U.S. Gains Lift Europe

Elena
22 Feb, 2006
Frankfurt

U.S. stocks advanced, reflecting eased concerns about higher interest rates and inflation on upbeat economic data and oil prices drop. Shares of Intel were under pressure after it was downgraded on inventory concerns. In earnings news, Sprint Nextel, Harrah''s Entertainment and Big Lots reported Q4 profit drop below estimates. Taser profit dropped 98% in Q4 on lower sales and higher expenses. The Chinese Internet search system Baidu com.Inc. reported quadrupled profit that beat expectations.

U.S. MARKET AVERAGES

U.S. stocks moved higher Wednesday as inflation and interest rates concerns eased down owing to core consumer prices rise in line with estimates, and oil prices drop of over $1.

The core rate of inflation, which excludes energy and food, rose by a tame 0.2% in January, in line with economists' forecasts. The broader Consumer Price Index climbed 0.7% on higher prices for gasoline and electricity, a greater increase than economists expected and the largest rise in prices in four months.

Shares of companies particularly sensitive to interest rates, such as banks and large manufacturers, rose.

Dow components Procter & Gamble ((PG)), Boeing ((BA)), JP Morgan ((JPM)) and Caterpillar ((CAT)) each set new 52-week highs. VA Software ((LNUX)) climbed sharply on earnings news, extending its peak. Wachovia ((WB)) was another notable stock reaching a fresh peak.

Intel ((INTC)) was the most conspicuous mover to a new 52-week low. Northfield Laboratories ((NFLD)) broke to a new low on a WSJ article about its PolyHeme product.

In midday trading, the Dow Jones industrial average rose 73.80, or 0.67%. Sharp rises a handful of its 30 component stocks powered the Dow ahead of broader indexes. The Standard & Poor's 500 index rose 8.69, or 0.68%, and the Nasdaq composite index rose 16.45, or 0.73%.

Bonds rose, with the yield on the 10-year Treasury note falling to 4.53% from 4.57% late Tuesday.

MOVERS AND SHAKERS

Baidu com. Inc. ((BIDU)) reported Q4 net earnings of $3 million, or 9 cents a share. The Chinese Internet search engine posted total revenue jump of 29.2%, or $14.2 million compared with last-year same period. Baidu.com forecast Q1 revenue of $15.1 million to $16.1 million. The stock rose 12%.

AmSurg Corp. ((AMSG)), ambulatory-surgery center operator, reported Q4 net earnings of 28 cents a share, compared with 29 cents last year on revenue increase of $102.9 million from $87.3 million. For Q1 the company expects adjusted earnings of 32 cents to 33 cents a share. The stock gained 8.3%.

InPhonic ((INPC)), online wireless services provider, reported its Q4 net loss widened to $24.6 million, or 69 cents a share, from $7.9 million, or 37 cents, in the year-earlier period. Revenue rose to $85.2 million from $48.7 million. The adjusted loss for the quarter was $14.6 million, or 41 cents a share vs. earnings of $1.9 million, or 5 cents a share last year. InPhonic projected Q1 adjusted earnings of 5 cents to 6 cents a share on revenue of $83 million to $85 million. The company’s shares dropped 24%.

Herbalife ((HLF)) reported Q4 net income rise of $30 million, or 41 cents a share, compared with a net loss of $37.4 million, or 68 cents a year ago. Revenue rose to $409 million from $341.6 million. Herbalife expects Q1 sales growth of 16% to 18% and per-share profit of 37 cents to 41 cents. The stock fell 12%.

Intel ((INTC)) was downgraded at Think Equity Partners to sell from accumulate. The firm also lowered its price target on the stock to $16 from $26. Intel’s shares fell 2.4%.

ECONOMIC NEWS

The Department of Labor released its report on consumer prices in the month of January on Wednesday, showing that prices rose more than economists had expected due largely to a rebound by energy prices.

The Labor Dept. said that its consumer prices index rose 0.7 percent in January after an unrevised 0.1 percent decrease in December. Economists had been expecting a somewhat more modest increase of about 0.5 percent.

As mentioned above, the price growth in January reflected a rebound in energy prices, which rose 5.0 percent in January after falling 2.1 percent in December and 8.1 percent in November. Prices for transportation also showed a notable increase, rising 1.8 percent.

The report also showed that core prices, which exclude food and energy prices, rose 0.2 percent in January after a downwardly revised increase of 0.1 percent in December. The growth in core prices came in line with economist estimates.

INTERNATIONAL MARKETS NEWS

Asian-Pacific benchmarks lost ground Wednesday to close broadly down, hurt by weakness on Wall Street and climbing oil prices. The Nikkei reversed from yesterday’s sharp rise of 3% to finish lower 0.7%. Across the region, Taiwan’s Weighted index tumbled 1.5%, South Korea’s Kospi lost 0.4%, while Australia’s All Ordinaries and the Bombay Stock Exchange’s Sensitive index slightly advanced.

European stocks rebounded from earlier losses, lifted by strong U.S. markets and well-received corporate data from brewers like Heineken and miners like Anglo American. The German DAX 30 rose 1%, the French CAC 40 climbed 1%, and London’s FTSE 100 gained 0.25%.

OIL, METALS, CURRENCIES

Crude oil prices eased back on expectations of positive oil inventories data. Light sweet crude March delivery declined 99 cents to $61.75 a barrel. Gasoline lost 3 cents to $1.4400, while heating oil declined nearly 2 cents to $1.6500. Natural gas dropped 33 cents to $7.4000 per 1,000 cubic feet. London Brent for April delivery dropped 55 cents to $61.05 a barrel.

European gold continued its decline. In London gold traded at the fixed price of $551.60 bid per troy ounce, down from $554.40. In Zurich the precious metal traded at $552, down from $554.60. In Hong Kong gold gained 60 cents to close at $553.70. Silver rose to $9.57 from $9.51.

The U.S. dollar turned mixed against other major currencies. The euro traded at $1.1888 down from $1.1977. The dollar bought 118.47, down from 118.70. The British pound stood at $1.7411, down from $1.7460.

EARNINGS NEWS

Orbital Sciences Corp, ((ORB)), manufacturer of rockets for military and civil space projects, reported Q4 net income of $7.6 million, or 12 cents a share, down from $166.1 million in the year-ago period. The company attributed the sharp drop to a change in income tax expense and. Revenue for Q4 advanced 13.9%.

Big Lots, ((BLI)), retailer, reported Q4 net earnings 13 cents share, down from 51 cents in the year-ago period despite 6% sales growth. On a continuing operations basis, the company reported 33 cents a share, down from 50 cents, missing on that basis analyst estimate of 43 cents a share. Revenue reached $1.39 billion and same-store sales were up 2.5%.

Sprint Nextel Corp, ((S)), communication products and solutions provider, reported Q4 earnings of 7 cents a share, down from a profit of 29 cents a share a year-ago. On an adjusted basis, before amortization and certain non-recurring items, the company reported earnings of 33 cents a share in Q4. Revenue advanced 63%, compared the prior year period, missing analyst estimate by a penny.

IHOP Corp, ((IHP)), restaurant operator, reported a Q4 profit to 53 cents a share, from 52 cents a year earlier, beating analysts’ forecasts of 51 cents a share. Earnings per share rose despite the decline in profit because there were fewer shares outstanding in the most recent period.

Landry''s Seafood Restaurants, ((LNY)), restaurant operator, reported Q4 earnings of 18 cents a share, down from a profit of 49 cents a share a year-ago, topping analyst view of earnings of 14 cents a share. If not for items, such as costs related to a refinancing and an income tax benefit, the company reported adjusted earnings of 22 cents a share in Q4. Revenue advanced in Q4 to $328.8 million from $259.8 million in the year-ago period.

Jack In The Box, ((JBX)), fast-food restaurant chain, reported that Q1 earnings dropped 0.8% to $25.2 million. Earnings per share advanced, though, to 70 cents from 68 cents a share on stock buybacks. Q1 included 5 cents a share in stock options expensing and 4 cents in charges from a legal settlement. Revenue advanced 11.1% or up 5.5% on a same-store basis. The company beat analysts’ forecasts for earnings of 68 cents.

QLT Inc, ((QLTI)), provider of healthcare products, reported a Q4 loss of $4.04 a share, down from a loss of $2.64 a share a year-ago. The results include a charge of $410.5 million related to goodwill impairment stemming from its acquisition of Atrix Laboratories. On an adjusted basis, the company reported 11 cents a share for Q4. Sales fell in Q4, compared with the year-ago period.

Taser International Inc, stun gun maker, reported Q4 earnings, break even on a per share basis, down from a profit of 7 cents a share a year-ago. Sales dropped in Q4 to $12.6 million from $19.2 million in the same period a year ago.

American Woodmark Corp, ((AMWD)), kitchen cabinet maker, reported Q3 earnings of 37 cents a share, down from a profit of 42 cents a share year-ago, topping analyst estimate of 26 cents a share. Sales advanced 4% in Q3, compared with the prior year period.

Ritchie Bros, ((RBA)), auctioneer, reported Q4 earnings of 41 cents a share, up from a profit of 33 cents a share a year-ago, beating analysts’ views for a profit of 36 cents a share. Gross auction sales advanced in Q4 to $589.9 million from $549.8 million in the same period a year ago.