$2.5 B Order for Boeing

Elena
27 Dec, 2005
New York City

After the long holiday weekend U.S. stock markets opened higher, boosted by a decline in oil prices, gains in Caterpillar, Boeing and Honeywell, and signs that retailers had respectable holiday sales with U.S. consumer spending up 8.7% during the holiday shopping period. As many traders are still away for the holiday and no major news is scheduled for the day, a day of light trading is expected with traders focused on treasury notes.

U.S. MARKET AVERAGES

U.S. stock averages opened in the positive in accordance with pre-market trading with the Nasdaq leading the advance with a gain of more than 0.4%. Stock markets were lifted by a decline in oil prices and reports that Dow component Boeing Co. received an aircraft order of more than $2.5 billion from Russian carrier Aeroflot.

Stocks were also supported by news that retailers had respectable holiday sales. Wal-Mart said it sees comparable store sales for December higher by 2% to 4%, in line with earlier forecasts. Amazon.com Inc. had its best holiday season ever, with a record number of items shipped. During the holiday shopping period U.S. consumer spending increased 8.7% compared to a year ago.

Trading today is likely to be thin as many traders are still away for the holiday, and no major corporate news is expected. Traders will watch fixed income markets as the yield on benchmark 10-year U.S. Treasuries fell below that of two-year notes on Tuesday, inverting the yield curve for the first time since December 2000.

Shares of medical device maker Guidant Corp. ((GDT)) will be in the spotlight after the company warned that its Q4 and 2006 profit will fall short of estimates after a product recall in June.

Airline stocks pushed higher in the early going on Tuesday, extending last-weeek gains. The Dow Jones Transportation Average rose modestly higher, with the index extending its all-time high. Biotech, chemical and gaming stocks were among the other gainers in early trading.

As oil prices slipped 1%, energy stocks were notable decliners with a nearly 2% decline in the oil service space.

In the first hour of trading, the Dow Jones industrial average rose 31.38, or 0.29%. The Standard & Poor's 500 index rose 2.41, or 0.19%, and the Nasdaq composite index rose 9.02, or 0.4%.

Bonds fell slightly, with the yield on the 10-year Treasury note rising to 4.39% from 4.38% late Friday.

MOVERS AND SHAKERS

Foamex International Inc. ((FMXIQ)), a cushioning producer, filed a proposed joint reorganization plan and accompanying disclosure statement with the bankruptcy court. Subject to the plan''s approval, Foamex expects to emerge from Chapter 11 in the spring of 2006. Under the proposed plan, Foamex''s financial restructuring will be primarily achieved through a debt-for-equity conversion, reducing about $500 million of total indebtedness from pre-petition amounts. A hearing on the adequacy of the disclosure statement has been scheduled for Jan. 26. Company’s shares dropped 12.5%.

Applied Biosystems Group ((ABI)) agreed to buy the research products division of Ambion Inc., a supplier of RNA-based reagents in the life science research and drug development field, for about $273 million in cash. On a GAAP basis, the acquisition is expected to be dilutive in fiscal 2006 and 2007 and possibly breakeven or accretive in fiscal 2008. The deal is expected to close in the first quarter. The stock fell 1.2%.

Regeneron Pharmaceuticals ((REGN)) was upgraded to overweight from equal-weight at Lehman Bros. Company’s shares soared 7%.

Charter Financial Corp. ((CHFN)) declared a special dividend of 35 cents a share, payable Feb. 1 to holders of record Jan. 13. First Charter MHC, a mutual holding company that controls 80% of Charter Financial, filed a regulatory notice saying it intends to waive dividends paid on the shares it owns. Charter Financial shares rose 2.1%.
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INTERNATIONAL MARKET NEWS

Asian-Pacific benchmarks finished mixed with bourses in Hong Kong and Australia closed. The Nikkei retreated from record highs, declining 0.9% on news that consumer prices rose for the first time in two years, sparking speculation that the Bank of Japan may reverse its ultra-easy monetary policy. South Korea’s Kospi gained 0.4%, Taiwan’s Weighted index added 0.05%, and Shanghai’s Composite inched up 0.07%.

European stocks traded slightly higher at mid-day as investors renewed dealing after the long holiday weekend, and Belgium brewing company gained after detailing CEO succession plans. The German DAX 30 added 0.1%, followed by the French CAC 40, also up 0.1%. London’s FTSE 100 was closed for an extra day.

OIL, METALS, CURRENCIES

Crude oil prices declined on mild U.S. weather and sufficient supplies. Light sweet crude for February delivery slipped 83 cents to $57.60 a barrel on the Nymex. Natural gas fell as much as $1.027 to $11.256 per 1,000 cubic feet.

Gold prices declined in European trading. In Zurich gold opened at $502.95 per troy ounce, down from $505.10 in late Friday trading.

The U.S. dollar traded mixed against its major counterparts in European trading. The euro was quoted at $1.1864, slightly up from $1.1863. The dollar bought 116.97 yen, up from 116.40. The British pound traded at $1.7364, up from $1.7319.

EARNINGS NEWS

Guidant Corp ((GDT)), medical device company, expects to report Q4 earnings of 17 cents to 23 cents a share on revenue of $790 million to $820 million. The company also expects 2006 earnings of $1.48 to $1.58 a share or $1.65 to $1.75 a share on an adjusted basis, on revenue of $3.8 billion to $4 billion. Guidant announced that domestic implantable defibrillator implant rate, an indicator of the company''s progress in regaining market share, averaged 80% of the implant rate experienced in March through May 2005. The implant rate declined to 70% in October and has increased somewhat since then.

Tommy Hilfiger Corp, ((TOM)), apparel retailer, posted Q2 net earnings of 59 cents a share, down 8.8% from 65 cents a share in the year-earlier period on 6.1% revenue decline. With the filing of its Form 10-Q for Q2, the company announced that it is now current with its Securities and Exchange Commission reporting requirements.