Weak Durable Goods Orders; RiM Plunges

Mukesh Buch
25 Sep, 2009
New York City

Durable goods orders fell 2.4%, second monthly decline in three months. The inventory rebuilding in the last six months had lifted hopes among investors that orders will keep increasing for the rest of the year. Research In Motion Limited plunges 15%.

[R]9:45 AM New York – Durable goods orders fell 2.4%, second monthly decline in three months. The inventory rebuilding in the last six months had lifted hopes among investors that orders will keep increasing for the rest of the year. Research In Motion Limited plunges 15%.[/R]

New York stocks in early trading edged lower after durable goods orders declined unexpectedly. The orders fell 2.4% when most economists were looking for an increase.

Weak durable goods orders and home sales in August put investors on the defensive. General Electric, Deere and Caterpillar declined after the report.

Durable Goods Orders Fall

Durable goods orders fell 2.4% or $4 billion to $164.4 billion, the second monthly decline in three months and the largest fall since January of this year. The volatile transportation equipment orders plunged 9.3% or $4 billion to $39.5 billion as non-defense aircraft and parts orders fell $3.7 billion.

Most economists were looking for orders to increase in the month as the economic activities related to inventory rebuilding had picked up since the second quarter.

Shipment of manufactured goods decreased 2% to $42.1 billion after two monthly increases in a row. The cash-for-clunkers program lifted auto sales and manufacturing. Automobiles orders increased 0.4% in the month after rising 1.6% in July.

Inventories of durable goods fell 1.3%, an eighth monthly decrease in a row with transportation orders had the largest decline of 2.9%.

Gainers & Losers

KB Home declined 7.4% to $17.17 after it reported third quarter loss ahead of market expectations.

Research In Motion Limited plunged 15% to $70.61 after the company reported weaker than expected increase in earnings. Sales surged 35% in the quarter.

Textron Inc decreased 4.3% to $17.56 after Cowen & Company downgraded the company to “neutral” from “outperform.”

Earnings Review

Christopher & Banks Corporation, a clothing retailer said second quarter sales fell 21% to $101.2 million from $128.5 million a year ago. Net loss in the quarter was $2.1 million or 6 cents per diluted share compared to net income of $836,000 or 2 cents per share a year ago.

KB Home, the homebuilder reported third quarter revenues fell 32.7% to $458.5 million from $681.6 million a year ago. Net loss in the quarter was $66 million or 87 cents per diluted share compared to net loss of $144.7 million or $1.87 per share a year ago.

Research In Motion Limited, the blackberry maker said second quarter revenues rose 37% to $3.53 billion from $2.58 billion a year ago. Net income in the quarter fell 4% to $475.6 million or 83 cents per diluted share compared to net income of $495.5 million or 86 cents per share a year ago.

Juventus Football Club SpA, an organizer of the soccer matches in Europe said full-year revenues rose 18% to €240.4 million from €203.7 million a year ago. Net profit in the full-year was €6.6 million compared to net loss of €20.8 million a year ago.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 278.24 or 2.64% to 10,265.98, Hang Seng index in Hong Kong decreased 26.33 or 0.13% to 21,024.40 and CSI 300 index in China lower 22.40 or 0.73% to 3,058.53. ASX 200 index in Australia increased 12.10 or 0.26% to 4,713.30. The FTSE Bursa KL Composite index in Malaysia was lower 0.67 or 0.06% to 1217.39.

The Kospi Index in South Korea decreased 2.40 or 0.14% to close at 1,691.48. SET index in Thailand closed lower 6.97 or 0.96% to 721.57. JSE Index in Indonesia decreased 24.32 or 0.98% to 2,444.58.The Sensex index in India decreased 88.43 or 0.53% to 16,693.00.