Solid Jump in Housing Starts

123jump.com Staff
16 Feb, 2006
New York City

Solid rise in housing starts and stable unemployment claims gave for the second day boost to broader averages. Tech earnings, weak oil prices and busy home builders on top of busy consumers in January kept all three indexes surging for the day. Target reported earnings of $1.06 vs 91 cents a year ago. After the close Dell reported 43 cents vs. 26 cents a year ago. Intuit reported Q2 profit of $1.02 vs. 77 cents a year ago.

U.S. MARKET AVERAGES

It was the revenge of the housing stocks at least for a day.

Economic data for the month of January reported that home builders had the busiest January with the jump in housing start strongest in 33 years and yesterday’s strong retail spending showed that consumers have not pulled back yet. In the face of back to back two strong reports and falling energy prices kept broader averages higher for the most part of the day.

Tech earnings reported from Hewlett Packard ((HPQ)) exceeded the analysts’ projections and Network Appliance surged 7% on earnings of 22 cents per share. Applied Materials ((AMAT)) reported 19 cents better than forecast of 17 cents but stock fell. With strong rally in tech stocks Google ((GOOG)) climbed $24 today jumping 7% and Apple Computer closed up $1.35 or up 1.95%.

Housing stocks were up on the back of solid rise in new home construction report. Toll Brothers ((TOL)) advanced 2%, KB Homes rose 1.55%, D R Horton ((DHI)) up 3.2% and Beazer Homes closed up 1.58%.

Oil jumped 1.7% after falling in the last ten of the twelve sessions, however for the month oil is down 12%. Bakers Hughes ((BHI)) revised the guidance for the current quartet helping oil drillers.

J C Penney ((JCP)) rose 2% on the news that the company raised its dividend by 44% and authorized $750 million stock buy back program. Other big-box retail stocks did not fare well today as Target ((TGT)) fell $1.21 and Wal-Mart fell 26 cents in the session.


MOVERS AND SHAKERS

Hewlett-Packard ((HPQ)), computer and printer giant, posted 30% profit jump in Q1, benefiting from restructuring efforts and higher personal-computer sales, beating estimates. The computer maker projected earnings for Q2 and 2006 above analyst consensus. The stock jumped 8.5%.

Wild Oats Markets ((OATS)) posted Q4 net income of $3.3 million, or 11 cents a share, compared with a loss of $34.7 million, or $1.22 a share in the year-ago period. Net sales were $282.7 million, compared with $281.9 million in the prior period. Same-store sales rose 4.2%. Analysts expected a profit of 6 cents a share on sales of $294.1 million. The stock jumped 17.6%.

Administaff ((ASF)) reported Q4 earnings of $10.9 million, or 39 cents a share, up from a year-ago profit of $3.5 million, or 14 cents a share on 22.8% revenue growth of $305.6 million. Analysts expected a profit of 27 cents a share on revenue of $303.2 million. The stock climbed 15%.

Expedia Inc ((EXPE)), travel-services company, reported Q4 earnings drop of 43% to $25.2 million, or 7 cents a share from $44.1 million, or 13 cents a share a year ago. Excluding special items earnings came in at 20 cents a share compared with 27 cents last year. Revenue rose 13% to $494.7 million from $439 million, below estimates of revenue of $505 million. The stock dropped 15%.

Goodyear Tire & Rubber ((GT)) posted a Q4 loss of $51 million, or 29 cents a share, down from a year-ago profit of $125 million, or 62 cents a share, missing estimates of net profit of 18 cents a share. Sales rose to $4.93 billion from $4.83 billion in the same period a year earlier.The company’s shares fell 4.2%.


ECONOMIC NEWS

Housing starts rose to their highest level in over 30 years in the month of January, according to a report from the Department of Commerce, with warmer than usual temperatures contributing to the growth.

The report showed that housing starts rose 14.5 percent to a seasonally adjusted annual rate of 2.276 million units in January from an upwardly revised 1.988 million unit rate in December. Economists had expected a more modest increase to a 2.0 million unit rate.

The increase in housing starts in January marked the biggest percentage increase since March of 1994, when starts rose 17.0 percent. With the increase, the pace of growth reached its highest level since March of 1974.

The growth reflected increases in housing starts in all four regions of the country, with housing starts in the Northeast and Midwest showing particularly strong growth.

The report also showed that building permits rose 6.8 percent to a seasonally adjusted annual rate of 2.217 million units in January from a revised 2.075 million unit rate in December. Building permits are seen as a good indicator of builder confidence.

Thursday morning, the Department of Labor released its report on initial jobless claims in the week ended February 11. The report showed that jobless claims rose more than economists had been expecting.

The Labor Dept. said that jobless claims for the week rose to 297,000 from the previous week''s revised figure of 278,000. Economists had expected jobless claims to rise to 285,000 compared to the 277,000 originally reported for the previous week.

The report also showed that the four-week moving average ended its recent streak of decreases, edging up to 283,000 from the previous week''s revised average of 276,750. The increase by the less volatile moving average came after it fell in the six previous weeks.

Additionally, the report showed that continuing claims in the week ended February 4 fell to 2.511 million from the preceding week''s revised level of 2.550 million.

INTERNATIONAL MARKETS NEWS

Asian-Pacific benchmarks finished broadly higher, following oil prices drop and Fed Reserve Chairman Bernanke’s comment on further interest-rate increases. Taiwan Weighted index led the gainers with an advance of 1.44%. The Nikkei rose 0.84% with traders looking ahead to Friday’s GDP release. South Korea’s Kospi climbed 0.8% and Singapore Straits Times gained 0.63% on upbeat economic data.

European stocks advanced Thursday as gains in the tech sector on strong earnings news from Hewlett-Packard counteracted mixed corporate news, including weakness at DaimlerChrysler on disappointing 2005 results. The German DAX 30 gained 0.4%, the French CAC 40 advanced 0.8%, and London’s FTSE 100 added 0.6%.

OIL, METALS, CURRENCIES

Crude oil prices climbed back over $58 a barrel, halting a two-week decline. Light sweet crude for March delivery gained 56 cents to $58.21 a barrel. London Brent added 45 cents to $58.60.

European gold prices moved lower. In London gold traded at the fixed price of $540.80 bid per troy ounce, down from $542.50. In Zurich the precious metal traded at $539.3, down from $544.10. In Hong Kong gold fell $5.30 to close at $540. Silver closed at 9.25, up from $9.23.

The U.S. dollar was strong against most other major currencies. The euro traded at $1.1881, down from $1.1883. The dollar traded unchanged at 117.88. The British pound stood at $1.7350, down from $1.7398.

EARNINGS NEWS

DaimlerChrysler, ((DCX)), automotive company, reported that its 2005 net profit advanced 15% to 2.85 billion euros but its operating profit dropped 10% to 5.19 billion euro, due to a 505 million euro operating loss at its Mercedes unit that offset rising profitability at Chrysler. Revenue advanced 5% to 149.78 billion euros over the year on a 3% increase in unit sales. The company beat analyst estimate for a 2005 profit of 2.39 billion euros. In Q4, the automaker gained 84% more to 966 million euros with a 10% revenue increase to 41.45 billion euros.

Baker Hughes Inc, ((BHI)), oil services company, reported Q4 net profit soared 43.6% to 76 cents a share on 19% revenue growth, beating analyst estimate of 73 cents a shareBaker Hughes said it expects 2006 revenue to rise 19% to 21% from $7.19 billion in 2005. Income from continuing operations is expected to be in the range of $3.40 to $3.60 a share.

CryptoLogic Inc, ((CRYP)), gaming software company, reported that Q4 earnings increased 53.5% to 43 cents a share on 39.6% revenue growth, due to increased licensing fees from the company''s poker software, which climbed 92% to $7.9 million.

Ness Technologies Inc, ((NSTC)), IT services company, reported that Q4 net income advanced 26.2% to 18 cents a share, if not for extraordinary income, on the back of a 27.6% increase in revenue, in line with analysts’ views.

Ansys Inc, ((ANSS)), software company, reported that its Q4 net income advanced 8.1% to 39 cents a share on 12.3% revenue growth. The company sees Q1 revenue in the range of $41 million to $42 million and adjusted earnings of 35 cents to 36 cents a share.