Oil Stocks Rise

Elena
30 Jan, 2006
New York City

Stocks traded in a lackluster fashion Monday morning with investors reluctant to make significant moves ahead of the Fed Reserve''s meeting Tuesday. In corporate news, oil giant Exxon Mobil posted Q4 record profit on revenue growth, beating expectations. USG Corp. rose 16% after it agreed to resolve asbestos personal injury claims in a Chapter 11 agreement which will help the company to exit bankruptcy in 2006. Sunoco Logistics posted disappointing Q4 profit and revenue.

U.S. MARKET AVERAGES

After the initial advance market lost momentum on cautiousness ahead of interest rates decision. The record-high results from oil giant Exxon Mobil and strong consumer spending encouraged investors to bid stocks higher at opening, but failed to give further momentum.

The Federal Reserve’s meeting on Tuesday will be the last one presided over by Alan Greenspan. The Fed Reserve is expected to raise interest rates by a quarter percentage point to 4.5%, but Wall Street expects a signal that the Fed will stop hiking rates after that.

Exxon Mobil's earnings surged 27% to more than $10 billion, benefiting from high oil prices. Revenue jumped 20% to $99.66 billion from a year earlier, topping analysts' forecasts of $95.65 billion. Shares of Exxon rose 2.9%.

In economic news, the Commerce Department reported that consumer spending rose 0.9% in December, while personal incomes rose just 0.4%.

The airline sector was a notable advancer in the early going, climbing by about 1.9% with AMR ((AMR)) being the best performer in the group, up 7%. Continental ((CAL)) posted an advance of 3.7%. JetBlue((JBLU)) rose by about 2.4%.

The biotech sector declined through most of the morning session, erasing some of the gains it posted in the final 2 sessions of last week, but remainrd in a trading range that has held it for about 3 weeks.

USG Corp. ((USG)) jumped to a new 52-week high, as news of an asbestos settlement has sparked a gain of more than 15%. Monsanto ((MON)) rallied more than 2.5% to set a fresh high as well. Novell ((NOVL)) built on last-week gains, stretching its peak.

Tyson Foods ((TSN)) dropped to a new 52-week low on disappointing earnings and outlook. Hershey ((HSY)) extended last week''s earnings-related slide to set another new low. Dollar General ((DG)) has ticked to a fresh nadir as well.

In midday trading, the Dow Jones industrial average fell 8.25, or 0.08%. The Standard & Poor''s 500 index added 0.44, or 0.03%, and the Nasdaq composite index gained 2.61, or 0.11%.

Bonds moved lower, with the yield on the 10-year Treasury note rising to 4.54% from 4.51% late Friday.

MOVERS AND SHAKERS

Lowrance Electronics ((LEIX)), marine electronics products company, agreed to be acquired by Simrad Yachting AS for $215 million, or $37 a share which represents a premium of 48% from a closing price of $25 for Lowrance stock on Friday. The stock surged 46.5%.

USG Corp ((USG)) agreed to resolve asbestos personal injury claims in a Chapter 11 agreement that paves the way for the company to exit bankruptcy in 2006. Berkshire Hathaway ((BRKA)) will backstop a $1.8 billion stockholder rights offering. After voting on the plan, the plan will require approval by both the Bankruptcy Court and the district court that oversees the cases. The company also reported a Q4 net loss of $1.8 billion or $39.94 a share, compared to earnings of $85 million, or $1.98 a share in the year-ago period, citing charges. Revenue rose to $1.34 billion from $1.17 billion. USG’s shares rose 16%.

FMC Technologies ((FTI)) raised its Q4 outlook to earnings of 7 to 17 cents a share, or 43 to 53 cents a share when excluding a tax charge for repatriating earnings. FMC added that it''s near a completion of an offshore oil loading project in Algeria. Analysts expected adjusted earnings of 53 cents a share. The stock gained 6%.

ECONOMIC NEWS

Monday morning, the Department of Commerce released its report on personal income and spending in the month of December. The report showed that spending rose slightly more than expected while income rose in line with economist estimates.

The Commerce Dept. said that personal spending rose 0.9 percent in December following an upwardly revised 0.5 percent increase in November. Economists had expected spending to rise 0.8 percent compared to the 0.3 percent growth originally reported for November.

The report also showed that personal income rose 0.4 percent in December, matching the increase seen in the previous month. As mentioned above, the personal income growth came in line with economist estimates.

With personal spending outpacing personal income, personal saving as a percentage of disposable personal income was a negative 0.7 percent in December, compared with a negative 0.2 percent in November.

Additionally, the Commerce Dept. said that its price index for consumers was unchanged in December after falling 0.4 percent in November. Excluding food and energy prices, the index rose 0.1 percent in December following a 0.2 percent increase in the previous month.

On an annual basis, the index rose 2.8 percent in December, the same as in November. The core index rose at an annual rate of 1.9 percent for the third consecutive month.

INTERNATIONAL MARKETS NEWS

Asian-Pacific benchmarks closed in the positive with only four bourses actively trading on Monday as many regional markets were closed for the Lunar New Year holiday. The Nikkei continued to build on the strong Friday finish when it hit a five-year high of 3.6%. The index rose 1.3% in the morning but later rebounded to close up 0.55%. Australia’s All Ordinaries gained 0.5%, Manila’s PSE advanced 0.47%, while Singapore Straits Times ended flat.

European stocks finished mixed after earnings updates from two major French companies and higher opening on Wall Street, failed to impress investors. The German DAX 30 edged up 0.2%, the French CAC 40 declined 0.2%, and London’s FTSE 100 inched down to 0.1%.

OIL, METALS, CURRENCIES

Crude oil prices declined ahead of a closely watched OPEC meeting, despite the continuous tensions in Nigeria and Iran. Light sweet crude for March delivery fell 14 cents to $67.62 a barrel. Heating oil was flat at $1.8069 a gallon, while natural gas gained 29 cents to $8.795 per 1,000 cubic feet. London Brent lost 29 cents to $65.95.

European gold prices climbed on political worries. In London gold traded at the fixed price $560.80, up from $556.95. In Zurich the precious metal traded at $559.93, up from $557.30. Silver opened at $9.64, up from $9.57.

The U.S. dollar advanced against other major currencies. The euro was quoted at $1.2090, down from $1.2105. The dollar bought 117.59 yen, up from 117.27. The British pound stood at $1.7655, down from $1.7678.

EARNINGS NEWS

Tyson Foods Inc, ((TSN)), chicken, beef and pork processor, reported Q1 income of 11 cents a share, down from 14 cents a share a year ago, missing analyst estimate of 16 cents a share. Sales were flat at $6.45 billion. The company forecast a net loss for Q2, and is targeting fiscal 2006 earnings to range from 50 cents to 80 cents a share.

J.B. Hunt Transport Services, ((JBHT)), trucking company, reported Q4 net income of 41 cents a share, nearly three times up from 12 cents a share in the year-ago period, beating analysts’ forecast for earnings of 36 cents a share.

Exxon Mobil, ((XOM)), oil company, reported Q4 net income of $1.71 a share, up from $1.30 a share a year ago on revenue growth. If not for special items, the company would have earned $1.65 a share.

Sealed Air Corp, ((SEE)), packaging company, reported Q4 net income of 77 cents a share, more than double from 33 cents a share in the year-earlier period, beating analyst estimate of 74 cents a share. The company said sales in Q4 advanced 6% to $1.08 billion from $1.02 billion. Sealed Air also initiated a quarterly cash dividend of 15 cents a share and added it expects 2006 earnings of $2.90 to $3.10 a share.

Schering-Plough, ((SGP)), manufacturer of pharmaceutical and health care products reported that it reversed to a Q4 profit of 7 cents a share, up 13% from a net loss of 58 cents a share in the year-ago on 6% revenue growth including sales from its cholesterol joint venture with Merck & Co. Analysts were expecting earnings of 8 cents a share.

Kinetic Concepts Inc, ((KCI)), healthcare device manufacturer, reported that Q4 net earnings advanced 36% to 64 cents a share on 18% revenue growth, beating analyst estimate of 61 cents a share. The company stated that increased revenue from its V.A.C. wound treatment was mainly responsible for the earnings growth.

Smith International Inc., ((SII)), oil and gas industry services company, reported an 11% rise in Q4 profit to 44 cents a share on 26% revenue growth. If not for a penny a share charge on a patent settlement, its results came in beat estimates of 43 cents a share.

Olin Corp, ((OLN)), metals and chemicals company, reported Q4 net income of 45 cents a share, up from 32 cents a share in the year-earlier quarter, topping analyst estimate of 28 cents a share. The company announced sales increase to $604.1 million from $487.3 million a year ago. The company said it beat its own projected forecast of earnings per share of 25 cents due primarily to the recovery of environmental expenses and related expense.

Eastman Kodak Co, ((EK)), consumer, professional, health and other imaging products company, reported a Q4 loss of 18 cents a share, narrower from a loss of 20 cents a year-ago, missing analysts’ expectations of a profit of 39 cents a share. On a continuing operations basis, company posted a loss of 50 cents a share. Sales in Q4 increased to $4.2 billion from $3.76 billion in Q4 last year.

[Cummins Inc, ((CMI)), engine manufacturer, reported Q4 net income of $3.31 a share, up from $2.41 a share in the year-ago period beating analyst estimate of $3.11 a share. Sales at the company in Q4 advanced 17% to $2.75 billion from $2.35 billion. In Q4 the company benefited 26 cents a share, a gain on a tax issue.

CORPORATE NEWS

The steel manufacturer Arcelor on Sunday rejected a takeover bid from its larger rival Mittal Steel. After a meeting at its headquarters in Luxembourg, Arcelor's board unanimously snubbed Mittal's E18.6 billion, or $22.5 billion, hostile offer - which would have combined the top two global steel producers - on the ground that the companies do not share the same strategic vision, business model and values.