Cisco Outlook Lifts Tech Stocks

123jump.com Staff
06 Aug, 2008
New York City

The U.S. stocks closed higher after trading lower for the most of the day. Cisco reported 10% rise in sales and offered outlook that investors found optimistic. Freddie Mac reported sharply lower revenue and a loss that was three times more than the estimates. The troubled mortgage lender is looking to raise $5 billion. The loss dragged financial stocks lower. Crude oil fell after the release of weekly inventories data. Asian and European stocks closed mixed.

4:30PM New York, 10:30PM Frankfurt, 6:30AM Sydney[R]– U.S. stocks gained on Cisco earnings. Consumer stocks fell on weak earnings from retailers and casinos. Xstrata made unsolicited offer for mining company Lonmin. Sony agreed to acquire rest of stakes in the Sony BMG joint venture.[/R]

Global Markets Update

U.S. stocks turned higher at closed on Cisco optimistic outlook and a drop in crude oil prices. Larger than expected loss at Freddie Mac and sharply lower earnings at Whole Foods turned trading sentiment negative. Benchmark indexes opened lower and quickly fell further but recovered losses and closed up 0.3%. Freddie Mac slashed its dividend by 80% and reported three times more than expected loss. Whole Foods third quarter earnings of 24 cents a share, the stock fell 20%. Cisco revenue fourth quarter revenue rose 10% and earnings gained 4%.

Lonmin Plc led advancers in the UK index shares with a rise of 47.74% after Xstrata Plc made an unsolicited £5 billion bid. The offer also suggests that discussion of a deal between the Xstrata and Vale of Brazil are not likely to materialize. The National Institute of Economic and Social Research reported today that the UK growth rate in the three months through July is forecasted at 0.1% from 0.2% in the three months to June. Economic growth in the period was the lowest since May 2005.

Stocks in Tokyo rallied tracking the gains in the U.S. markets. Benchmark index rose 2.6% and broader index gained 2.4% on the hopes that exports to the U.S. will be sustained. Mitsubishi UFJ first quarter earnings fell 66% from a year ago to 51 billion and total net assets dropped 3% to 9.3 trillion. Sony agreed to acquire 50% stake in the joint venture Sony BMG that it does not own for $900 million and cash in the balance sheet of the venture.

Stocks in Shanghai gained as crude oil prices fell. Hong Kong markets were closed on impending tropical storm. China increased its loan quotas for regional banks for small and medium companies after the credit markets tightening affected lending to the sector. Oil refiners, airlines and chemical companies rose after the recent drop in crude oil future prices. Commodity stocks fell after gold prices plummeted 2.4% to $886.10 an ounce. Zjin Mining Group Co. fell 2.7%.

North American Markets indexes

Dow Jones Industrial Average increased 40.30 or 0.34% to a close of 11,654.07, S&P 500 closed up 4.31 or 0.34% to 1,289.18, and Nasdaq Composite Index increased 28.57 or 1.20% to close at 2,378.37. In Toronto TSX Composite closed up 352.20 or 1.30% to 13,457.81.

Of the 30 stocks in Dow Jones Industrial Average 17 stocks gained, 13 declined and none was unchanged.

Caterpillar led gainers in the Dow Jones Industrial Average with a rise of 3.6% followed by increases in Microsoft of 3.1%, in Chevron Corp of 2.60%, in Merck & Company of 1.7% and in United Technologies Corp of 1.46%.

General Motors led the decliners in the Dow Jones Industrial Average with a loss of 4.1% followed by losses in AIG of 3.1%, in American Express of 1.7%, Pfizer Inc of 1.5% and in Citigroup Inc 1.2%.

Of the stocks in S&P 500 index, 283 increased, 216 declined and 1 was unchanged. Of the index stocks, 62 rose more than 3% and 31 fell more than 3%.

Fidelity National led the gainers in the S&P 500 index with a rise of 18.6% followed by gains in Tesoro Corp of 11.98%, in Freeport-McMoran of 10.98%, in American Capital of 9.79%, in Valero Energy of 7.25% and in Polo Ralph Lauren of 7.09%.

Freddie Mac led decliners in the S&P 500 index with a loss of 19.3% followed by losses in Fannie Mae of 14.7%, in Sprint Nextel Company of 14.7%, in Whole Foods Market of 12.6%, in Molex Inc of 9.99%, in Wendy’s International of 7.2% and in Big Lots of 6.2%.

South American Markets Indexes

Argentina led gainers in the Latin American markets with a rise of 3.46% followed by increases in Brazil of 2.0%, in Mexico of 1.30%, in Peru of 0.385 and in Chile of 0.34%.

Colombia fell 0.75% and Venezuela declined 0.32%.

Europe Markets Review

In London FTSE 100 Index closed higher 31.60 or 0.58% to 5,486.10, in Paris CAC 40 Index increased 61.98 or 1.41% to close at 4,448.33 and in Frankfurt DAX index higher 42.69 or 0.65% to close at 6,561.39. In Zurich trading SMI increased 18.56 or 0.26% to close at 7,209.34.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 340.23 or 2.63% to 13,254.89. ASX 200 index in Australia increased 148.70 or 3.08% to close 4,969.10. The KL Composite index in Malaysia increased 4.73 or 0.42% closed to 1,133.59. Market of Hong Kong was closed today.

The Kospi Index in South Korea increased 43.17 or 2.81% to close at 1,578.71, SET index in Thailand closed higher 9.23 or 1.38% to 676.35 and JSE Index in Indonesia increased 1.59 or 0.07% to 2,187.20. The Sensex index in India increased 112.47 or 0.75% to 15,073.54.


Commodities, Metals, and Currencies

Crude oil decreased $0.86 to close at $118.31 a barrel for a front month contract, natural gas closed up 5 cents to $8.78 per mBtu and gasoline futures decreased 1.35 cents to close at 294.30 cents per gallon.

Gold increased $0.50 in New York trading to close at $886.60 per ounce, silver closed down 3 cents to $16.54 per ounce and copper for front month delivery increased 0.80 cent to $3.4250 per pound.

Wheat futures closed down 14.25 cents in Chicago trading and closed at $7.65 a bushel. Sugar increased 0.26 cent to 14.19 cents a pound. Soybean future closed down 47.00 cents to $12.22 a bushel.

Dollar edged higher and traded near record low against euro to $1.5415 and edged lower against yen to 109.79.

Yields on U.S. bonds increased to 4.03% with 10 years of maturities and increased to 4.68% with 30-year of maturities.