Jobless Claims Rise Unexpectedly

Elena
08 Dec, 2005
New York City

Asian-Pacific benchmarks closed in the red, led by the Nikkei, down nearly 2% on profit taking, mangled IPO and cautiousness ahead of economic data. European averages were also weak at mid-day on insurance stocks with the German DAX 30 falling 0.6%. In earnings news, Costco Wholesale Corp. announced Q1 12% earnings rise to 45 cents a share, from 40 cents a year ago, in line with analyst expectations. Toll Brothers posted Q4 70% profit jump, but cut 2006 outlook.

U.S. MARKET AVERAGES

U.S. stock futures indicated lower opening on Thursday, continuing a downtrend that began late in Tuesday's trading and lasted through most of Wednesday's session. Today’s investors’ concerns are connected with the outlook for U.S. interest rates and consumer spending on continuously rising oil prices. Homebuilders are likely to be in focus after luxury home builder Toll Brothers Inc. cut its fiscal 2006 forecast. The tech sector is expected to soften the decline with an upbeat outlook released by Texas Instruments Wednesday and ahead of mid-quarter update by chipmaker Intel Corp.

Luxury homebuilder Toll Brothers Inc. ((TOL)) is likely to weigh on market sentiment with a move to cut its forecast for fiscal 2006 even after reporting that fiscal fourth-quarter profit rose more than 70%.

In other corporate news, Citigroup ((C)), the world''s largest financial services firm, has defeated in arbitration a $900 million claim filed against it by an investor who claimed that he lost money by relying on allegedly flawed research issued by the firm.

Standard & Poor''s 500 futures were down 2.5 points, below their fair value. Dow Jones industrial average futures were off 16 points, and Nasdaq 100 futures were down 4 points.

ECONOMIC NEWS

Before the start of trading on Thursday, the Department of Labor released its report on initial jobless claims in the week ended December 3. The report showed that jobless claims rose unexpectedly.

The report said jobless claims rose to 327,000 from the previous week's revised figure of 321,000. Economists had been expecting jobless claims to fall to about 315,000 from the 320,000 originally reported for the previous week.

At the same time, the 4-week moving average fell to 322,500 from the previous week's revised average of 322,750. This marks the second consecutive weekly decline by the less volatile moving average.

The report also showed that continuing claims for the ended November 26 came in a 2.603 million, down from the preceding week's revised level of 2.740 million.

INTERNATIONAL MARKET NEWS

Asian-Pacific benchmarks lost ground Thursday on profit taking, mangled IPO of J-Com, and cautiousness ahead of Japanese revised GDP figures. Regional markets also saw two interest-rate hikes. The Nikkei dropped 1.95% and Hong Kong’s Hang Seng slid 1.7%.

European markets traded lower at mid-day, dragged down by weaker U.S. trading overnight and insurers like Munich Re and AXA which led decliners. The German DAX 30 slipped 0.6%, the French CAC 40 tumbled 0.6%, and London’s FTSE 100 declined 0.3%.

OIL, METALS, CURRENCIES

Crude oil rebounded on cold weather worries, ignoring data showing oil inventories increase. Light sweet crude for January delivery climbed 16 cents to $59.37 a barrel on the Nymex. London Brent advanced 33 cents to $57.31.

European gold hit a fresh 24-and-a-half-year high on heavy fund buying as the precious metal outperformed traditional assets like stocks and bonds. In London the precious metal was fixed at $514.85 per troy ounce, up from $514.20. In Zurich gold traded at $515.85, up from $515.25. In Hong Kong gold rose $2.70 to close at $515.95. Silver traded unchanged at $8.79.

The U.S. dollar slipped against other major counterparts. The euro was quoted at $1.1764, up from $1.1720. The dollar bought 120.37yen, down from 120.93. The British pound traded at $1.7435, up from $1.7344.

EARNINGS NEWS

Costco Wholesale Corp. ((COST)), discount retailer, announced that Q1 earnings advanced 12% to 45 cents a share, from 40 cents in the year-ago period, in line with the analyst expectations of 45 cents a share. Both periods included 1-cent charges due to damage from Florida hurricanes. Sales went up and comparable-store sales increased 9%.

Hovnanian Enterprises Inc ((HOV)) homebuilder, reported Q4 net earnings of $2.53 a share, up 26% from $2.06 a share in the year-earlier period on revenue growth, beating analyst estimate of $2.42 a share.

Net2Phone ((NTOP)), provider of Internet protocol-based telecommunications products and services, reported a Q1 net loss of 9 cents a share, down vs. a net loss of 11 cents a share in the same period last year.

Ciena Corporation ((CIEN)), optical networking technology company, reported narrower fiscal Q4 loss to 44 cents a share, down from 87 cents a share in the same quarter last year on 44% revenue growth. Adjusted loss came to 2 cents a share, a penny more than analysts’ estimates.