Weak Existing Home Sales

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

With less than a day left hopes of market rally are fading very quickly. Oil jumped above $60 as weekly petroleum report suggested declining oil crude inventory. Jobless claims were unchanged for the previous week. Existing home sales for November month fell below 7 million units for the first time since the month of March 2005. For the year, GM shares have declined 50% draging with it Dow Jones Industrial Average yearly gain to mere 0.02%.

U.S. MARKET AVERAGES

With only one trading day left market rally looks increasingly remote.

Benign jobless and weekly energy reports supported early gains in the morning hours of trading. Existing home sales fell for the second month in a row to a seasonally adjusted 6.97 million and dipping for the first time since March 2005 below 7 million. Chicago Purchasing Managers Index for the December month was reported at 61.5.

Mid-morning weakness in tech stocks drove tech heavy Nasdaq stocks lower. Strength in oil price kept broader market averages in check as crude oil closed above $60 for the first time this week. Yield on 10-year bond fell to 4.368% and on 30-year fell to 4.519%.

For the year so far, Dow is up 0.02%, Nasdaq is up 1.96% and S&P is up 3.5%.


MOVERS AND SHAKERS

Warner Music Group Corp ((WMG)) plans to pay a quarterly dividend of 13 cents a share, or $19.3 million in total on Feb. 14. Warner Music previously announced that it will pay regular quarterly dividends totaling up to $80 million a year. The stock rose 1%.

Christopher & Banks Corp. ((CBK)), the Minneapolis women''s-clothing retailer, reported sales for the four weeks ended Dec. 24 rose 9% to $60.2 million from $55.1 million in the year-earlier period. December same-store sales rose 2%. During the Thanksgiving-through-Christmas period, CBK said, gift-card sales increased to 11 million from 9 million, indicating a 22% increase. The company’s shares advanced 1.2%

ECONOMIC NEWS

Crude oil inventories recorded another build in the latest week, according to government statistics released Thursday, though the advance was far more modest than in the previous week. Stocks of gasoline and distillate fuel oil declined during the period.

The Department of Energy''s Energy Information Administration revealed that crude oil inventories ticked up by 100,000 barrels for the week ended December 23, climbing to 322.6 million barrels from the prior week''s level of 322.5 million barrels. This followed an advance of 1.3 million barrels in the previous week. Oil inventories were 12.6% higher than their levels of the same time last year.

Gasoline inventories posted a week-over-week decline of 1.2 million barrels, the government said, compared to the previous week''s slide of 300,000 barrels. Gasoline stocks were 6% below their levels of last year. Inventories of distillate fuel oil fell by 900,000 barrels in the most recent week.

The National Associations of Realtors released its report on existing home sales in the month of November on Thursday, showing that sales fell slightly more than economist had been expecting.

The report showed that existing home sales fell to a seasonally adjusted annual rate of 6.97 million units in November from a 7.09 million unit rate in October. Economists had been expecting sales to fall to a 7.00 million unit rate.

The report also showed that the national median existing-home price came in at $215,000 in November, up 13.2 percent year-over-year. Additionally, total housing inventory levels rose 1.2 percent to 2.90 million existing homes for sale at the end of November, a 5-month supply at the current sales pace.

Thursday morning, the Department of Labor released its report on initial jobless claims in the week ended December 24. The report showed that jobless claims rose slightly less than economists had expected.

The Labor Dept. said that jobless claims rose to 322,000 from the previous week''s revised figure of 319,000. Economists had been expecting claims to rise to 325,000 compared to the 318,000 originally reported for the previous week.

The report also showed that the less volatile four-week moving average edged up to 325,000 from the previous week''s revised average of 324,750. Additionally, continuing claims rose to 2.715 million in the week ended December 17 from the preceding week''s revised level of 2.630 million.

INTERNATIONAL MARKET NEWS

Asian-Pacific benchmarks rallied on Thursday with the Nikkei in the lead, up 0.9%, hitting a multi-year high of 16,344.20 on hectic buying in expectations of strong corporate profit and robust economic growth across the region next year. South Korea’s Kospi rose 0.8%, Shanghai Composite surged 1.1%, and Taipei’s Weighted index advanced 0.8%. Hong Kong was the sole decliner, down 0.4%.

European stocks closed higher, supported by resource stocks and gains from the leading German insurers Allianz and Munich Re which posted detailed earnings outlooks. The German DAX 30 gained 0.2%, the French CAC 40 rose 0.3%, and London’s FTSE 100 climbed 0.3%, hitting a fresh four-year high.

OIL, METALS, CURRENCIES

Crude oil prices rose above $60 a barrel after oil inventory report showed an increase in oil inventories but a decline in gasoline and distillate fuels stockpiles. Light sweet crude for February delivery lost 14 cents to $60.18 a barrel on the Nymex. Gasoline, heating oil and natural as were unchanged at close of the session.

European gold prices neared a two-week high on speculations that the central banks may buy more of the precious metal to diversify their reserve. In London gold rose to $517 per troy ounce, up from $515.20. In Zurich the precious metal advanced to $517.03 from $515.75. In Hong Kong gold gained $8.05 to close at $516.90. Silver traded unchanged at $8.59. Gold in New York closed down $1.50 to $516 per ounce and silver closed down 3 cents $8.845 and copper closed down 3 cents to $2.1645.

The U.S. dollar steadied against its major counterparts ahead of economic data. The euro was quoted at $1.1845, up from $1.1836. The dollar bought 117.90 yen, up from 117.83. The British pound traded at $1.7199, up from $1.7160.

EARNINGS NEWS

Luby''s Inc., ((LUB)), cafeteria-style restaurants operator, posted a Q1 profit of 8 cents a share, up from a loss of 5 cents a share a year earlier, beating analyst estimate of 3 cents a share. Sales advanced 6.9% in Q1, compared with the same time last year, with same-store sales advancing 6.9% in the quarter. The company announced that its sales in Q1 were hurt by Hurricane Rita, which resulted in a loss of about 236 store days of operations.

CORPORATE NEWS

Hilton Hotels ((HLT)) confirmed that it reached a deal to acquire Hilton Group for about $5.71 billion. The hotel operator said the purchase price equates to a multiple of 11.3 times pro forma 2006 adjusted EBITDA. The deal is likely to close in the first quarter of 2006. The company stated that Hilton Group will retain its gambling and betting business and will likely change its name to Ladbrokes plc.

InterDigital Communications Corp. said late Wednesday that a federal judge confirmed an award rendered by a tribunal against mobile phone making giant Nokia Corp. for between $232 million and $252 million.