Holiday Sales Drive Stock Market

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

Rising consumer sentiment and steady retail sales growth for holiday sales brough traders back to the market. Oil market was on the edge as Iran called for deeper cuts in OPEC production targets. Flat bond yield curve dominated trader-talk in the bond and stock marekts trading. General Motors stock dropped 2% totaling a loss of 50% for the year. Whole Foods stock is added to S&P 500 index.

U.S. MARKET AVERAGES

Investors refocused on stock market after worrying for two days on the possible slow down of economy as represented by inverted yield.

Investors’ attention was led by a rise in consumer confidence index as reported by Conference Board and sustained rise in weekly retail sales as tracked by International Council of Shopping Centers.

General Motors stock declined another 2% on top of 50% decline for the year on renewed concerns that the current auto sales promotions are not attracting enough buyers to the dealers.

Oil price jumped, though lost most of its gains at close, as Iran called for oil production cuts.

Bond market showed flattening yield curve. The yield on 2-year bond was 4.373% and for 10-year bond was at 4.736% at close.

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%.

Whole 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 also traded split adjusted two for one beginning today. 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 closed mixed, despite improved optimism in the German economy on upbeat consumer confidence data. The German DAX 30 finished little changed at 0.04%, the French CAC 40 lost 0.3%, while London’s FTSE 100 rose 0.5%, hitting an intraday high.

OIL, METALS, CURRENCIES

Crude oil prices advanced after Iran’s oil minister said OPEC should cut production, while natural gas futures declined on expectations of mild U.S. weather. Light sweet crude for February delivery rose $1.66 to $60.15 a barrel on the Nymex after Iran called for production cut but settled at $59.90 up at 8 cents. Natural gas slipped 13 cents to $11.77 per 1,000 cubic feet. London Brent gained 41 cents to $56.70.

European gold prices rose as weakening dollar increased its appeal. In London gold closed at $515.20 per troy ounce, up from $505.05 on Friday. In Zurich the precious metal advanced to $515.75 from $506.60. In Hong Kong gold gained $4.75 to close at $508.86. Silver closed unchanged at $8.59. In New York gold advanced $1.50 to $517.80 per ounce.

The U.S. dollar dropped against its major counterparts in European trading. The euro was quoted at $1.1912, sharply up from $1.1832. The dollar bought 117.21 yen, down from 117.39. The British pound traded at $1.7276, 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.