Xilinx Leads Tech Rally

Elena
05 Jan, 2006
New York City

Semiconductors gained for the third session in a row, boosting the Nasdaq up 0.5%, while the broader market was flat on Boeing downgrade and December retail sales. Target Corp., Costco Wholesale, Nordstrom and Federated Department Stores posted strong sales, but Wal-Mart disappointed. The Labor Department reported a five-year low of initial jobless claims by 35,000 to 291,000. The non-manufacturing index rose to 59.8 in Dec from 58.5 in Nov, above a forecast for a rise to 59.0.

U.S. MARKET AVERAGES

At mid-day trading the Nasdaq climbed 0.5%, boosted by U.S. technology stocks which advanced for a third straight session. The leading gainers were the semiconductor shares, lifted by Xilinx Inc, Cisco Systems, Altera Corp., and Broadcom Corp. The broader market was flat on disappointing December sales from Wal-Mart Stores Inc. and broker downgrades for Boeing Co. and Merck & Co.

A five-year drop in unemployment claims failed to lift market sentiment. However, the Dow and S&P inched up briefly after the Institute for Supply Management reported its non-manufacturing index rose to 59.8 in December from 58.5 in November, above a forecast for a rise to 59.0.

The nation's big retailers released reports, showing volatile but respectable holiday season as consumers saved most of their shopping for the days before and after Christmas. The early winners included Target Corp., Costco Wholesale Corp., Nordstrom Inc., Abercrombie & Fitch Co. and others.

Wal-Mart ((WMT)), the world's largest retailer, fell short of expectations posting a 2.2% gain in same-store sales. The results missed the 2.4% estimate from analysts surveyed by Thomson Financial. Total sales rose 6.3%. The company also said its Q4 profits would come in at the low end of expectations.

The housing sector advanced 1.5%, following the release of data that showed a 2.5% decline in November index for pending sales of existing homes with Beazer Homes ((BZH))being the best performer in the group, climbing by more than 4% and setting a new high.

The semiconductor sector continued its recent advance, helped by Xilinx ((XLNX)), which jumped more than 7% on raised outlook.

Energy stocks were notable movers to the downside, reflecting lower oil prices . The oil service sector declined about 2.5% with Global Industries ((GLBL)) and Tidewater ((TDW)) notable losers, each with a loss of about 4.5%.

Nuvelo ((NUVO)) broke to a new 52-week high, rising 40% on news of a collaboration with Bayer. A number of important tech stocks, including Nokia ((NOK)), Broadcom ((BRCM)) and AMD ((AMD)), reached fresh peaks.

Network Equipment Technologies ((NWK)) dropped to a new 52-week low on a disappointing Q3 guidance prompting a larger-than-10% slide in its stock price. Tuesday Morning ((TUES))added to recent weakness to extend its low.

The Dow Jones industrial average was up 7.27 points, or 0.07%. The Standard & Poor''s 500 Index added 0.36 points, or 0.03%. The technology-laced Nasdaq Composite Index rose 10.57 points, or 0.47%.

MOVERS AND SHAKERS

Boeing ((BA)) was downgraded by the Bank of America to neutral from buy, citing valuation. Analyst Nick Fothergill also cut his price target on the company by $1 to $72 on consideration that further upside to the stock appears limited, after a strong run in the shares since March 2003. A 50% drop in orders in 2006 is expected. A supply chain survey shows increasing risk in raw material price inflation and a risk of component shortages, and as a result the broker cut his 2007 aircraft delivery forecast to 437 planes from 453. The company’s shares fell 2.1%.

Computer Sciences ((CSC)) gained 8.5%, following a report that private equity firm Blackstone Group and Hewlett-Packard Co are considering a buy out of the company.

Aeropostale Inc. ((ARO)) said its comparable-store sales rose 11.4% in December, and the company boosted its fourth-quarter earnings forecast. The stock jumped 9.2%.

Gentiva Health Services ((GTIV)) agreed to buy the provider of home healthcare and hospice Healthfield Group Inc. for $454 million in cash and stock with $55 million of Gentiva common stock and around $399 million in cash. Gentiva anticipates the transaction will be accretive to its fiscal 2006 results. Gentiva’s shares rose 7.9%.

ECONOMIC NEWS

Crude oil inventories showed a decline in the latest week, according to government statistics released Thursday, reversing course after a couple of weeks of gains. Stocks of gasoline and distillate fuel oil advanced during the period.

The Department of Energy''s Energy Information Administration revealed that crude oil inventories dropped by 1 million barrels for the week ended December 30, falling to 321.6 million barrels from the prior week''s level of 322.6 million barrels. This followed an advance of 100,000 barrels in the previous week. Oil inventories were 12.5% higher than their levels of the same time last year.

Gasoline inventories posted a week-over-week increase of 1.4 million barrels, the government said, compared to the previous week''s slide of 1.2 million barrels. Gasoline stocks were 5.9% below their levels of last year. Inventories of distillate fuel oil rose by 2.1 million barrels in the most recent week.

The service sector saw continued growth in December, according to a report from the Institute for Supply Management, with the pace of growth accelerating somewhat faster than economists had been expecting.

The ISM said that its index of business activity in the service sector rose to 59.8 in December from 58.5 in November. Economists had been expecting a more modest increase to 59.0, with a reading above 50 indicating growth in the sector.

The better than expected increase in the pace of growth reflected a notable acceleration in new orders growth, with the new orders index rising to 61.9 in December from 59.5 in November.
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 lost ground for the first time in 2006, pressured by weak mining and utility shares. The German DAX 30 declined 0.1%. The French CAC 40 lost 0.07% and London’s FTSE 100 dropped 0.4%.

OIL, METALS, CURRENCIES

Crude oil prices retreated before climbing back above $63 after a petroleum report showed a less-than-expected drop in crude inventories, but a larger-than-expected rise in supplies of distillates and gasoline. Light sweet crude for February delivery gained 2 cents to $63.34 a barrel. Heating oil traded 1 cent down at $1.8025 a gallon. Gasoline added 2 cents to $1.8025 a gallon. Natural gas dipped 60 cents to $9.60 per 1,000 cubic feet.

European gold declined. In London gold fell to $526.90 per troy ounce, down from $530.90. In Zurich the precious metal slipped to $526.85 from $529.35. In Hong Kong gold fell $2 to close at $532.10. Silver closed at $8.84, down from $9.05.

The U.S. dollar traded mixed against major currencies. The euro was quoted at $1.2083, down from $1.2122. The dollar bought 115.99 yen, up from 115.95. The British pound traded at $1.7555, 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%.

Panera Bread Co ((PNRA)), food for breakfast and lunch producer, reported its December systemwide comparable bakery sales increased 7.2%. The company forecast earnings per share for the quarter of 50 cents to 51 cents a share. Analysts anticipated earnings of 50 cents a share.

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.

Entegris Inc, ((ENTG)), material management and handling products manufacturer, reported a Q1 loss of 12 cents a share, down from a profit of 8 cents a share a year-ago. If not for items related to the company''s merger with Mykrolis Corp., the company gained 5 cents a share in Q1, missing analyst estimate for earnings of 9 cents a share. Sales increased in Q1 to $146.8 million from $89.1 million in the same period a year ago.