Fading Trading

Elena
30 Dec, 2005
New York City

The last trading session of 2005 opened in the negative as investors gave up on the fading fourth-quarter rally and locked in gains made throughout the year. With very little news to drive buying, the Dow Jones industrial average is likely to close 2005 with a loss for the first time since 2002. The other two major averages are expected to finish with modest gains.

U.S. MARKET AVERAGES

U.S. stocks started the last trading session in the negative in line with the futures prediction as investors locked in gains, made throughout the year. With little news to spur buying, the Dow Jones industrial average threatened to close the year with a loss for the first time since 2002. The other two major indexes were expected to post modest gains for 2005.

Ahead of a 3-day New Year''s weekend, there are no major economic reports due out on Friday.

Among the companies in focus today, Citigroup Inc. slipped 6 cents on news that the company is leading a consortium offering $3 billion for a stake in Chinese bank Guangdong. Citigroup was also approved to trade the yuan as an interbank foreign exchange market maker.

Google Inc. fell 1% being a defendant in a lawsuit brought by Rates Technology Inc. which claims that Google inappropriately used Voice-over-IP technology in Google Talk. The American-based company is seeking $5 billion in damages.

Intel Corp. slipped a penny on news that it plans to unveil a new branding strategy.

The networking sector moved to the downside in early going, dropping below a recent trading range with a slide of more than 1%. Energy stocks were also weak with the oil service sector leading decliners. Transportation, disk drive and broker/dealer stocks also posted losses.

There were no standouts to the upside in the early going. The retail group appeared to be the best performer, by keeping near the unchanged mark.

In the first hour of trading, the Dow fell 37.86, or 0.35%, to 10,746.96. The Dow would need to close above 10,783.01 for a positive 2005. The Standard & Poor''s 500 index lost 4.50, or 0.36%, to 1,249.92, and the Nasdaq composite index dropped 10.59, or 0.48%, to 2,207.57.

Bonds moved higher, with the yield on the 10-year Treasury note falling to 4.34% from 4.36% late Thursday.

MOVERS AND SHAKERS

NetGuru ((NGRU)), engineering services company, approved a per-share cash distribution of 85 cents following the company's November sale of certain assets. The distribution will be made Jan. 27 to shareholders of record as of Jan. 17.The sock surged 43.8%.

Omni Energy Services Corp. ((OMNI)) agreed to acquire Preheat Inc. for $16 million in cash, 900,000 shares of stock and $4 million of buyer promissory notes. The company’s shares rose 17.2%.

Learning Tree International ((LTRE)), information technology educational services provider, forecast Q4 revenue of $36.5 million, down 2% compared with the year-ago period. It also expects a quarterly loss from operations of $400,000 to $600,000. The company said for fiscal 2005 ended Sept. 30, it expects to post revenue of $151.6 million, down from $152.1 million last year, and a loss from operations of $1 million to $1.2 million. The stock dropped 7.7%.

INTERNATIONAL MARKETS NEWS

Asian-Pacific benchmarks finished Friday session mixed to lower. The Nikkei led the decliners, closing the half-day trade down 1.4% to 16,111.43 as investors locked in gains ahead of the extended New Year’s holiday. For the year the Japanese benchmark climbed 40.24%. Hong Kong’s Hang Seng slid 1.12% with a total gain for 2005 of 4.5%. Taiwan’s Weighted index fell 0.7%, while India’s BSE index rose 0.7%.

European stocks lost ground at mid-day, reflecting profit-taking on the last working day of the year and a weak close of U.S. markets overnight. The German DAX 30 lost 1.1%, the French CAC 40 slipped 1.2%, and London’s FTSE 100 declined 0.5%.

OIL, METALS, CURRENCIES

Crude oil slipped below $60 a barrel on profit-taking after a two-day rally. Light sweet crude for February delivery lost 43 cents to $59.89 a barrel. London Brent fell 47 cents to $58.08.

European gold traded mixed. In London gold rose to $513 per troy ounce, up from $512.50. In Zurich the precious metal declined to $512.85 from $517.03. In Hong Kong gold fell $2.50 to close at $514.40. Silver traded unchanged at $8.59.

The U.S. dollar gained against the euro, fell against other major currencies. The euro was quoted at $1.1829, down from $1.1840. The dollar bought 117.43 yen, down from 117.72. The British pound traded at $1.7235, up from $1.7225.

EARNINGS NEWS

Learning Tree International Inc. ((LTRE)), IT educational services provider, forecast Q4 revenue of $36.5 million, down 2% from the year-ago period. The company is to report a quarterly loss from operations of $400,000 to $600,000. Learning Tree announced its fiscal year results were reduced by one-time lease expenses of $800,000 related to the subleasing of space in its U.K. Education Center, and by $1.7 million of external costs relted to Sarbanes-Oxley compliance.

The Scotts Miracle-Gro Co ((SMG)), maker of lawn and garden products, forecast a widening loss for Q1 on a continued shift in the timing of retailer purchases. The company anticipates its loss for the period to be 15% to 20% greater than its loss of 75 cents a share in the year-ago period, missing analyst estimate of a loss of 75 cents a share. The increased loss in Q1 is the result of a continued trend by the company’s retail partners to take delivery of our products closer to the time they are purchased by consumers.