Gold at Two-Decade High

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

Market took a breather today, after rising for seven sessions and five weeks in a row to a four year high. Falling oil prices, and mixed retail sales and apparently slowing housing market kept averages in check. Tech heavy Nasdaq fell 1%. Home builders, casions, retailers and energy stock declined. restaurant stocks P.F.Chang''''s and Cheesecake Factory advanced on a broker recommendation. Gold climbed $6 and settled near $500.

U.S. MARKET AVERAGES

Market faced mixed news from retailers with holiday sales in the morning.

The morning enthusiasm for the retail sector quickly turned to caution as the trading session progressed. The mixed report from several large retailers turned market cautious on the entire retail sector and retail stocks lost their early gains. Consumers took advantage of early bargains but turned cautious once the bargains disappeared during the weekend.

Existing home sales for the October month also came below market’s forecast putting additional pressure on the home building sectors. Lennar ((LEN)), KB Homes ((KBH)), Beazer Homes ((BZH)), D R Horton ((DHI)), Toll Brothers ((TOL))and Hovnanian fell at close by better than 3%.

Crude oil prices came under heavy pressure and lost as much as 3% during the session before recovering to a loss of 2%. The decline in oil did not help averages as stocks accelerated their decline in the last hour of trading.

Gold reached a new high during the session and came very close to reaching $500 per ounce before settling at $498.30. Gold is close to now two decade high and several traders believe that gold may trade higher than $500 in the coming days.

Market for the week is awaiting reports on GDP, durable order and spending, new home sales and report on employment situation. Economists in general are optimistic with the reports.

Bond market climbed as 10-year bonds rose and yield fell from 4.43% to 4.40%.


MOVERS AND SHAKERS

Legg Mason cut Yahoo, Inc ((YHOO)) to hold from buy, citing valuation. The broker told clients that the company''s shares are up more than 25% since October and are now within 1% of its $42.50 target price. At current valuations, Legg Mason said it continues to favors Google, Inc. over Yahoo. The stock slipped $2.7 %.

Merck & Co. ((MRK)) announced a global restructuring plan, including the elimination of 7,000 jobs by the end of 2008 and the close of 5 of its 31 manufacturing plants. The company expects to record restructuring related charges of $1.8 billion to $2.2 billion, with the bulk completed by 2008. The drug maker expects the program to lead to total savings of $3.5 billion to $4 billion from 2006 through 2010. The company now expects 2005 earnings, excluding non-recurring items, to be close to analyst expectations of $2.50 a share. The stock is currently down 4.2 %.

INTERNATIONAL MARKET NEWS

Asian-Pacific benchmarks advanced across the region, lifted by higher Wall Street close Friday, positive U.S. retail revenue data, and continuously strengthening dollar. The Nikkei gained 1.4%, hitting a fresh high of 14,986 on exporter issues, boosted by the stronger dollar. Among other regional markets, Australia’s All Ordinaries rose 0.4%, Hong Kong’s Hang Seng added 0.2%, while South Korea’s Kospi was flat at 0.04%.

European markets finished in the positive territory, boosted by strong opening of U.S. equity markets, corporate news, and auto stocks gains on the back of strong dollar and lower oil prices. The German DAX 30 advanced 0.5%, the French CAC 40 climbed 0.2%, and London’s FTSE 100 was flat. The euro steadied at $1.723.

OIL, METALS, CURRENCIES

Crude oil prices during the session declined as much as $1.60 on mild weather forecast and lower fuel demand. Light sweet crude for January delivery dropped $1.35 to $57.36 a barrel. Heating oil lost 6 cents to $1.685 a gallon. Gasoline fell 5 cents to $1.477. Natural gas slipped 37 cents to $11.68 per 1,000 cubic feet. London Brent gained 19 cents to 455.20.

European Gold traded mixed. In London the precious metal closed at $495.20 per troy ounce, down from $495.70. In Zurich gold traded unchanged at $495.95. In Hong Kong gold climbed $1.80 to close at $497.75. Silver traded unchanged at $8.13. In New York gold was $6.00 and closed at $498.30 per ounce.

The U.S. dollar rebounded from early highs to finish down against its major counterparts. The euro was quoted at $1.1796, up from $1.1723. The dollar bought 119.25 yen, up from 119.58. The British pound stood at $1.7210, up from $1.7141.

EARNINGS NEWS

Hillenbrand Industries, Inc ((HB)) announced that Q4 loss from continuing operations narrowed to $1.56 a share, from $3 a share in the year-earlier period on 6% revenue growth. The company envisages fiscal-year earnings from continuing operations in the range of $3.30 to $3.40 a share.

CORPORATE NEWS

Applied Films Corp. ((AFCO)) announced that it has agreed to sell its 50% stake in its Chinese joint venture, Suzhou NSG AFC Thin Films Electronics Co., Ltd to its joint venture partner Nippon Sheet Glass for $14.6 million. Applied Films stated that it will take an impairment charge of $1.7-$1.9 million related to the deal.