Metals Trading Dominate

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

It was a day of Metals. Gold, platinum, and copper all traded near record levels. Economic reports on housing, durable goods and consumer confidence suggested healthly economy sparking fears of inflation. Market averages closed near unchanged but yield on 10-year bond rose 4.48%. Overnight Tokyo closed down 0.4%.

U.S. MARKET AVERAGES

Stronger new home sales, rising consumer confidence, and better than expected orders for durable goods all pointed a positive start at the opening.

The market mild rally quickly faded as traders worried of the rising inflation and Fed’s desire to keep raising the interest rates in the wake of stronger economic data. Market averages at close did not reflect the strength in the economy and closed near unchanged.

Home builders stocks declined despite the better than expected new home sales in October of 1.42 million homes. Economists had forecasted 1.2 million October sales. Strength in the Western region supported the home sales in October. The Commerce Department revealed that new home sales advanced 13% in October to a seasonally-adjusted annual rate of 1.424 million units, reaching the biggest monthly increase in more than a decade.

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.

Sycamore Networks jumped to a new 52-week high after reversing a year-ago loss, releasing a better-than-expected profit in the first quarter. Express Scripts also reached a fresh peak of 5% on strong 2006 guidance. MetLife, Mellon Financial and Prudential are other noteworthy stocks reaching new highs.

American Woodmark's reached a new 52-week low, dropping 15% on earnings report. Education Realty Trust has also dropped to a new low on earnings-related news, falling more than 3% on guidance released late Monday.

Bonds slid, with the yield on the 10-year Treasury note rising to 4.48% from 4.41% late Tuesday.

MOVERS AND SHAKERS

Express Scripts Inc , 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., 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.

The increase in new home sales reflected strong growth in both the Northeast and the West, with new home sales in each region increasing by more than 40 percent.

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.

The Conference Board said that the rebound in consumer confidence reflected a notable decline in gasoline prices as well as an improving outlook for the labor market.

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 closed higher, boosted by upbeat U.S. economic data, gains in the auto sector and well-received corporate news from Dutch food group Ahold and catering giant Compass. The German DAX 30 advanced 0.5%, the French CAC 40 rose 0.4%%, and London’s FTSE 100 climbed 0.4%.

OIL, METALS, CURRENCIES

Crude oil prices rebounded after dropping below $57 a barrel on optimistic weather forecast. Light sweet crude for January delivery lost 86 cents to $57.50 a barrel. Heating oil lost 2 cents to $1.6720 a gallon, while gasoline lost 2 cents to $1.4556. Natural gas rose 10cents to $11.736 per 1,000 cubic feet. London Brent fell 3 cents to $54.85.

In New York gold traded above $500 but closed at $499.10 up 80 cents. Metal continues to trade at 18-year high. The last time gold traded at $500 was on Dec 14, 1987. 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, 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, 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., 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.