2005 on 3.4% revenue growth, missing analyst estimate of 53 cents per share. Earnings for the latest quarter included 4 cents related to stock option expense; the company also had 5% fewer weighted average shares outstanding than in Q1 of fiscal 2005.

Hastings Entertainment Inc ((HAST)), retailer, posted Q3 earnings of 80 cents a share, up from 72 cents a share in year-ago period on 37% revenue growth, beating the analyst estimate of 78 cents a share. The company lowered its financial outlook for revenue for fiscal 2006 to reflect uncertainty related to industry consolidation and certain macroeconomic factors.

Campbell Soup Co ((CPB)), food products company, reported Q1 of fiscal 2006 adjusted net earnings of 58 cents a share up from 56 cents in the year-ago period, beating analyst view of 56 cents a share. Sales reached $2.11 billion from $2.09 billion, as U.S. soup, sauce and beverage sales slipped 2% to $970 million. Campbell Soup also affirmed its full-year growth forecast of 5% to 7% for earnings per share.

The Valspar Corp, coatings manufacturer, reported Q4 net income of 50 cents a share up from 38 cents a share in the same period last year, topping analysts’ forecasts of 42 cents a share. If not for a one-off tax gain and a lower Q4 tax rate, the company would have gained 44 cents a share. The company also added that sales rose 12.4%. Valspar announced that it continues to implement its plan to rationalize its manufacturing capacity.

CORPORATE NEWS

General Motors ((GM)) announced a plan to eliminate 30,000 manufacturing positions from 2005 through 2008 in order to reduce its assembly capacity in North America. It expects the staff reduction to come mostly through attrition and early retirees. The company expects to reduce capacity by an additional 1 million units by the end of 2008, bringing its target down to 4.2 million units, a level that would represent a 30% decrease from 2002 levels. GM lifted its target for structural cost reductions to $6 billion by the end of 2006 from a previously indicated level of $5 billion.

Boeing ((BA)), aircraft maker, revealed that Emirates has placed a firm order for 42 Boeing 777 airplanes with purchase rights to another 20 planes. The company said the deal would be worth $9.7 billion at list prices. Low-Cost Aircraft Leasing has also placed an order with Boeing for 6 of its 787-8 Dreamliners, valued at about $780 million.