Positive Opening Weak Close

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

Morning mild optimism was quickly lost as oil and natural gas rose steadily throughout the day. Wal-Mart and Federated earnings disappointed the market. Home Depot delivered better than expected earnings of 60 cents. Fed minute of meeting and rise in oil and natural gas price set the tone for the trading for the most of the afternoon. General Motors unsecured debt was lowered by Moody. Only eleven of thirty Dow components rose during the session.

U.S. MARKET AVERAGES

Market early gains at the opening quickly dissolved into losses as oil and natural gas climbed.

Mixed earnings from Wal-Mart, Home Depot and Federated Department drove market to the sideways. As oil made a steady climb and rose above 1% and natural gas rose above 5% at mid-day stock moved in the negative territory.

Wal-Mart ((WMT)) reported higher earnings but forecasted lower earnings for the coming years on higher interest charges. The company stock declined 36 cents and closed at $45.74. Home Depot ((HD)) reported 60 cents vs. 47 cents a year ago and beat estimates of 57 cents. The stock’s early gains were lost at market close. Federated ((FD)) lost $1.23 on lower than expected earnings.

General Motors ((GM)) lost 2% on the news that Moody’s lowered its rating on senior unsecured debt from B1 to B2.

Market largely ignored the report on Leading Economic Indicators showing widening economic activities. Investors did focus on minutes of Fed Meeting and turned cautious on the read that Fed is likely to raise interest rates in the coming months.

MOVERS AND SHAKERS

Evergreen Solar ((ESLR)) received a $100 million four-year supply deal with Germany''s S.A.G. Solarstrom AG. Evergreen will ship about $100 million of photovoltaic modules to S.A.G., which operates solar power stations. The stock jumped 6.7%.

MeriStar Hospitality ((MHX)) agreed to be acquired by an affiliate of the private equity firm Blackstone Group for about $2.6 billion. Under the terms of the deal each share of MeriStar common stock and each unit of limited partnership interest in MeriStar''s operating partnership, will be converted into the right to receive $10.45 in cash. The deal is expected to close in Q2 of 2006. The company’s shares gained 3.7%.

Atari Inc ((ATAR)) said it will cut 20% of its workforce worldwide as part of a previously announced plan to cut costs and dispose of non-core assets, among other actions. The company’s shares gained 4%.

Haverty Furniture ((HVT)), home furnishings retailer, posted Q4 profit drop of $6.8 million, or 30 cents a share from $8.7 million, or $38 cents a year ago, missing estimates of 31 cents. The company said profit was hurt by higher energy and transportation costs. Sales for the quarter rose to $225.6 million from $216.8 million in last year''s fourth quarter. The stock dropped 6%.

ECONOMIC NEWS

The Conference Board released its report on leading economic indicators in the month of January on Tuesday. The report showed that the agency''s index of leading indicators rose much more than economists had anticipated.

The report showed that the index surged up by 1.1 percent in January after an upwardly revised increase of 0.3 percent in December. Economists had expected a more modest increase of 0.6 percent compared to the 0.1 percent increase originally reported for December.

The Conference Board said that the increase by the index in January was largely due to a decrease in initial jobless claims and increases in real money supply and building permits.

The report also showed that the coincident index, a measure of current economic activity, increased by 0.2 percent in January.

The Conference Board noted that the coincident index has been on a relatively steady upward trend since April 2003, although it pointed out that this trend moderated somewhat in the second half of 2005.

INTERNATIONAL MARKETS NEWS

Asian-Pacific benchmarks finished Tuesday session mixed. The Nikkei soared 3% to 15,894.04 on evidence of economic improvement. Among the other regional gainers, Shanghai Composite climbed 1.7%, Singapore Straits Times advanced 0.5%., and Australia’s All Ordinaries rose 0.9%. On the losing side stood South Korea’s Kospi, down 1% and Taiwan’s Weighted index, down 0.8%.

European stocks closed off intraday highs after weakness on Wall Street erased earlier gains. On Tuesday averages reached multi-year highs, boosted by strong utilities which rallied on a bidding war starts for the Spanish Endesa. The German DAX 30 gained 0.1%, the French CAC 40 added 0.2%, and London’s FTSE 100 declined 0.09%.

OIL, METALS, CURRENCIES

Crude oil prices jumped on supply concerns, following a violent militant act against oil pipelines in the Niger Delta. Light sweet crude March delivery climbed $1.30 to $62.60 a barrel. Heating oil rose marginally to $1.694. Gasoline fell 2 cents to $1.6013, while natural gas climbed 54 cents to $7.731 per 1,000 cubic feet. London Brent for April delivery traded at $61.51 a barrel

European gold declined. In London gold traded at the fixed price of $554.40 bid per troy ounce, down from $555.70. In Zurich the precious metal traded at $554.60, down from $555.60. In Hong Kong gold gained 20 cents to close at $553.10. Silver closed unchanged at $9.51.

The U.S. dollar was mixed against other major currencies. The euro traded at $1.1915 down from $1.1945. The dollar bought 118.79, up from 118.19. The British pound stood at $1.7439, down from $1.7444.

EARNINGS NEWS

Wal-Mart Stores, ((WMT)), retailer, reported Q4 earnings of 86 cents a share, a 13.4% jump from 75 cents a share in the year-earlier period on sales and 3.1% same-store sales growth, beating analyst view of 83 cents a share. The figures include a 2-cent a share tax benefit.

TRW Automotive Holdings Corp., ((TRW)), provider of automotive parts systems, reported Q4 earnings of 57 cents a share, up from a loss of 63 cents a share a year-ago. If not for items, the company earned 40 cents a share, beating analyst estimate for a profit of 33 cents a share.

Live Nation Inc, ((LYV)), entertainment promoter, reported a wider Q4 net loss of $2.02 a share, despite 38.2% revenue growth. Q4 included a deferred tax expense of $99.7 million. The company pointed out that its primary focus during Q4 was on rightsizing our cost structure and tightening our strategic and operational focuses.

Home Depot, ((HD)), home-improvement retailer, reported that Q4 net earnings reached 60 cents a share, up from 47 cents a share in the year-earlier period on 16% higher revenue while same-store sales grew 5.5%, beating analyst estimate of 56 cents a share.

Triad Hospitals Inc, ((TRI)), owner and manager of hospitals and ambulatory-surgery centers, reported that Q4 earnings advanced 11% to $54.6 million, or 63 cents a share, from $49.2 million, or 64 cents in the same period the prior year on 17% revenue growth, missing analyst estimate of 66 cents.

State Auto Financial ((STFC)), insurer, reported Q4 net income of 71 cents a share, down from 93 cents in the same period the prior year, missing analyst forecasts of 87 cents a share. The company’s net income from operations reached 73 cents a share, down from 92 cents. Revenue advanced to $280.9 million from $273 million, as net premiums written advanced to $244.8 million from $239.9 million.

Federal Signal Corp, ((FSS)), manufacturer of safety and signalling equipment, reversed to a Q4 net loss of 54 cents a share, down from a year-ago profit of 13 cents a share despite 2.1% revenue growth. Federal Signal added that the loss included a $34 million write-down from the decision to exit the refuse truck body business. Income from continuing operations was 28 cents a share.

US Airways Group Inc ((LCC)), carrier, reported a Q4 net loss of $3.26 a share, up from $4.66 a share in the year-ago period. Last period’s loss reflects that the prior period inclusion of only America West''s data. The company included a $69 million unrealized loss related to the airline''s fuel hedges as well as $36 million of special charges and $18 million in charges partially related to the remarketing and warrant repurchase associated with America West''s prior Airline Transportation Stabilization Board loan. If not for these items, the company would have reported a quarterly loss of $1.72 a share, considerably up from $3.89 a share a year ago. Quarterly revenue reached $2.58 billion as opposed to $697 million. Analysts had been expecting a loss of $1.93 a share.

Memory Pharmaceuticals Corp, ((MEMY)),manufacturer of drugs to treat central nervous system conditions, reported that its Q4 net loss was narrower, coming to 10 cents a share, from $6.84 million in the prior quarter on 52.5% revenue growth. The company stated that its net loss included a $2.2 million noncash gain referring to warrants issued in a September private placement.