Home Builders Fall; Dollar Weak, Gold Up

123jump.com Staff
07 Oct, 2009
New York City

In the early trading in New York, stocks trade lower as commodities rise and dollar hovers near its low. Home builders fall on the worries that first time home buyer tax credit many not be extended. Costco gains on better than expected outlook. Eurozone revises its economic outlook higher.

[R]10:45 AM New York – In the early trading in New York, stocks trade lower as commodities rise and dollar hovers near its low. Home builders fall on the worries that first time home buyer tax credit many not be extended. Costco gains on better than expected outlook. Eurozone revises its economic outlook higher.[/R]

World financial markets are in a state of hold ahead of third quarter earnings and sharp rise in commodities prices in the recent days. Record prices in gold and sharp gains in base metals and natural gas has rekindled the threat of inflation.

U.S. inflation is expected to regain its momentum as the government and Federal Reserve pumps trillions of dollars in the economy. The government stimulus to revive the economy and the Fed programs to bailout banks and brokerage industry will only stoke inflationary pressures that have been dormant for the least two decades.

U.S. dollar hovered near its recent lows against the euro and yen. In the early trading, one euro fetched $1.465.

In New York trading home builders declined on the worries that the U.S. Congress may not renew the $8,000 tax credit to first time home buyers. Pulte Homes Inc, KB Homes, DR Horton and Lennar fell between 1% and 3%.

European economic decline appears to have slowed. The statistical agency of 16-nations in Europe, eurostat reported GDP declined 0.2% in the second quarter from the first and fell 4.8% from a year ago.

The EU Commission forecasted economic growth in the third quarter of 0.2% and 0.1% in the last quarter of this year.

The bid to acquire a stake in the second largest mobile carrier in Brazil heated up. Telefonica SA offered 48 reais or $3.75 billion. Vivendi SA offered to acquire the company for 42 reais or $3 billion.

U.S. Earnings Review

Costco Wholesale Corporation, the warehouse club operator reported fourth quarter revenues fell 3% to $22.4 billion from $23.1 billion a year ago. Net income in the quarter fell 6% to $374 million or 85 cents per diluted share compared to net income of $398 million or 90 cents per share a year ago.

Comparable same-store sales decreased 6%

Total revenues for the fiscal year 2009 fell 1.5% to $71.4 billion from $72.5 billion a year ago. Net income for the year fell 15% to $1.09 billion or $2.47 per diluted share compared to net income of $1.28 billion or $2.89 per share a year ago.

Family Dollar Stores, Inc, the discount retailer reported fourth quarter sales rose 2.3% to $1.81 billion from $1.77 billion a year ago. Net income in the quarter rose 13% to $60.1 million or 43 cents per diluted share compared to net income of $53.2 million or 38 cents per share a year ago. Comparable same-store sales increased 1.0%.

Net sales for the fiscal year 2009 rose 6% to $7.40 billion from $6.98 billion a year ago. Net income for the year rose 25% to $291.3 million or $2.07 per diluted share compared to net income of $233.1 million or $1.66 per share a year ago.

Monsanto Company, the seed maker reported fourth quarter sales fell 8.3% to $1.88 billion from $2.05 billion a year ago. Net loss in the quarter was $233 million or 43 cents per diluted share compared to net loss of $172 million or 31 cents per share a year ago.

Net sales for the fiscal year 2009 rose 3% to $11.72 billion from $11.37 billion a year ago. Net income for the year rose 4.5% to $2.11 billion or $3.80 per diluted share compared to net income of $2.02 billion or $3.62 per share a year ago.