Oil Inventories Rise

Elena
07 Dec, 2005
New York City

Stock averages opened slightly higher, but failed to move to the upside, pressured by rising oil prices ahead of inventory report and very little significant news. In corporate news, Cisco Systems advanced after J.P.Morgan upgraded it from neutral to overweight on reaffirmed long-term growth forecast. Microsoft Corp. rose after the company announced plans to add 3,000 jobs in India over the next three to four years.

U.S. MARKET AVERAGES

U.S. stock averages opened slightly higher but without a significant market driver, the major averages failed to sustain the advance. Apparently the market lacks vigor as it has been in an exhausting rally for a month already. The three major averages are currently posting modest losses only, hurt by an increase in oil prices.

The only significant data expected Wednesday was news on oil inventories and a mid-quarter business update from Texas Instruments after the close of regular trading.

On the back of higher oil prices, currently about $60.50 a barrel, energy stocks advanced. The natural gas and oil service sectors rose a little less than 1%.

The housing sector moved lower, falling by 1% despite data from the Mortgage Bankers Association that showed an increase in mortgage loan application volume in the most recent week. Airline stocks also moved to the downside, reflecting rising oil prices.

Hurco ((HURC)) sharply advanced after it reported a significant rise in fourth-quarter earnings. The stock rose nearly 20%.

PW Eagle ((PWEI)) sharply moved to the downside after it completed an $18.75 million private equity placement. The stock fell 9%.

In corporate news, Microsoft Corp ((MSFT)) was ordered to separate its instant messaging service from its Windows software and allow rival products on its system in South Korea after losing an antitrust case. Microsoft Corp. rose 3 cents to $27.72 after Chairman Bill Gates said the company plans to add 3,000 jobs in India over the next three to four years, nearly doubling its work force in the country.

In the first hour of trading, the Dow Jones industrial average rose 4.64, or 0.04%. The Standard & Poor''s 500 index rose 1.15, or 0.09%, and the Nasdaq composite index rose 3.37, or 0.15%.

Bonds rose, with the yield on the 10-year Treasury note falling to 4.44% from 4.48% late Tuesday.

MOVERS AND SHAKERS

Cisco Systems ((CSCO)) reaffirmed its long-term growth forecast. Consequently, J.P. Morgan upgraded the company from neutral to overweight. The stock rose 2.4%.

SigmaTel ((SGTL)) was downgraded to peer perform from outperform on evidence that the company's fourth-quarter is tracking toward the low end of expectations and even lower due to increased competition, weaker demand, and market pressure from Apple. Company’s shares dropped 8.4%.

SimpleTech Inc ((STEC)), memory chip maker, cut its fourth-quarter revenue forecast and said earnings per share will come below its previous outlook. The company sees its revenue in the range of $60 million to $63 million, compared with its previous outlook of $70 million. The stock slid 9.7%.

ECONOMIC NEWS

Coming back from the previous week's sharp declines, crude oil inventories advanced in the latest week, according to government data released Wednesday. Stocks of gasoline also moved higher.

The Department of Energy's Energy Information Administration revealed that crude oil inventories rose by 2.7 million barrels for the week ended December 2, climbing to 320.3 million barrels from the prior week's level of 317.6 million barrels. This followed a decline of 4.2 million barrels in the previous week. Oil inventories were 11.1% higher than their levels of the same time last year.

Gasoline inventories also posted a week-over-week advance of 2.7 million barrels, the government said, compared to the previous week's 500,000-barrel slide. Gasoline stocks were 4.3% below their levels of last year. Inventories of distillate fuel oil rose by 2.7 million barrels as well in the most recent week.

INTERNATIONAL MARKET NEWS

Asian-Pacific benchmarks closed higher, supported by U.S. markets gains overnight. The Nikkei helped the upside momentum, recovering from yesterday’s losses and rising 0.4% ahead of economic data Friday. Across the region Indonesian Jakarta Composite surged 2.5%, Hong Kong’s Hang Seng rose 1%, while South Korea’s Kospi gained 0.3%, reaching a new high on tech stocks.

European markets slightly rose at mid-day trading on gains from metals stocks which offset losses in automakers and insurance shares, as well as weaker U.S. markets close. The German DAX 30 gained 0.2%, the French CAC 40 added 0.2%, and London’s FTSE 100 climbed 0.5%.

OIL, METALS, CURRENCIES

Crude oil prices rose on cold weather concerns and expectations of higher fuel demand. Light sweet crude for January delivery gained 39 cents to $60.33 a barrel on the Nymex. Heating oil advanced to $1.7725 a gallon. Gasoline rose nearly a cent to $1.5971. Natural gas climbed 23 cents to $13.718 per 1,000 cubic feet. London Brent surged 55 cents to $58.16.

European gold hit a 24-year high for the second consecutive session on heavy fund buying. In London the precious metal was fixed at $510 per troy ounce. In Zurich gold traded at $513.25, up from $506.55. In Hong Kong gold rose $4.70 to close at $513.25. Silver traded at $8.75, up from $8.62.

The U.S. dollar advanced against other major counterparts. The euro was quoted at $1.1724, down from $1.1794. The dollar bought 121.02 yen, up from 120.74. The British pound traded at $1.7315, down from $1.7418.

EARNINGS NEWS

Synovis Life Technologies Inc ((SYNO)), medical device company, announced that Q4 profit advanced to 2 cents a share, breakeven with the year-earlier period. Earnings per share remained unchanged despite the profit gain because there were more shares
outstanding in Q4. Revenue advanced to $16.8 million from $14.6 million in the comparable period a year-ago.

Pall Corp. ((PLL)), maker of filtration systems for industrial applications, announced that its Q1 earnings rose 16 percent to 20 cents per share, up from 17 cents per share in the same period last year on growth in its industrial and biopharmaceuticals segments. Sales increased 4 % and total industrial sales went up 6 %.