Consumer Confidence Improves

Elena
28 Dec, 2005
New York City

U.S. stocks opened higher ahead of data and as the Treasury yield curve flattened. The Conference Board said that Consumer Confidence Index rose to 103.6 in December from a downwardly revised 98.3 in November, below expectations of 105.0. In earnings news, CBRL Group posted higher same-store restaurant sales for December and projected Q2 earnings between 56 and 61 cents a share. Cal-Maine Foods reported a narrower Q2 loss of 3 cents a share on sales growth.

U.S. MARKET AVERAGES

U.S. stock markets opened higher Wednesday ahead of data and as the Treasury yield curve flattened, following an inversion in the previous session.

The Conference Board released its repot on consumer confidence for December, showing notable improvement of 103.6 from 98.3 in November, but the reading came in below economist estimates of an increase of 105.0.

The gold sector ticked higher in early trading, rising by 1.8%. Biotech stocks advanced, helped by Affymetrix ((AFFX)), which will move into the S&P MidCap 400 index Friday. Energy stocks rebounded from Tuesday's decline with the oil service, oil and natural gas sectors are each higher by less than 1%.

Housing stocks posted mild weakness in the early going. The semiconductor sector showed weakness,too.

The Dow Jones industrial average is up 18.65 points, the S&P 500 is ahead 1.85 points and the Nasdaq 100 is down 4.22 points.

Bonds fell, with the yield on the 10-year Treasury note rising to 3.6% from 4.34% late Tuesday. Traders were watching bond yields closely, after the spread between yields of short-term and long-term bonds inverted Tuesday for the first time in five years.

MOVERS AND SHAKERS

Linens N Things Inc. ((LIN)) said it expects to meet the required conditions for it to be acquired by a company controlled by Apollo Management LP in a deal valued at $1.3 billion. Its shareholders are expected to receive $28 per share in cash. Company’s shares soared 11%.

Foods Market Inc. ((WFMI)) will be included in Standard & Poor's 500 index. The chain, which is currently part of the S&P MidCap 400 index, will replace credit-card issuer MBNA Corp., which is being acquired by Bank of America Corp., in the S&P 500. The stock rose 5%.

Weatherford International ((WFT)), maker of mechanical products related to oil and gas drilling and production, announced that its board has authorized up to $1 billion for the repurchase of common stock. Company’s shares advanced 3%.

Albertson''s ((ABS)) was upgraded at J.P. Morgan to neutral from underweight. The stock rose 1.4%.

Celgene Corp. said the Food and Drug Administration approved its drug Revlimid, announced a stock split and said its chief executive will retire in May. The company said that due to a later-than-expected FDA approval for Revlimid, it now sees 2005 earnings of 36 cents to 38 cents a share. Celgene also declared a 2-for-1 stock split with a record date of Feb. 17. Company’s shares dropped 1.9%.

Chesapeake Energy Corp. ((CHK)) extended its offer to exchange its 6.5% senior notes due 2017 for any and all of its outstanding 6.5% senior notes due 2017 that were issued on Aug. 16 in a private offering. The offer had been scheduled to expire Dec. 23. The stock declined 4.6%.

Pinnacle Entertainment ((PNK)) plans to apply for a gaming license in Pennsylvania. The company also entered into an option to buy land in Philadelphia for a proposed casino and entertainment complex. Pinnacle expects phase one of the project would cost between $250 million and $400 million. The stock lost 2.2%.

ECONOMIC NEWS

Wednesday morning, the Conference Board released its repot on consumer confidence in the month of December, showing notable improvement from November. The reading still came in below economist estimates.

The Conference Boars said that its Consumer Confidence Index rose to 103.6 in December from a downwardly revised 98.3 in November. Economists had expected the index to rise to 105.0 in December from the 98.9 originally reported for November.

The report showed that the Present Situation Index rose to 121.5 in December from 113.2 in November while the Expectations Index rose to 91.6 in December from 88.4 in November.

INTERNATIONAL MARKET NEWS

Asian-Pacific benchmarks finished mixed Wednesday with the Nikkei sharply rising to hit a five-year closing high of 1.4% at 16,194.61 on expectations that exporter issues will profit on the continuously strengthening U.S. dollar. Across the region, Hong Kong’s Hang Seng fell 0.5%, South Korea’s Kospi declined 0.4%, while Australia’s All Ordinaries advanced 0.6%.

European stocks traded mixed at mid-day, reflecting a lower close on Wall Street overnight and losses in oil majors. Upbeat consumer climate data, raising optimism in the German economy, provided support. The German DAX 30 fell 0.04%, the French CAC 40 lost 0.2%, while London’s FTSE 100 edged up 0.04%. The euro gained 0.7% to $1.1925.

OIL, METALS, CURRENCIES

Crude oil prices extended losses on expectations of mild U.S. weather. Light sweet crude for February delivery slipped 35 cents to $57.81 a barrel on the Nymex. London Brent lost 28 cents to $56.01.

European gold prices rose to a two-week high as weakening dollar increased its appeal. Gold for immediate delivery gained $3, or 0.6% to $510.90 per troy ounce.

The U.S. dollar dropped against its major counterparts in European trading. The euro was quoted at $1.1911, sharply up from $1.1832. The dollar bought 117.08 yen, down from 117.36. The British pound traded at $1.7382, up from $1.7270.

EARNINGS NEWS

Cal-Maine Foods Inc ((CALM)), egg producer, reported a Q2 loss of 3 cents a share, up from a loss of 23 cents a share a year-ago. Sales increased in Q2, compared with the same time last year. The company announced that it expects feed costs to be favorable in the months ahead. Cold, snowy weather in much of the country added to strong seasonal holiday demand.

CBRL Group Inc., ((CBRL)), restaurants and retail concepts developer, announced that same-store restaurant sales for its main Cracker Barrel Old Country Store units increased 0.9% in December. For its Logan''s Roadhouse units, same-store restaurant sales rose 4.4%. The company forecasts revenue growth of 2% to 4% for the Q2, and earnings of 56 to 61 cents a share, including stock option expense of 3 to 4 cents a share, compared with the analyst view of 59 cents a share.