Volatile Markets

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

Weekly oil inventory report was overshadowed by the December monthly existing-home sale report. Industry association, which released the report cautioned that housing market is slowing. Guidant agreed to be acquired by Boston Scientific for $27 billion. Housing stocks contnued their slide on monthly report. Railroads, miners, retailers and restaurants, Crude oil declined close to 2%. Markets in Brazil, India and Germany advance close to 2%.

U.S. MARKET AVERAGES

Near unchanged –closing averages defy the underlying volatility in the stock market especially in tech stocks.

Of the thirty stocks in Dow Jones Industrial Average, nine gained more than 1%, eight lost better than 1% and rest were near unchanged, all in a day when weekly energy report and December month housing reports led the market talk.

A slow cooling in the housing market was indicated by the National Association Realtor December report on existing home sales. December sales declined 5.7% but for the year 2005 sales rose 4.2% and median home price rose 12% in the year. Housing stocks took a dive despite better than expected earnings from Centex ((CTX)). KB Homes, Centex, Toll Bros. and Lennar declined between 1% and 2%.

Weekly energy report released today suggested that crude oil inventory of crude oil declined and that of distillate and gasoline rose. However, crude oil still declined close to 2% on top of yesterday’s 1.5% decline.

It appears that Boston Scientific ((BSX)) has won merger deal with Guidant ((GDT)) after bidding for it at $27 billion. Johnson & Johnson ((JNJ)) stock rose on the news.

In overseas markets Brazil added 1.5% gain on top of yesterday’s close to 2% gain and India added 1.3% gain and main index in Germany rose 2%.

MOVERS AND SHAKERS

Netflix ((NFLX)), online DVD-rental firm, announced Q4 profit six times higher than a year ago on increased subscriber revenue. The company said that it earned $38.1 million, or 57 cents a share, compared with a profit of $5.6 million or 9 cents a share in the year-ago period. On a pro forma basis, Netflix said it earned $41.4 million, or 62 cents a share. Revenue rose 36% to $195 million from $144 million. Subscribers rose 60% from the year-ago period to 4.2 million. The stock jumped 15.3%.

Afilliated Managers Group ((AMG)) reported Q4 net income rose 67% to $38.8 million, or 90 cents a share from $23.3 million, or 58 cents a share in the year-ago period. Revenue climbed 48% to $272.5 million. Cash earnings were $1.42 a share, up from $1.08 a share. A survey of analysts by Thomson First Call forecast earnings of $1.29 a share and revenue of $256.8 million. The company’s shares rose 6.1%.

CNF ((CNF)), trucking company, reported Q4 earnings and Q1 outlook fell short of expectations. The company said that it earned $51.2 million, or 92 cents a share, up from $32.2 million, or 58 cents a share a year ago. Excluding discontinued operations, earnings would have been 97 cents a share, missing the average analyst estimate of $1. Revenue rose to $1.09 billion from $967.5 million. For the first quarter, the company expects ongoing earnings of 71 to 77 cents a share, below analyst forecasts of 79 cents. The stock was downgraded to equal weight from overweight. Company’s shares dropped 11.8%.

ECONOMIC NEWS

Crude oil inventories showed a decline in the latest week, according to government statistics released Wednesday. 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 2.3 million barrels for the week ended January 20, falling to 319.1 million barrels from the prior week''s level of 321.4 million barrels. Oil inventories were 11% higher than their levels of the same time last year.

Gasoline inventories posted a week-over-week increase of 3.2 million barrels. Gasoline stocks were just 1.6% below their levels of last year. Inventories of distillate fuel oil rose by 1.8 million barrels in the most recent week.

The National Association of Realtors released its report on existing home sales in the month of December on Wednesday, showing a much bigger than expected decrease. NAR noted that existing home sales still hit a new record for the full year.

The report showed that existing home sales fell 5.7 percent to a seasonally adjusted annual rate of 6.60 million units in December from an upwardly revised rate of 7.00 million units in November. Economists had expected existing home sales to fall to a 6.90 million unit rate.

Despite the decrease in December, existing home sales for all of 2005 came in at 7.072 million, up 4.2 percent from 6.784 million in 2004. With the increase, existing home sales reached their fifth consecutive annual record.

The report also showed that total housing inventory levels fell 4.4 percent in December to 2.80 million existing homes available for sale. NAR said that this represents a 5.1-month supply at the current sales pace.

INTERNATIONAL MARKETS NEWS

Asian-Pacific benchmarks finished in the positive ahead of the Chinese Lunar New Year holiday with easing oil prices and institutional share buying. The leading gainers were South Korea’s Kospi, rising 1.2% and Taiwan’s Weighted index, up 1.2%. Shanghai Composite advanced 0.5% on better-than-expected economic data and institutional buying of large-capitalized stocks. The Nikkei finished flat at 0.01%. Hong Kong’s Hang Seng was the only decliner, down 0.07%.

European stocks rallied Wednesday on upbeat outlook from software company SAP, strength in miners and automakers stocks and multi-year high for German business sentiment. The German DAX 30 climbed 1.7%, London’s FTSE 100 surged 1.3%, and the French CAC 40 rose 0.9%.

OIL, METALS, CURRENCIES

Crude oil prices fell below $66 on fuel inventories increase. Light sweet crude for March delivery fell $1.36 to $65.70 a barrel. Heating oil lost 3 cents to $1.79 a gallon. Gasoline declined 6 cents to $1.68. Natural gas slipped 20 cents to $8.48 per 1,000 cubic feet. London Brent declined 44 cents to $64.90.

European gold closed higher. In London gold traded at $562, up from $556.50. In Zurich the precious metal traded at $560.70, up from $556.15. In Hong Kong gold dropped $5.20 to close at $551.20. Silver closed at $9.41, up from $9.13.

The U.S. dollar avanced against other major currencies. The euro was quoted at $1.2241, down from $1.2288. The dollar bought 115.94 yen, up from 114.59. The British pound stood at $1.7859, down from $1.7864.

EARNINGS NEWS

ConocoPhillips, ((COP)), crude oil, natural gas manufacturer, reported Q4 net income of $2.61 a share, compared with $1.72 a share in the year-earlier quarter on revenue growth. From continuing operations alone, the company would have earned $2.69 a share, compared with $1.76 a share, in Q4 of 2004. Analysts expected earnings of $2.62 a share.

Piper Jaffray Companies, ((PJC)) brokerage firm, reported Q4 net income of 87 cents a share, up 39% from net income of 61 cents a share on 6.4% revenue growth and strong capital markets performance and robust"""""""""""""""" activity in advisory services.

Affiliated Managers Group, ((AMG)), asset management services provider, reported Q4 net income of 90 cents a share, up 67% from 58 cents a share in the year-earlier period on 48% revenue growth. Cash earnings were $1.42 a share, up from $1.08 a share in the comparable period the previous year, beating on that basis analyst’s expectations of $1.29 a share.

Abbott, ((ABT)), health care products manufacturer, reported Q4 earnings of 63 cents a share, up 0.2% from 62 cents a share in the year-ago period. If not for items, earnings were 76 cents a share, up 12.7% from 67 cents a share in the year-ago period, matching on that basis analyst estimate. Revenue jumped 7% to $6.05 billion. Abbott expects Q1 earnings of 62-64 cents a share, excluding items and stock compensation expense under GAAP.

Nova Chemicals Corp ((NCX)), reported Q4 loss of 82 cents a share, down from a profit of $1.78 a share a year-ago, missing analyst estimate of a loss of 3 cents a share. Q4 results include a charge of $70 million related to an outage at its Corunna, Ontario flexi-cracker location, and a charge of $46 million from the closure of a Chesapeake, Va., site. Revenue advanced to $1.43 billion from $1.37 billion in the same period a year earlier.

BellSouth, ((BLS)), local phone company, reported that Q4 net income dropped to 34 cents a share down from 74 cents a share in the year-ago period, as the company incurred large hurricane-related costs. Adjusted for onetime items and other special factors, the company recorded income of 53 cents a share, up from 39 cents in the year-ago period. Analysts expected the company to earn 45 cents a share. Revenue advanced 1.9% to $5.24 billion from a year ago, excluding the company''s wireless business. Cingular Wireless, the company''s venture with AT&T Inc., added a net 1.8 million wireless subscribers. BellSouth owns a 40% stake. Including Cingular''s share of revenue, the company saw a 9.2% increase in sales to $8.66 billion.

Lear Corporation, ((LEA)), automotive interior systems suppliers, reported Q4 net loss of $8.88 per share, including impairments, restructuring and other special charges, down from a net income of $1.70 per share in the year-ago period. Operating performance went down, reflecting the adverse platform mix in North America, higher raw material and energy prices, as well as continuing cost pressures throughout the entire supply chain.

Colgate-Palmolive Company, ((CL)), reported Q4 net income of 65 cents a share, up from 50 cents a share in the comparable period in 2004. Excluding restructuring charge and other items earnings would have been 69 cents a share. The company announced a continuation of the strong momentum that built throughout 2005. Sales and unit volume, as reported including divestments, advanced 3.5%. Worldwide sales, excluding divestments, were up 5.5% on unit volume growth of 4.5%, on top of 9.0% volume growth in the comparable quarter the previous year.

Ameritrade Holding Corp, ((AMTD)), online-brokerage operator, reported Q1 net income advanced 1.9% to 21 cents a share, up from 20 cents a share in the year-ago period on 5.8% higher revenue, missing analyst estimate by a penny.

Praxair Inc, ((PX)), industrial gas company, reported that Q4 net income advanced 18.2% to 65 cents a share including a $6 million accounting charge. If not for the charge, earnings would have been 67 cents a share. Analysts were expecting earnings of 64 cents a share. Sales in Q4 increased 13% to $2.02 billion, driven by growth in the company''s oil and gas well service business and strong packaged-gases sales.

Xerox Corp, ((XRX)), producer of copiers, reported Q4 profit of 27 cents a share, higher than last year’s profit of 24 cents a share in the comparable period fueled by sales of digital color copier supplies and services. If not for restructuring costs, Xerox earned 32 cents a share, meeting analysts'' expectations. Revenue shed 2 % but revenue from color products grew 17%.

CORPORATE NEWS

After the closing bell Tuesday, Walt Disney ((DIS)) agreed to acquire computer animation studio Pixar ((PIXR)) in an all-stock transaction at the value of $7.4 billion. Under the deal, 2.3 Disney shares would be issued for each Pixar share. The transaction is expected to be completed in the summer.

Guidant Corp. ((GDT)), medical device maker terminated its merger agreement with Johnson & Johnson ((JNJ)) in favor of Boston Scientific''s ((BSX)) higher offer of $27.2 billion.