Techs Lead Market Advance

123jump.com Staff
04 Jan, 2006
New York City

Market averages, even though closed and traded higher during the day, lacked direction. Market looked for direction from the report on factory orders and auto retail sales for the December month. Factory orders rose 2.5% but the domestic automakers lost market share during the month and for the year 2005. Crude oil rose but natural gas tested four-month low.

U.S. MARKET AVERAGES

Rally in tech stocks continued for the second day in a row. Tech heavy Nasdaq advanced 19.72 points to close at 2,263.46 and broader average S&P 500 advanced 4.66 to 1273.46. Dow added 32 points to 10,880.15.

Investors have come to believe that the economy in the first half of 2006 will be driven more by capital spending budget of large companies than the consumer spending. Consumer spending has been robust for the last three years but rising interest rates and falling values of home prices may slow the consumer down.

Automotive retail sales for the December month suggested another month and year of market losses for the U.S. auto companies. GM and Ford sales declined 10% and 4.9% from a year ago and that of DaimlerChrysler rose 4% in the month of December.

Factory orders rose 2.5% in November its best showing in three months. The orders rose on 13.5% rise in orders for aircrafts. Without the transportation order, factory orders were essentially unchanged from a year ago.

Nasdaq and S&P traded for the most part in the positive territory but Dow vacillated near the zero line for the most of the session. On NYSE trading volume exceeded 2.5 billion shares and 1.97 billion shares changed hands on Nasdaq system.

MOVERS AND SHAKERS

Bear Stearns upgraded Google ((GOOG)) to outperform from peer perform, citing confidence in the Internet search company''s long-term fundamentals and the burgeoning ""Google ecosystem,"" which Analyst Robert Peck uses to describe Google''s growing interactive business community. Peck also raised his 2006 stock price target to $550 from $360. The stock rose 5% but settled at 2% near close.

Greenbrier Cos ((GBX)), manufacturer of railroad freight cars, reported Q1 net earnings of 51 cents a share, up from 35 cents a year ago, despite quarterly revenue decline, beating analyst estimate of 37 cents a share. The company''s quarterly margin advanced to $32.9 million from $24.8 million. Greenbrier also set a full-year profit target range of $2.30 to $2.45 a share. The stock gained 8%.

Intermagnetics General Corp. ((IMGC)), provider of magnetic resonance imaging products, reported Q2 profit of $6.84 million, or 24 cents a share, compared with $4.13 million, or 15 cents a share a year ago. The company said the quarter''s normalized net income was 30 cents, compared with 24 cents last year. Intermagnetics reported quarterly revenue of $78.1 million, compared with $66.2 million last year. The stock jumped 14.5%.

Lowe''s ((LOW)) fell 1.4% after it was downgraded at J.P. Morgan to neutral from overweight, citing a slowdown in home sales.

ECONOMIC NEWS

Wednesday morning, the Department of Commerce released its report on factory orders in the month of November, showing that orders rose slightly more than economists had been expecting.

The report showed that new orders for manufactured goods rose 2.5 percent in November following a downwardly revised increase of 1.7 percent in October.

Economists had expected orders to increase by 2.4 percent compared to the 2.2 percent increase originally reported for October.

The increase in factory orders reflected a 4.4 percent increase in orders for durable goods as well as a 0.4 percent increase in orders for non-durable goods.

The report also showed that shipments of manufactured goods rose 0.2 percent in November after rising 0.7 percent in October.

Inventories of manufactured goods also rose, increasing by 0.2 percent in November following a 0.6 percent increase in October.

INTERNATIONAL MARKETS NEWS

Most Asian-Pacific benchmarks closed sharply higher, boosted by export-related and tech stocks and amid speculations the Fed Reserve will stop raising interest rates. In half-day session, the Nikkei hit a new five-year peak of 1.6% to 16,361.54. Jakarta Composite surged to 2.3%, Hong Kong’s Hang Seng rose 1.7%, and China’s Shanghai Composite climbed 1.7%.

European stocks closed with solid gains after the Fed Reserve signaled that the U.S. rate-hike cycle is close to an end and oil prices slipped, reflecting the settlement of Russia-Ukraine conflict. The German DAX 30 gained 1.2%, the French CAC 40 climbed 1.3%, and London’s FTSE 100 rose 0.6%.

OIL, METALS, CURRENCIES

Crude oil prices fell from a two-month high after Russia and Ukraine resolved the gas pricing dispute between them. Light sweet crude for February delivery fell and then rose 16 cents to $63.30 a barrel. Heating oil closed at $1.81 a gallon. Gasoline closed at $1.71 a gallon. London Brent dropped 35 cents to $61. Natural gas closed down 44 cents to $10.18 per MBTU.

European gold advanced to a three-week high as the dollar weakened against the euro, increasing the appeal of the precious metal as an alternative investment. In London gold rose to $533.30 per troy ounce, up from $528.40. In Zurich the precious metal advanced to $528.10 from $516.55. In Hong Kong gold rose $14.30 to close at $534.10. Silver opened at $9.14, up from $9.03. In New York gold closed up $3.10 to $535.60 per troy ounce, silver closed up 1 cent to $9.17 and copper closed up 4.9 cents to $2.0975 after rallying to $2.16 during the day.

The U.S. dollar fell to a two-month low against the euro on disappointing economic news and speculations that interest rate hikes will cease. The euro was quoted at $1.2056, up from $1.2023. The dollar bought 116.28 yen, up from 116.03. The British pound traded at $1.7535, up from $1.7452.

EARNINGS NEWS

Greenbrier Cos, ((GBX)), manufacturer of railroad freight cars, reported Q1 net earnings of 51 cents a share, up from 35 cents in the same period last year despite quarterly revenue decline, beating analyst estimate of 37 cents a share. The company''s quarterly margin advanced to $32.9 million from $24.8 million. Greenbrier also set a full-year profit target range of $2.30 to $2.45 a share.

Monsanto Co, (( MON)), seed and agricultural chemicals company, reported Q1 net income of 22 cents a share, swinging from a loss of 15 cents a share in the year-ago period, topping analyst estimate of 19 cents a share. Sales Q1 increased 31%.

Computer Services, Inc., ((CSVI)), bank processing company, reported record revenues and net income for Q3. Q3 net income per share increased 17.6% to $0.40 compared with the same time last year. Q3 revenues increased 10.7% in comparison to the same period last year’s result. The company attributed the revenue growth to the acquisition of McCoy Myers & Associates that was effective November 1, 2005. In addition, ATTUS Technologies'' revenue growth was very strong, and the company recorded double digit growth from eBusiness and card services.