Weekly Oil Inventory Data Support Averages

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

Unemployment claims rose higher than expecetd for the previous week. Consumer sentiment rose and help-wanted index fell. Ten-year bond yields fell to 4.47% and yield curve flattened as 30-year bonds fell to 4.706%. Research in Motion said that new subscriber growth will be less than expected, Google and Apple Computer shares close at record high.

U.S. MARKET AVERAGES

Dow closes at 54-month high and may reach higher in the coming days.

Despite the higher than expected rise in initial unemployment claims for the previous week market started on a positive note. Market continued its positive climb supported by the fall in bond yields and rise in tech stocks such as Intel, Micron, Apple Computer and Google.

Steep fall in early morning in the oil prices helped the averages to gain further in the afternoon trading. The weekly petroleum inventories report suggested rising inventories for oil, gasoline and distillate driving the oil prices lower by more than a dollar.

10-year bond yield fell to 4.47% and 30-year bond yield fell to 4.706%. The falling bond yield, drop in oil and better than expected consumer confidence as reported by University of Michigan supported the rise in averages at close.


MOVERS AND SHAKERS

Sitel Corp. ((SWW)), provider of outsourced customer-support services, retained Citigroup Global Markets to help the board evaluate strategies to boost value for shareholders. In a statement, the company didn''t provide specific possible alternatives. The stock jumped 11.3%.

Hormel Foods Corporation ((HRL)), manufacturer of food products, posted Q4 better-than-expected earnings of 59 cents a share, up from 50 cents in the same period last year, beating analysts’ expectations of 57 cents a share. The company projected 2006 earnings below expectations and the stock fell 6.6%.

Michaels Stores Inc. ((MIK)), retailer, reported third-quarter net earnings of $55.4 million, or 40 cents a share, compared with $42.5 million, or 31 cents a share, in the year-earlier quarter., exceeding estimates of 37 cents a share on revenue of $846 million. Same-store sales rose 0.8%. Company’s shares rose 7% on the favorable news.

Alexion Pharmaceuticals ((ALXN)) reported disappointing results for a late-stage clinical trial of a drug to reduce the incidence of heart attacks and deaths following coronary artery bypass graft surgery. Consequently the stock dropped 26%.

ECONOMIC NEWS

Coming back from a drop in the previous period, crude oil inventories ticked slightly higher in the latest week, according to government data released Wednesday. Stocks of gasoline also edged slightly higher.

The Department of Energy''s Energy Information Administration revealed that crude oil inventories rose by 400,000 barrels for the week ended November 18, climbing to 321.8 million barrels from the prior week''s level of 321.4 million barrels. This followed a decline of 2.2 million barrels in the previous week. Oil inventories remained 11.9% higher than their levels of the same time last year.

Gasoline inventories posted a week-over-week advance of 200,000 barrels, the government said, compared to the previous week''s decline of 900,000 barrels. Gasoline stocks were 3.7% below their levels of last year. Inventories of distillate fuel oil rose by 1.1 million barrels in the most recent week.

The Department of Labor released its report on initial jobless claims in the week ended November 19 on Wednesday, a day earlier than usual due to the Thanksgiving Day holiday. The report showed a bigger than expected increase in jobless claims.

The Labor Dept. said that initial jobless claims in the week ended November 19 rose to 335,000 from the previous week''s upwardly revised figure of 305,000. Economists had expected jobless claims to increase to 315,000 from the 303,000 originally reported for the previous week.

The increase was partly due to 21,000 new jobless claims related to Hurricanes Katrina, Rita, and Wilma. With the increase, the total number of hurricane-related job losses over the last 12 weeks rose to 582,400.

INTERNATIONAL MARKET NEWS

Asian-Pacific benchmarks advanced across the region on strong exporter-related issues, boosted by U.S. interest rate speculations. The Nikkei was closed for a national holiday. Among other regional markets, the biggest gainer was South Korea’s Kospi, surging 3% after yesterday’s 2% decline, followed by Hong Kong’s Hang Seng, up 1.2% and Singapore Straits Times, rising 0.8%. The only decliner was Australia’s All Ordinaries, down 0.2%.

European markets closed in the positive territory, supported by Wall Street gains, earnings reports and merger-and-acquisition activity. The German DAX 30 gained 0.4%, the French CAC 40 advanced 0.6%, and London’s FTSE 100 added 0.3%.

OIL, METALS, CURRENCIES

Crude oil prices declined on oil data showing a rise in oil inventories. Light sweet crude for January delivery lost at one point close to a dollar but recovered to a loss of 13 cents to $58.71 a barrel at close. London Brent fell 83 cents to $55.55. Heating oil and gasoline also dropped by 5 cents and 2 cents.

European gold prices retreated from 18-year highs on subsiding trading activity before Thanksgiving. In London gold closed at $499.90 per troy ounce, down from $491.20. In Zurich gold fell to $489.35 from $490.90. In Hong Kong gold dropped $3.30 to close at $489.95. Silver traded unchanged at $8.13.

The U.S. dollar traded mixed against other major currencies. The euro was quoted at $1.1790, down from $1.1814. The dollar bought 118.52 yen, down from 118.78. The British pound traded at $1.7210, down from $1.7222.

EARNINGS NEWS

Air France-KLM ((AKH)), air transport company, announced that Q2 profit more than tripled to 2.73 euro a share, up from 76 euro cents a share in the year-ago period. Sales rose 10%. Fuel costs increased 29%, reflecting a 3% rise in volumes, a 49% surge in jet fuel prices and a hedging impact of 23%.

Patterson Cos ((PDCO)), equipment distribution company, reported that Q2 net income advanced to 32 cents a share, a penny up from 31 cents share in the same period last year, missing analyst estimate by a penny. The company added that sales advanced 11% in Q2. The company stated that Patterson Dental, its largest business, reported sales growth of 9%. Patterson expects Q3 earnings between 38 cents and 40 cents a share.

Nexus Telocation Systems Ltd ((NXUS)), provider of stolen-vehicle-retrieval and roadside-assistance services in Israel, posted a narrow Q3 loss of 14 cents a share, from 37 cents a share in the year-ago period as revenue more than doubled. The company reversed to Q4 operating earnings of $870,000 from an operating loss of $313,000.

Hormel Foods Corp ((HRL)), manufacturer and marketer of consumer-branded meats and food products, posted Q4 net earnings of 59 cents a share, up from 50 cents in the same period last year, beating analysts’ expectations of 57 cents a share. Sales rose 9.9%. The company projected earnings in a range of 44 cents to 50 cents a share for the fiscal 2006, including a charge of 4 cents for adoption of FAS 123R, the accounting rule for share-based payments. And for the year, Hormel''s pegged its profit range at $1.86 to $1.96 a share, also including the 4-cent charge.

CORPORATE NEWS

French steelmaker Arcelor SA announced it will launch a hostile bid of C$56 a share - or C$4.3 billion in all - for Canadian counterpart Dofasco Inc. The all-cash takeover bid represents a premium of approximately 27.3% over the 44 Canadian dollar closing price of Dofasco''s common shares on Nov. 22, Arcelor said it won''t buy shares until it can purchase at least 50% of the Canadian company. Buying the Canadian firm would raise Arcelor''s annual production by around 10% to 55 million tons.