Precious Metals Shine Again

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

Market after tradig sideways for the most of the day settled lower at clsoe. Natural gas rose on decline in inventory. Gold rose in demand rise and inflation concern. Silver touched $9 for the first time two decades. McDonald''''s stock fell on less-than-expected rise in same-store sales. Chip stocks fell despite the positive news from TI, Xilinx and Taiwan Semi.Toll Bros. and Hovnanian report better than expected earnings.

U.S. MARKET AVERAGES

It was a day of natural gas, crude oil, autos and chip stocks.

Cautious market in the morning was disappointed with the rise in unemployment claims. Market was further shaken by the rise in natural gas and crude prices as inventories of natural gas were reported to have declined. Less-than-expected rise in same-store sales at McDonald’s did not help broader averages wither. Auto industry was abuzz with Ford Motors restructuring plan and possibility that General Motors will appoint Kirk Kirkorian to its board. Stocks of Ford Motor and General Motors declined in the session.

Texas Instruments raised its earnings guidance late Wednesday from 36 cents to 40 cents to 38 cents to 40 cents. Overnight Taiwan Semiconductor reported record sales. Intel is expected to report mid-quarter report today and Xilinx lifted its sales forecast for the current quarter. However, stocks of Texas Instruments fell 2.8%, Intel fell 1.7%, Taiwan Semi fell 0.9% and Xilinx fell 1.6%.

MOVERS AND SHAKERS

British biotech Protherics PLC surged more than 50% in London after AstraZeneca PLC agreed to pay up to $338 million for the rights to a drug to treat a potentially lethal blood infection.

Merrill Lynch cut British Airways PLC ((BAB)) to neutral from buy, citing valuation. The broker said shares have appreciated 49% in the last 12 months, outperforming the FTSE 100 by 26% and the European airline sector by 32%. Merrill also said the airline is in good shape, with favorable traffic growth and mix trends. The stock rose 1.8%.

Credit Suisse First Boston upgraded railroad operator RailAmerica, Inc. ((BRA)) to outperform from neutral to buy, citing valuation. The broker said there''s more potential upside than downside risk. Company’s shares climbed 7.3%.

Costco Wholesale Corp., discount retailer, reported that Q3 earnings and sales rose 12% to $215.8 million, or 45 cents a share, from $193.2 million, or 40 cents last year, meeting estimates. Sales climbed to $12.66 billion from $11.34 billion with comparable-store sales 9% higher. The stock dropped 2%.

Luxury home builder Toll Brothers Inc. reported a 72% Q4 increase in net profit on a 40% revenue rise, but lowered its fiscal 2006 earnings outlook, and said fiscal 2007 earnings may beat or miss a previous estimate of 20 percent growth. Shares of the company gained 2%.

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 erased earlier losses to close in the positive territory as strong retail and energy stocks offset weakness in the insurance sector. The German DAX 30 advanced 0.3%, the French CAC 40 gained 0.2%, while London’s FTSE 100 finished flat.

OIL, METALS, CURRENCIES

Crude oil rallied as cold weather raised worries about increased heating fuels demand. Light sweet crude for January delivery climbed $1.45 to $60.66 a barrel on the Nymex. Heating oil rose 4.6 cents to $1.7832 a gallon, while gasoline climbed 5.9 cents to $1.6266. Natural gas surged $1.294 cents to $14.99 per 1,000 cubic feet. London Brent advanced 55 cents to $57.53.

European gold rose, reaching 24-year highs. In London the precious metal closed at $517.05 per troy ounce, up from $514.20. In Zurich gold traded at $516.75, up from $515.25. In Hong Kong gold rose $2.70 to close at $515.95. Silver traded at $8.82, up from $8.79. Gold and silver in New York reached a new high. Gold closed up $4.90 to $522.70 and silver reached $9.00 but closed at $8.99 up 11.3 cents. Platinum closed above $1,000 for the first time at $1007 up $8.80.

The U.S. dollar fell against other major counterparts. The euro was quoted at $1.1823, up from $1.1720. The dollar bought 120.48 yen, down from 120.93. The British pound traded at $1.7501, 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%.

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.

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.