Oil and Ford Rise

Elena
23 Jan, 2006
New York City

Stock averages started in the positive, supported by easing oil prices and better-than-anticipated earnings report from Ford which counteracted the quarterly decline of Bank of America. Ford Motor rose 7% on Q4 profit rise of 8 cents a share vs. 6 cents a year ago, beating estimates by a penny. Bank of America posted Q4 2% profit decline on loan losses and weak trading results. Bear Stearns raised its rating on Internet media company Yahoo to outperform from peer perform.

U.S. MARKET AVERAGES

U.S. stocks opened in the positive, recovering from Friday’s heavy losses with the help of bargain-hunting. A strong earnings report released by Ford helped encourage buyers back into the market after the Dow Jones industrial dropped 213 points last Friday.

The financial sector disappointed investors after Bank of America Corp posted quarterly results which missed estimates.

Ford Motor ((F)) posted Q4 profit increase on strength in its finance arm and the sale of its rental car unit Hertz Corp. Quarterly results exceeded analyst estimates.

Bank of America ((BAC)), the No. 2 U.S. bank, posted Q4 2% decline in net profit, reflecting loan losses and weaker trading results.

Credit card and travel services company American Express Co. ((AXP)), a Dow component, is scheduled to report results after market close.

In deal news, a group including grocery store operator Supervalu Inc ((SVU)) and drug store chain CVS Corp. ((CVS)) agreed to buy rival retailer Albertsons Inc. ((ABS)) for $17.4 billion in cash and stock.

Polo Ralph Lauren Corp. ((RL)) agreed to buy back its Polo jeans business from Jones Apparel Group Inc. ((JNY)).

The semiconductor sector moved higher in the early going to erase some of Friaday's losses. Gold stocks were also strong, moving to the upside. The airline and broker/dealer sectors showed strength as well.

Energy stocks moved to the downside early Monday on profit taking. The biotech sector posted a modest decline as well.

In the first hour of trading, the Dow Jones industrial average rose 12.65, or 0.12%. The Standard & Poor's 500 index added 1.34, or 0.11%, and the Nasdaq composite index gained 5.88, or 0.26%.

Bonds sold off as stocks rose, with the yield on the 10-year Treasury note rising to 4.40% from 4.35% late Friday.

MOVERS AND SHAKERS

Albertsons Inc. ((ABS)) agreed to be acquired by a group including grocery store operator Supervalu Inc ((SVU)) and drug store chain CVS Corp. ((CVS)) for $17.4 billion in cash and stock. Albertson’s stockholders will receive $26.29 in cash. The company’s shares rose 4.4%.

YAHOO ((YHOO)) was upgraded at Bear Stearns to outperform from peer perform. The stock gained 1.11%.

Citigroup ((C)) was downgraded at UBS to neutral from buy. The stock gained 1.1%.

The Sports Authority Inc ((TSA)) agreed to be acquired by private equity firm Leonard Green & Partners and members of the company's senior management team for roughly $1.3 billion in cash and assumed debt. The deal values Sports Authority shares at $37.25 each and the transfer is expected to close in the second quarter. The company’s shares soared 20%.

Datawatch Corp ((DWCH)) reported Q1 earnings of $64,000, or a penny a share, on revenue of $4.7 million, missing estimates of 3 cents a share. The company’s shares dropped 26.4%.

The U.S. Supreme Court rejected Research In Motion’s ((RIMM)) appeal to reverse a lower-court ruling that found its BlackBerry wireless email device violated patents held by NTP Inc., a Virginia patent-holding firm. The case now moves to a federal district court in Virginia, where a judge will decide whether to reinstate an injunction against the U.S. sale of BlackBerries. RIM’s shares fell 2.6%.

INTERNATIONAL MARKETS NEWS

Asian-Pacific benchmarks fell across the region, reflecting an oil price rise to $69 a barrel and cautiousness following the steep declines on Wall Street. The Nikkei recovered from earlier lows to close down 1.2%. Among other regional markets, Taiwan’s Weighted index dropped 1.7%, Hong Kong’s Hang Seng slipped 1.4%, and South Korea’s Kospi fell 1%.

European stocks traded in the negative at mid-day, hurt by disappointing earnings reports, surging oil prices and heavy losses on Wall Street Friday. The German DAX 30 slipped 0.6%, the French CAC 40 dropped 0.9%, and London’s FTSE 100 fell 0.2%.

OIL, METALS, CURRENCIES

Crude oil prices retreated after hitting $69 a barrel on supply concerns, raised by problems with Russia’s natural gas exports and the continuous tensions in Nigeria and Iran. Light sweet crude for March delivery fell 88 cents to $67.60 a barrel. London Brent declined 61 cents to $65.82.

European gold prices declined after hitting fresh 25-year highs Friday. In London gold traded at $558.50, down from $559.80. In Zurich the precious metal traded at $558.25, down from $561.35. In Hong Kong gold fell $1 to close at $556. Silver opened at $9.04, down from $9.06.

The U.S. dollar traded lower against other major currencies. The euro was quoted at $1.2278, up from $1.2075. The dollar bought 114.25 yen, down from 115.40. The British pound was quoted at $1.7829, up from $1.7638.

EARNINGS NEWS

Ford Motor Co., ((F)), automotive company, reported Q4 earnings of 8 cents a share, up from 6 cents a share a year-ago, beating analyst estimate for a profit of penny a share. If not for a number of items, the company posted earnings from continuing operations of 26 cents a share, down from a year-earlier equivalent profit of 28 cents a share.

Bank of America Corp, ((BAC)), banking services, reported that its Q4 profit dropped to 93 cents a share, down from 94 cents a share in the year-ago period on costs related to its recent acquisition on credit card firm MBNA, increased provision expense and lower trading results. If not for merger and restructuring costs, it gained 94 cents a share, missing analyst estimate of $1.02 a share. The company earned $3.85 billion, or 94 cents a year ago in the year ago quarter. Quarterly revenue was $14.12 billion, up 3%.

Pilgrim''s Pride Corp., ((PPC)), chicken producer, reported Q1 net income fell 47% to 39 cents a share, down from 73 cents in the year-ago period on 1.8% lower sales. Sales dropped to $1.34 billion from $1.37 billion. The company cited weakness at its Mexico operations plus higher energy costs and lower sales prices for the decline.

Provident Financial Holdings Inc., ((PROV)), holding company, reported Q2 net income rose 67% to $1.23 a share, up from 77 cents a share in the year-ago period. In the latest period, the banking company sold a commercial office building, prompting an increase of 53 cents to earnings.

Energizer Holdings Inc., ((ENR)) batteries manufacturer, reported that Q1 profit was $1.77 a share, up vs. $1.60 in the year- ago period, topping analysts’ forecasts of $1.61 a share. Earnings included a 5-cent restructuring charge related to the company''s European supply chain. Sales for Q1 advanced to $882.4 million from $875.9 million in last year''s first quarter.

TD Banknorth, ((BNK)), banking services company, reported Q4 earnings of 32 cents a share, up from 12 cents a share in the year-ago period. Aside from non-recurring items, earnings would have been 62 cents a share, up from 59 cents in the same period last year and in line with the analyst estimate. Net interest income was flat with last year’s, while non-interest income fell to $60.1 million from $72.5 million.

Insteel Industries Inc., ((IIIN)), wire products manufacturer, reported Q1 net income of 81 cents a share, up from 54 cents a share in the year-ago period. Sales in Q1 advanced 12% to $83.5 million from $74.7 million.

Carpenter Technology, ((CRS)), specialty metals and engineered products producer, reported Q2 earnings of $1.65 a share, up vs. $1.28 a share in the year-ago period, topping analyst estimate of $1.60 a share. Revenue advanced to $345.7 million from last year''s $312.1 million as strength in the aerospace markets helped improve demand for alloys, titanium and ceramic materials.