Dramatic Drop in Unemployment

Elena
05 Jan, 2006
New York City

Asian-Pacific benchmarks continued to rally on tech and exporter issues, led by Taiwan''s Weighted index, up 1.4% and Singapore Straits Times, up 0.99%. The Nikkei advanced 0.4% to 16,425.37. European averages traded in a tight range with the French CAC 40 and London''s FTSE 100 lifted by strong oil stocks. The Labor Department reported that initial jobless claims dropped by 35,000 to 291,000, the smallest number since Sept. 23, 2000.

U.S. MARKET AVERAGES

U.S. stock futures pointed to a flat start of Thursday session with investors inclined to take some profit after the two-day rally and awaiting jobless and non-manufacturing data. A downgrade of Dow component Boeing Co. is also likely to weigh on market sentiment. U.S. retailers’ reports will also be in the focus with their monthly sales, including the critical holiday shopping season.

A couple of noteworthy retailers released their monthly sales after the close on Wednesday. American Eagle Outfitters ((AEOS)) revealed that its total sales for December rose 15.5% to $433.2 million, while comparable store sales grew by 9.8%.

Costco Wholesale Corp ((COST)) said its December same-store sales rose 7%, helped by demand for gasoline and strong results from its international operations.

Wal-Mart Stores Inc. ((WMT)) would also be in the spotlight after the discounter issued a disappointing December sales outlook at the weekend.

In research news, Banc of America Securities downgraded Boeing Co to neutral from buy on valuation, saying the stock is likely to be range bound after its strong performance since March 2003.

Lehman Brothers raised JDS Uniphase Corp. ((JDSU)) to equal-weight from underweight.

Deutsche Bank raised its rating on Cablevision Systems Corp ((CVC)) to buy from hold.

Standard & Poor''s 500 index futures were down 0.9 points, but held a shade above fair value. Nasdaq 100 index futures were down 1.5 points, and Dow Jones industrial average futures dropped 13 points.

Non-manufacturing report is due out at 10 a.m. EST.

ECONOMIC NEWS

Thursday morning, the Department of Labor released its report on initial jobless claims in the week ended December 31, showing that jobless claims fell more than economists had been expecting.

The Labor Dept. said that jobless claims fell to 291,000 from the previous week's revised figure of 326,000. Economists had been expecting jobless claims to fall to 320,000 from the 322,000 originally reported for the previous week.

The report also showed that the less volatile 4-week moving average fell to 316,750 from the previous week's revised average of 326,000.

The Labor Dept. added that continuing claims during the week ended December 24 rose to 2.718 million from the preceding week's revised level of 2.705 million.

INTERNATIONAL MARKETS NEWS

Asian-Pacific benchmarks rallied for a fourth straight session, boosted by strong tech and export issues after the strong performance of U.S. S&P 500 at the close of 2005. The leading gainers were Taiwan’s Weighted index, soaring 1.4% to 6,709.87 and Singapore Straits Times, up 0.99% to 2,407.80. The Nikkei advanced 0.4% to 16,425.37. Shanghai Composite extended gains to close up 1.4%.

European stocks traded in a tight range at mid-day. The German DAX 30 declined 0.1%. The French CAC 40 inched up 0.03% and London’s FTSE 100 gained 0.1%, lifted by strong oil stocks. The euro fell 0.2% against the dollar to $1.2089.

OIL, METALS, CURRENCIES

Crude oil prices retreated ahead of inventory report and mild weather. Light sweet crude for February delivery fell 8 cents to $63.34 a barrel. Heating oil traded 1 cent down at $1.8096 a gallon. Gasoline shed 1 cent to $1.7710 a gallon. Natural gas dipped 22 cents to $9.9750 per 1,000 cubic feet. London Brent dropped 10 cents to $61.58.

European gold advanced, despite strengthening dollar. In London gold rose to $531.60 per troy ounce, up from $530.90. In Zurich the precious metal advanced to $530.45 from $529.35. In Hong Kong gold fell $2 to close at $532.10. Silver opened at $8.98, down from $9.05.

The U.S. dollar gained ground against major currencies. The euro was quoted at $1.2083, down from $1.2122. The dollar bought 116.32 yen, up from 115.95. The British pound traded at $1.7501, down from $1.7581.

EARNINGS NEWS

Performance Food Group Co, ((PFGC)), food and non-food products distributor, reported that Q1 earnings are expected to be 11 cents to 15 cents a share and fiscal 2006 earnings are seen at $1.20 to $1.30 a share, missing analysts'' estimates standing at 18 cents and $1.33 a share, respectively.

Shoe Carnival, ((SCVL)), footwear retailer, announced that its December same-store sales advanced 10.6%. Total sales for the five weeks ended Dec. 31, increased 12.8% to $72.5 million.

Chico''s FAS Inc, ((CHS)), apparel retailer, reported same-store sales advanced 16.4% in December. Total sales for the five weeks ended Dec. 31 rose 34.3% compared with the same period a year earlier. The company expects earnings of 24 to 25 cents a share for Q4, missing on that basis the analyst estimate for earnings of 26 cents a share.

New York & Co, ((NWY)), specialty retailer, reported that its December same-store sales increased 10.9%. Total sales for the five weeks ended Dec. 31, advanced 16.2%, beating on that basis analysts’ expectations of a same-store sales gain of 5.1%. The company expects earnings of 34 cents to 36 cents a share, up from its earlier range of 29 cents to 36 cents a share. Analysts were projecting 36 cents a share.

Cache Inc, ((CACH)), women's apparel retailer, reported that December same-store sales advanced 4% over the comparable period a year ago, and increased 4% during Q4. Total sales grew 6.5% in December, and advanced 0.9% from last year''s fourth-quarter period. The company added that earnings for the quarter would be at the low of its previously forecasted range of 46 cents to 48 cents a share.

Bebe Stores Inc ((BEBE)), women's apparel and accessories retailer, reported that same-store sales in December increased 1.1% over year-ago levels. Total sales for the period advanced 11.1%. For the fiscal Q2, the company announced that same-store sales gained 2.2% while total sales were up 11.5%.

Zale Corp ((ZLC)), jewelry retailer, announced that same-store sales, advanced 0.9% for the combined months of November and December. Based on the company 's current performance, Zale forecast Q2 earnings at $2.08 to $2.13 a share, which includes a tax benefit of 20 cents. Analyst estimate stands at $2.08 a share.