October New Home Sales Up

Elena
29 Nov, 2005
New York City

The Department of Commerce released a report which showed that new orders for durable goods rose 3.4% in October following a revised 2% drop in September. Economists had expected a much more modest increase of about 1.8%. According to a report, posted by the Conference Bord, the consumer confidence index rose sharply to a reading of 98.9 in November after falling to a reading of 85.2 in October. Economists had expected a more modest increase to a reading of 90.0.

U.S. MARKET AVERAGES

Stocks rebounded from yesterday’s profit taking and the major averages started higher just as the futures had predicted. Stocks advanced on a strong start to the online holiday shopping season and better-than-expected economic news. All three of the main U.S. equity indices are up more than 0.6% in the early going.

The Commerce Department revealed that new home sales advanced 13% in October to a seasonally-adjusted annual rate of 1.424 million units. This is the biggest monthly increase in more than a decade and is well above economists' expectations of an annual rate of about 1.2 million units.

The Commerce Department also reported that factory goods orders sharply rose in October, up $7.1 billion on five-year high of military aircraft demand.

In another economic report, the Conference Board revealed that its consumer confidence index came in at 98.9 for November, an increase from October's level of 85.2.

Energy stocks are moving to the upside after oil prices slipped on Monday, sparking a sell off in the group. Oil prices are ticking slightly higher after showing weakness for much of the morning, with light, sweet crude now trading near $57.50 per barrel.

The housing sector has rallied sharply on the increase in new home sales. The space is now up more than 2%. Energy and HMO stocks remain strong as well.

The gold sector, ticking lower with a loss of about 1.2% is one of the very few notable decliners in early going. Airline stocks are also showing some mild weakness.

Perot Systems ((PER)) is a conspicuous mover to the upside in the early going, after Bernstein raised its rating on the stock from Market Perform to Outperform. The stock is currently up nearly 10%.

American Woodmark ((AMWD)) is among the biggest decliners after it revealed disappointing earnings for the second quarter. The stock is currently down19%.

In the first hour of trading, the Dow Jones industrial average rose 44.33, or 0.41%. The Standard & Poor''s 500 index rose 5.51, or 0.44%, and the Nasdaq composite index rose 7.77, or 0.35%.

The fixed income market has been fairly stable in its first hour or so of trading, with the 10-year yield up less than a basis point at 4.410%.

MOVERS AND SHAKERS

Express Scripts Inc ((ESRX)), pharmacy-benefits manager, projected 2006 earnings in the range of $3.10 to $3.22 a share, exceeding analyst estimates of $2.98 a share. Company’s shares rose 5.1%.

ViroPharma Inc. ((VPHM)), pharmaceutical company, said it plans to sell 7 million shares of its common stock in a public offering. The company intends to use the offering's proceeds for working capital and general corporate purposes, and it may also use a portion for its 6% subordinated convertible notes due March 2007. The stock fell 4.5%.

ECONOMIC NEWS

The Department of Commerce released its report on new home sales in the month of October on Tuesday, showing a significant increase in new home sales.

The report showed that new home sales rose 13 percent to a seasonally adjusted annual rate of 1.424 million units in October from an upwardly revised 1.260 million unit rate in September.

Economists had been expecting new home sales to fall to a 1.200 million unit rate compared to the 1.222 million unit rate originally reported in September.

Tuesday morning, the Conference Board released its report on consumer confidence in the month of November, showing that its consumer confidence index rebounded after falling in the two previous months.

The report showed that the consumer confidence index rose rather sharply to a reading of 98.9 in November after falling to a reading of 85.2 in October. Economists had expected a more modest increase to a reading of 90.0.

Durable goods orders rebounded in October after showing a notable decline in September, according to a report from the Department of Commerce. The increase came in well above economist estimates.

The report showed that new orders for durable goods rose 3.4 percent in October following a revised 2.0 drop in September. Economists had expected a much more modest increase of about 1.8 percent.

INTERNATIONAL MARKET NEWS

Asian-Pacific benchmarks declined across the region, reflecting weakness in U.S. trading Monday. The Nikkei fell 0.4%, ending an eight-session rally which sent the index on a five-year high. Data on unemployment and lower-than-expected output growth also weighed on market sentiment. Among other regional markets, South Korea’s Kospi dropped 1.1%, Hong Kong’s Hang Seng lost 0.5%, and Australia’s All Ordinaries fell 0.5%.

European markets traded near the flat line at mid-day, pressured by lower oil prices and banking shares, but losses were partly offset by well-received corporate news from Dutch food group Ahold and catering giant Compass. The German DAX 30 edged up 0.03%, the French CAC 40 lost 0.1%, and London’s FTSE 100 slipped 0.1%.

OIL, METALS, CURRENCIES

Crude oil prices dropped below $57 a barrel after OPEC assured it is prepared to keep fuel supplies steady. Light sweet crude for January delivery dropped 47 cents to $56.89 a barrel. London Brent fell 50 cents to $54.38.

European Gold traded mixed, retreating from its decade-high of $500 per ounce, reached on inflation and geopolitics worries. In London the precious metal was fixed at $497.10 per troy ounce, up from $495.20. In Zurich gold traded at $495.45, down from $495.95. In Hong Kong gold fell 25 cents to close at $497.50. Silver traded unchanged at $8.13.

The U.S. dollar climbed against its major counterparts. The euro was quoted at $1.1820, down from $1.1873. The dollar bought 119.13 yen, up from 118.57. The British pound stood at $1.7256, down from $1.7328.

EARNINGS NEWS

SkillSoft PLC ((SKIL)), electronic learning content company, posted Q3 earnings of 6 cents a share, up from 4 cents a share in the same period last year on 3% revenue growth, beating analyst estimate of 3 cents per share. The results include $6.4 million in charges for amortization of assets and income tax provisions. Gross margin went down to 88% from 89%.

United Natural Foods ((UNFI)), natural and organic foods distributor, posted Q1 earnings of 18 cents a share, down from 24 cents a share, in the year-earlier period. Q1 sales advanced 21%. Adjusted earnings amounted to 24 cents a share, matching analyst forecasts.

GameStop Corp. ((GME)), video-game retailer, reversed to a Q3 loss of 4 cents a share, from 21 cents in the year-ago period. If not for merger costs and other items, the company would have earned 14 cents a share, matching analyst estimate. Sales rose 28% in Q3.