Stocks With Earnings Lead

Elena
22 Dec, 2005
New York City

Thursday morning session was one of low trading volume with stocks rising at opening and then easily losing steam. U.S. market averages struggled but failed to build upward momentum as investors digested upbeat economic data which eased inflation worries against mixed corporate news from the tech sector. Micron Technology threatened the tech sector, releasing a disappointing report, while a better-than-expected profit rise of Research in Motion, provided support.

U.S. MARKET AVERAGES

U.S. socks advanced at opening but easily lost steam, finding it difficult to build on momentum and stayed at intraday highs. The initial rise of averages reflected positive economic data including higher personal income for November and a drop in unemployment claims and came despite mixed earnings in the technology sector and insignificant growth in consumer spending.

Micron Technology Inc. released disappointing earnings, threatening to pressure technology stocks.

In economic news, the U.S. Commerce Department reported that personal income in November rose at a seasonally-adjusted rate of 0.3%, down from October''s revised growth rate of 0.5%. Personal spending also climbed 0.3%, following a 0.2% increase in the previous month. The Commerce Department also stated that the price index for personal consumption expenditures, excluding food and energy, ticked up by 0.1% in November.

In a separate report, the U.S. Labor Department revealed that initial jobless claims came declined by 13,000 to 318,000 for the week ended December 17 versus expectations of a more modest dip to 325,000.
The gold sector extended gains to rise nearly 3%. The HMO group advanced 1.3%, challenging its multi-year high.

The airline sector rebounded from early morning losses to rise by nearly 1% as natural gas inventory data dragged down oil prices, sparking interest in fuel-sensitive airline stocks.

Red Hat ((RHAT)) set a new 52-week high on strong third-quarter results. AMD ((AMD)) expanded recent gains to set a fresh peak. Humana ((HUM)) rose by more than 10% on its Medicare enrollment projection and set a fresh high.

General Motors ((GM)) extended its losing streak for sixth straight day, being the most the most conspicuous decliner and setting a new 52-week low. Tuesday Morning ((TUES)) broke to a fresh low due to a lowered earnings guidance for the fourth quarter.

In late morning trading, the Dow Jones industrial average rose 21.30, or 0.2%. The Standard & Poor''s 500 index added 1.76, or 0.14%, and the Nasdaq composite index gained 3.48, or 0.16%.

Bonds moved higher after two previous down sessions, with the yield on the 10-year Treasury note falling to 4.44% from 4.49%.

General Electric Co.''s real estate division announcing the purchase of Arden Realty Inc. for about $3.2 billion in cash, or $45.25 per share. Arden shares slid $1.81, or 3.8 percent, to $45.18, while GE added 20 cents to $35.27.

ECONOMIC NEWS

The Department of Labor released its report on initial jobless claims in the week ended December 17 on Thursday, showing a bigger than expected decline.

The report showed that jobless claims fell to 318,000 from the previous week''s revised figure of 331,000. Economists had been expecting jobless claims to fall to 325,000 from the 329,000 originally reported for the previous week.

The Labor Dept. also said that the less volatile 4-week moving average fell to 324,500 from the previous week''s revised average of 329,250.

Additionally, the report showed that continuing claims rose to 2.638 million in the week ended December 10 from the preceding week''s revised level of 2.597 million.

Thursday morning, the Department of Commerce released its report on personal income and spending in the month of November, showing that income rose in line with expectations while spending growth came in slightly below estimates.

The report showed that personal income increased by 0.3 in November after rising 0.5 percent in October. The increase in personal income came in line with economist estimates.

The Commerce Dept. said that personal spending also rose 0.3 percent in November following a 0.2 percent increase in October. The growth came in slightly below economist estimates of an increase of 0.4 percent.

The report also showed that the price index for personal consumption expenditures fell 0.4 percent in November following an increase of 0.1 percent increase in October. Excluding food and energy prices, the index rose 0.1 percent for the second straight month.

INTERNATIONAL MARKET NEWS

European stocks closed mixed after a low-trading session with support provided by merger-and-acquisition speculation, including Dutch logistics group KFM and the U.K. Hilton Group. The German DAX 30 edged up 0.02%, the French CAC 40 lost 0.01%, and London’s FTSE 100 gained 0.2%.

OIL, METALS, CURRENCIES

Crude oil prices advanced on petroleum report, which showed a decline in distillate fuels. Light sweet crude for January delivery gained 35 cents to $58.91 a barrel on the Nymex. Heating oil traded 1 cent up at $1.5480. Gasoline traded at $1.7640. Natural gas fell 47 cents to $13.800 per 1,000 cubic feet. London Brent gained 64 cents to $57.36.

Gold prices advanced in European trading. In London gold closed at $501.40, up from $493.60 per troy ounce. In Zurich the precious metal traded at $501.10, up from $492.40. In Hong Kong gold closed unchanged at $493.95. Silver closed at $8.43, up from $8.29.

The U.S. dollar traded mixed against its major counterparts in European trading. The euro was quoted at $1.1874, up from $1.1830. The dollar bought 116.57 yen, down from 117.21. The British pound traded at $1.7404, down from $1.7422.

EARNINGS NEWS

Micron Technology Inc, ((MU)), semiconductor company, reported its Q1 profit dropped to 9 cents a share, down from 23 cents a share a year ago despite revenue growth, missing analysts’ estimate of 11 cents a share.

Bed, Bath & Beyond Inc, ((BBBY)), home furnishings retailer, reported that Q3 profit advanced to 45 cents a share, up from 40 cents a share in the year-ago period. Earnings matched analysts'' estimate. Same-store sales rose 3.1%.

Research in Motion, ((RIMM)), maker of the BlackBerry handheld email devices, reported Q3 net earnings of 61 cents a share, up from 46 cents a share in the same time last year on revenue growth. On an adjusted basis, earnings were 71 cents a share. Gross margin was 55.8% vs. 52.3% in the comparable period.

Red Hat Inc., ((RHAT)), business software company, reported that its fiscal Q3 profit dropped to 31 cents a share, down 18% from 37 cents a share a year ago despite a slight revenue growth, beating analyst estimate of 29 cents a share. The company issued a financial outlook for the current quarter and the year that fell shy of analysts'' estimates.

Paychex Inc, ((PAYX)), payroll and human resources services provider, reported fiscal Q2 net earnings of 30 cents a share, up from 23 cents a share in the same time last year on revenue growth, beating analysts’ expectations of 29 cents a share. Paychex announced its outlook for fiscal 2006 is the same as previously announced, except for the inclusion of the effect of the Federal Funds rate increases on Nov. 1 and Dec. 13.

3Com Corp, ((COMS)), converged networking solutions provider, reported a net loss of 3 cents a share, narrower compared to a loss of 13 cents a share for the same period last year despite revenue growth, beating analyst estimate of 8 cents a share. The company said restructuring and amortization took out 2 cents a share while a tax settlement benefit amounted to 6 cents a share.

ConAgra Foods Inc., ((CAG)), packaged foods company, reported Q2 earnings of 31 cents a share, down from a profit of 47 cents a share a year-ago, missing analysts’ expectations of 38 cents a share Sales slid 5% in Q2. If not for an expense of 7 cents a share related to asset impairment charges and the accelerated recognition of certain benefits, the company earned 38 cents a share.