Auto Sales Disappoint

Elena
01 Dec, 2005
New York City

Initial jobless claims declined by 17,000 to 320,000 in the week ended Nov 26, vs expectations of a decline of around 323,000. Personal income rose 0.4% in October after surging up 1.7% in September. Personal spending increased by 0.2% in line with economist estimates. Auto sales in November increased compared with October sales, but were still disappointing.

U.S. MARKET AVERAGES

Positive economic data brought relief to investors, easing their concerns over inflation and sent stocks sharply higher, giving investors hope that the November rally would continue through year-end.

The Commerce Dept. reported that consumer prices rose just 0.1% in October, far better than September's 0.9% jump. Strong holiday shopping season is expected on data showing incomes rise of 0.4% and spending increase of 0.2.

A decrease in initial jobless claims also lent support to stocks. The Labor Department said first-time jobless claims fell to 320,000 last week, down from 335,000 the week before.

The day's other economic indicators were mixed. The manufacturing sector grew at a slower pace in November than in October, while construction spending for October exceeded expectations.

The energy group stood out as one of the strongest on the session, though slightly retreating from intraday highs. The semiconductor sector posted a gain of 3.1%.

The retail sector saw pressure as companies reported mixed sales results for November. Wal-Mart Stores Inc. fell 73 cents to $47.83 as November same-store sales rose 4.3%, meeting expectations. Target Corp.'s sales were slightly below Wall Street estimates, but its stock gained 18 cents to $53.69 on a bullish holiday sales forecast. Gap Inc’s same-store sales dropped 4% in November, sending its shares down 13 cents to $17.25, while Abercrombie & Fitch Co. slid $2.02 to $59.30 despite reporting a 23% jump in its monthly sales.

E*TRADE ((ET)) set a new 52-week high, ticking above a recent trading range. National Semiconductor ((NSM)) reached a fresh peak, with the rally in chip stocks driving it to a 4.5% gain. Phelps Dodge ((PD)) advanced to a new high as well.

Noven Pharma ((NOVN)) broke to a fresh nadir after the FDA staff raised safety concerns about an ADHD skin patch. Rigel ((RIGL)) set a new low, due to 60% decline on disappointing trial results for a potential hay fever drug.

MOVERS AND SHAKERS

Rigel Pharmaceuticals ((RIGL)) released disappointing results from a clinical study of R112, a potential intranasal therapy for the treatment of allergic rhinitis. In the trial, treatment with R112 failed to show a statistically significant difference from placebo treatment in improving nasal allergy symptoms. The stock dropped nearly 63%.

MTC Technologies Inc ((MTCT)) projected Q4 earnings of 34 cents to 37 cents a share on revenue of $96.8 million to $100.8 million compared with a previous forecast of 32 to 40 cents a share on revenue of $108.7 million to $114 million. The company sees 2005 earnings of $1.34 to $1.37 a share on revenue of $373 million to $377 million. MTC also said that the planned acquisition will not occur this year, as conditions connected with it were not satisfied. Company’s shares fell 11.2%.

ECONOMIC NEWS

The Commerce Dept. said that personal income rose 0.4 percent in October after surging up 1.7 percent in September. The increase came in slightly below economist estimates of a 0.5 percent increase.

The report also showed that personal spending increased by 0.2 percent in October following a 0.5 percent increase in September. The personal spending growth came in line with economist estimates.

The Commerce Dept. noted that its index of consumer prices excluding food and energy rose at an annual rate of 1.8 percent in October, down from a 2.0 percent rate of growth in September. This marked the slowest pace of growth since February 2004

The number of people filing for first-time unemployment benefits declined in the most recent week and came in below economists'' expectation.

The U.S. Department of Labor revealed Thursday that initial jobless claims came in at 320,000 for the week ended on November 26, a decline of 17,000 from the previous week''s revised total. Economists had expected a level of around 323,000.

The 4-week moving average for initial claims, which flattens out the week-to-week volatility, fell 1,250 to 322,500. Continuing claims for the week ended November 19, the most recent week for which the government has data, dropped 24,000 to 2.767 million.

INTERNATIONAL MARKET NEWS

Asian-Pacific benchmarks finished mixed. The Nikkei ended the session at a five-year high of 15,130.50, climbing 1.8% on shipping and constructions shares with Advantest and Softbank the biggest contributors to the rise. Across the region, Hong Kong’s Hang Seng gained 0.9%, South Korea’s Kospi jumped 0.7%, while stocks in Australia slid 1.2%.

European markets closed with solid gains as the European Central Bank raised the interest rate to 2.25% and energy stocks and takeover deals provided strong support. Higher opening of U.S. markets also contributed to the positive performance. The German DAX 30 climbed 1%%, the French CAC 40 surged 1.3%, and London’s FTSE 100 rose 1.1%.

OIL, METALS, CURRENCIES

Crude oil prices slipped on natural-gas inventories, easing supply concerns. Light sweet crude for January delivery declined 2 cents to $57.30 a barrel on the Nymex. Heating oil rose marginally to $1.6950 a gallon. Gasoline gained 2 cents to $1.5125. Natural gas fell 7 cents to $12.52 per 1,000 cubic feet. London Brent fell 13 cents to $54.92.

European gold gained ground. In London the precious metal was closed at $496.85 per troy ounce, up from $494.50. In Zurich gold traded at $501.65, up from $494.85. In Hong Kong gold gained 50 cents to close at $493.75. Silver traded at $8.41, up from $8.13.

Copper rose to records in New York and London on signs that economic growth is boosting global demand. Copper futures for March delivery rose 3.6 cents, or 1.9%, to $1.962 a pound on the Comex division of the New York Mercantile Exchange.

The U.S. dollar advanced against its major counterparts. The euro was quoted at $1.1709, down from $1.1791. The dollar bought 120.45 yen, up from 119.81. The British pound traded at $1.7285, down from $1.7290.

EARNINGS NEWS

Warner Music Group Corp. ((WMG)), record-label operator and music publisher, announced that Q4 net loss narrowed to 21 cents a share, against a net loss of $1.27 per share in the year-ago period on 13% higher revenue. If not for special items, the company would have gained 8 cents a share against a loss of $1.01.

Conn''s, Inc. CONN, consumer electronics retailer, reported that Q3 net profit surged 44.6% to 38 cents a share, from the year-ago period on 30.4% revenue growth and same-store sales up 23.3%.

Movado Group, MOV, watch maker and seller, posted Q3 earnings of 54 cents a share, up from 44 cents a share in the same period last year on 12% revenue growth If not for non-recurring items, earnings would have been 51 cents a share, topping analyst estimate of 48 cents at $18.45.

Gerber Scientific, Inc. ((GRB)), industrial goods company, posted a Q2 fiscal 2006 loss of 2 cents per share, narrower than last year’s loss of 5 cents per share on revenue growth. Excluding the impact of a one-time charge, the earnings would have been 5 cents per share.

Del Monte Foods Company ((DLM)), consumer goods company, posted Q2 net income of 21 cents per share, a penny above the year-ago profit, including 1 cent per share integration expense. Net sales increased 4.2% from the prior year period.