Trimmed Rally

123jump.com Staff
06 Dec, 2005
New York City

October new factory orders showed a jump of 2.2% after declining by 1.4% in Septemeber. Third quarter labor productivity was revised upwards 4.3% from 4.1% as labor cost declined 1% revised from previous estimate of 0.5% fall. Kroger, grocery chain, delivered earning in-line with the estimates of 25 cents for the Q3. Apple stock rose 3% on a recommendation from a broker.

U.S. MARKET AVERAGES


It was a day of direction and conviction less market trading. Market was sluggish at the morning despite strong rise in labor productivity and factory orders. However, market remained focused on the inflation causing factors. In the early afternoon market focused on the rise in October durable goods orders and shipments and took averages to the best level of the day.

In the late afternoon market lost its momentum and began to decline, however for the day averages still closed above yesterday’s close. Dow closed up 21 points at 10,856.86, Nasdaq closed up 3.20 at 2,260.80 and S&P closed up 1.61 at 1263.70 for the day.

Gold and silver continued to climb during the session to the new highs but copper lost marginally during the session. Crude oil rose and then fell only to rise at close by a margin. Natural gas fell during the session.

Shares of Guidant declined by $1.10 to $66.88, on the news that Johnson & Johnson is reported to not raise its acquisition offer for Guidant.


MOVERS AND SHAKERS

Apple Inc. ((AAPL)) rose 3.6% to $74.39 after UBS raised its price target on the stock to $86 from $74 because of its iPod product.

FedEx Corp. ((FDX)) rose 3.2% to $98.82 after Merrill Lynch upgraded the stock to ‘buy’ from ‘neutral’.
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Dillard''s Department Stores ((DDS)), retailer, reported narrower Q3 loss of $2.7 million, or 3 cents a share vs. $18.7 million, or 23 cents a year ago, exceeding analyst estimates of 21 cents quarterly loss. Company’s sales rose to $1.73 billion with same-store sales 2% higher compared with last-year figures. The stock gained 7.1%.

G-III Apparel Group Ltd. ((GIII)), sportswear maker, reported Q3 net income rise of $14.8 million, or $1.73 a share compared with $9.9 million, or $1.33 a share a year ago. Sales climbed 62% to $186.6 million largely due to the acquisition of Marin Richards stock and assets from Winlit. The company projected 2006 net income in the range of 85 cents to 90 cents a share, including an 11-cent non-cash charge. The stock gained 8.4%.

ConAgra Foods Inc. ((CAG)) projected Q2 pro forma earnings of 38 cents a share compared with analyst expectations of 45 cents a share on revenue of $4.03 billion. ConAgra cited lower-than-expected shipment volume and revenue and increased input and operating costs, among other factors, for its expected quarterly shortfall. The stock fell 3%.

ECONOMIC NEWS

Tuesday morning, the Department of Commerce released its report on factory orders in the month of October, showing that orders rebounded after a notable decline in September. The strength of the rebound came as a surprise to economists.

The report showed that new orders for manufactured durable goods rose 3.4 in October following a 2.0 percent decrease in September. Economists had been expecting a much more modest increase of about 2.2 percent compared to the 1.7 percent drop originally reported for September.

The growth in October was largely due to a rebound by orders for transportation equipment, which rose by 11.4 percent in October after falling 6.4 percent in September. Excluding orders for transportation equipment, new orders increased 0.3 percent.

The U.S. Department of Labor released its revised reading for third-quarter productivity on Tuesday, with the measure now showing a 4.7% seasonally adjusted annual growth rate. When the statistics were first reported in early November, the government said productivity increased by a rate of 4.1%. Unit labor costs were revised to a decline of 1%, compared to the previous-reported estimate of a 0.5% slide.

Meanwhile, factory orders data are due out after the start of trading. Economists expect the measure to increase by about 2% for October, reversing September''s 1.7% decline.

INTERNATIONAL MARKET NEWS

Asian-Pacific benchmarks closed mostly lower after the Nikkei retreated from multi-year highs, losing 0.8% on profit taking. High-tech stocks declined on concerns that the sector gained rather fast during the rally, financial shares attracted investors. Among other regional markets, Hong Kong’s Hang Seng dropped 1.1% on rising oil, Australia’s All Ordinaries lost 0.2%, while South Korea’s Kospi gained 0.5%.

European markets closed higher, supported by strong U.S. trading on productivity data, as well as financial and telecom stocks. The German DAX 30 gained 0.7%, the French CAC 40 advanced 0.6%, and London’s FTSE 100 rose 0.5%.

OIL, METALS, CURRENCIES

Crude oil prices slipped below $60 a barrel after rally, despite cold weather forecast. Light sweet crude for January delivery rose 4 cents to $59.95 a barrel on the Nymex. Heating oil lost 2 cents to $1.7720 a gallon. London Brent dropped 25 cents to $57.48.

European gold retreated from 25-year highs as investors took profit from the surge. In London the precious metal closed at $507 per troy ounce, up from $505.05. In Zurich gold traded at $506.55, up from $505.45. In Hong Kong gold rose $2.30 to close at $508.55. In New York gold closed up $1.20 to $513.80 per ounce. Silver traded at $8.62, up from $8.55.

The U.S. dollar advanced against other major counterparts. The euro was quoted at $1.1765, down from $1.1790. The dollar bought 121.04 yen, up from 120.79. The British pound traded at $1.7364, down from $1.7421.

EARNINGS NEWS

Kroger Co ((KR)), supermarket chain, announced that Q3 profit advanced to 25 cents a share, from 19 cents a year earlier, matching analysts'' estimate. Sales rose to $14.02 billion from $12.85 billion in last year''s third quarter. Identical supermarket sales rose 6.6% with fuel and 3.7% without fuel.

Brocade Communications Systems, ((BRCD)), server and storage company, posted Q4 earnings of 8 cents a share, breakeven on a per share basis in the same period a year earlier. If not for non-recurring items, earnings would have been 7 cents a share, topping the analysts’ estimate of 5 cents a share.

Sears Holdings, ((SHLD)), retailer, announced that Q3 net income fell to 35 cents a share, from $5.45 a share in the same time last year, despite revenue growth. On a proforma basis Sears stated earnings dropped to 35 cents a share from 93 cents a share in the comparable period last year, with revenue down 5%. Analysts were waiting for earnings of 28 cents a share.