Arcelor in Play

Elena
02 Feb, 2001
New York City

Retailers posted strong January sales on warm weather and gift cards buying. 80% of all companies posted sales growth above estimates. The gainers were led by Wal-Mart, standing out with a 4.7% rise in same-store sales and total sales growth of 14.5%. Costco sales rose 9%, Target Corp. 5.2%. American Eagle Outfitters sales were up 11.3% and Bebe Stores sales higher by 9.8%. European governments have softened their stance against the hostile bid from Mittal.

U.S. MARKET AVERAGES

Stocks opened in the negative, hurt by inflation worries, raised by a government report showing high labor costs. Those concerns overshadowed strong January retail sales that were boosted by warm weather and strong gift-cards sales. A drop in initial jobless claims failed to spark much enthusiasm.

Same-store sales will be in the spotlight Thursday with sales seen to rise by 4% in January. However, Wall Street trading is expected to be cautious ahead of key jobs release data, due out Friday.

Wal-Mart Stores reported that January same-store sales climbed 4.7%, marking the highest monthly increase of the fiscal year. Sales at the company's Sam's Club bulk discount chain rose 8.2%. Total sales for the month grew 14.5% to $22.675 billion. The company predicted 2%-4% comparable sales growth in February.

Costco's same-stores sales rose 9%, beating the 6.9% forecast from Wall Street. Nordstrom posted same-store sales increase of 6%, exceeding expectations of a 4.7% gain. J.C. Penney Coposted 2.5% increase in same-store sales, better than the 2% forecast.

Federated announced a 1% increase in same-store sales, in line with the forecast from Wall Street. Talbots Inc. posted in-line-with-estimates same-store sales rise of 0.7%. The apparel retailer also backed its Q4 earnings outlook.

Teen retailers made a strong performance. Bebe Stores reported 9.8% increase in same-store sales, higher than the 8.1% gain Wall Street expected. Pacific Sunwear beat estimates of 1.6% rise with a 4.9% same-store sales increase. American Eagle Outfitters Inc. announced an 11.3% gain in same-store sales, above the 7.4% estimate.

The Dow Jones industrial average is down 30 points, the S&P 500 is off 3.30 points and the Nasdaq 100 is down 5.5 points.

Bonds edged lower, with the yield on the 10-year Treasury note rising to 4.57 percent from 4.56 percent late Wednesday.

MOVERS AND SHAKERS

NutriSystem Inc ((NTRI)), weight management services provider, projected Q4 earnings of 16 cents a share and 2005 of 58 cents a share, both views a penny shy of the analyst estimates. The company forecast Q4 revenue of $69 million to $70 million, above analysts' forecast of $62 million and 2005 revenue outlook of $212 million to $213 million, also above analysts' expectations for revenue of $206 million. The stock dropped 14.9%.

Research in Motion ((RIMM)), producer of the BlackBerry wireless e-mail system, said it won a round in a patent dispute with InPro, a Luxembourg patent-holding company. RIM said that InPro had asserted that certain BlackBerry products infringed a United Kingdom patent it held. The High Court of Justice, Chancery Division in London invalidated the claims. The stock fell 1.6%.

SiRF Technology Holdings Inc ((SIRF)), semiconductor company, reported Q4 net earnings of $9.6 million, or 17 cents a share, down 44% from $17.1 million, or 33 cents a share, last year on revenue rise of $54.4 million from $27.5 million. Excluding certain items, earnings came in at 21 cents a share compared with 10 cents a share last year. Analysts had forecast earnings of 19 cents a share on revenue of $52 million. The company’s shares climbed 9.6%.

ECONOMIC NEWS

The Department of Labor released its report on initial jobless claims in the week ended January 28 on Thursday, showing an unexpected decline. The 4-week moving average also fell, reaching its lowest level in over five years.

The report showed that jobless claims fell to 273,000 from the previous week's revised figure of 284,000. Economists had expected jobless claims to increase to 295,000 compared to the 283,000 originally reported for the previous week.

The Labor Dept. added that the less volatile 4-week moving average fell to 284,250 from the previous week's revised average of 289,000. This marks the fifth consecutive decline for the 4-week moving average, which fell to its lowest level since June of 2000.

The report also showed that continuing claims fell to 2.509 million in the week ended January 21 from the preceding week's revised level of 2.573 million. With the decrease, continuing claims fell to their lowest level since February of 2001.

Thursday morning, the Department of Labor released its preliminary report on fourth quarter productivity. The report showed that productivity unexpectedly fell during the final three months of 2005.

The report showed that non-farm productivity fell 0.6 percent in the fourth quarter after rising 4.5 percent in the third quarter. The decrease came as a big surprise to economists, who had been expecting growth of about 1.7 percent.

This marked the first decrease in productivity since a 0.4 percent drop in the first quarter of 2001, and it was also the biggest drop since a 0.9 percent decrease in the third quarter of 2000.

The decrease in productivity came as an increase in hours outpaced an increase in output, with hours rising 1.5 percent in the quarter while output increased by only 0.9 percent. In the third quarter, output increased by 4.7 percent while hours edged up by 0.1 percent.

The report also showed that unit labor costs rose by 3.5 percent in the fourth quarter after falling 0.5 percent in the third quarter. Economists had been expecting a more modest increase in unit labor costs of about 2.8 percent.

INTERNATIONAL MARKETS NEWS

Asian-Pacific benchmarks closed largely higher, supported by solid Wall Street gains and strengthening dollar after the interest rate rise which is favorable for the Asian exporter-related issues. The Nikkei soared 1.4% to 16,710.55. Among other regional markets Singapore Straits Times rose 0.45%, while Thailand SET dropped 2.1% and South Korea’s Kospi declined 0.1%. The dollar bought 118.24 yen.

European stocks turned weak at mid-day dealings as early gains on upbeat news from Alcatel and Rio Tinto were erased by losses in the oil sector and slightly disappointing quarterly results from Royal Deutsch Shell. The German DAX 30 lost 0.26%, the French CAC 40 declined 0.4%, and London’s FTSE 100 slipped 0.2%.

OIL, METALS, CURRENCIES

Crude oil declined, hovering above $66 a barrel on growing tension over the nuclear program of Iran. Light sweet crude for March delivery fell 28 cents to $66.28 a barrel. London Brent lost 53 cents to $64.50.

European gold prices hit a 25-year high on oil rise and inflation worries. In London gold traded at the fixed price of $571.85 bid per troy ounce, up from $565.30. In Zurich the precious metal traded at $571.10, up from $566.20. In Hong Kong gold rose $4.95 to close at $572. Silver opened at $9.83, up from $9.70.

The U.S. dollar turned mixed against other major currencies. The euro was quoted at $1.2069, up from $1.2057. The dollar bought 118.40 yen, up from 117.94. The British pound stood at $1.7739, up from $1.7732.

EARNINGS NEWS

Starbucks reported a 20% rise in Q1 earnings, topping forecasts. It also raised its earnings outlook after reporting a 10 percent rise in January same-store sales.

Tyco International Ltd. ((TYC)) reported that Q1 net income fell 22% on 1.1% higher sales, missing estimates by a penny a share.

Whirlpool Corp. ((WHR)) announced better-than-expected Q4 profit of $1.83 a share on 9% sales growth, beating estimates of $1.70. The company raised 2006 earnings to $7-$7.25 a share.

Cable TV operator Comcast Corp. ((CMCSA)) posted a 69% drop in quarterly profit. The board of directors approved an additional $5 billion stock buyback program