Oil Stocks Rise Modestly

Elena
23 Feb, 2006
New York City

Stocks opened lower as investors turned to profit-taking on inflation concerns and disappointing earnings from Viacom. Toll Bros beat estimates, posting Q1 net income rise of 49%, with revenue up 35% to $1.34 billion and its backlog up 22% to $5.95 billion. CBS posted a narrower Q4 net loss of $6 a share vs. a loss of $10.99 a share a year ago. Shares of Reuters Group PLC dropped after the company posted 25% profit rise in 2005 but a disappointing 2006 outlook.

U.S. MARKET AVERAGES

U.S. stocks opened lower as investors locked in profits on inflation concerns and disappointing earnings from Viacom.

The latest unemployment figures showed strength in the labor market as initial jobless claims fell by 20,000 from the previous week to 278,000 , a sharper drop than expected. However, market remained concerned that steady employment, followed by higher consumer spending, could push prices higher and spark inflation.

In its first earnings report since spinning off CBS Corp., Viacom posted Q4 profit drop due to poor performance at its Paramount movie studio arm as well as one-time restructuring charges.

Toll Brothers posted Q1 net income rise of 49% to $163.9 million, or 98 cents a share, with revenue up 35 percent to $1.34 billion and its backlog up 22 percent to $5.95 billion. Quarterly results beat analyst expectations for earnings of 92 cents a share. The homebuilder cut its 2000 profit outlook.

Insurance stocks were among the worst performers in the opening hours, dragged by Hartford Financial Services ((HIG)) and St. Paul Travelers ((STA)), each falling by about 2.5%. Gold and housing stocks also showed some weakness.

The airline sector was one of the few notable movers to the upside, lifted by continued weakness in oil prices.

In the first hour of trading, the Dow Jones industrial average fell 35.06, or 0.32%. The Standard & Poor''s 500 index lost 3.90, or 0.3%, and the Nasdaq composite index dropped 6.10, or 0.27%.

Bonds fell, with the yield on the 10-year Treasury note climbing to 4.56% from 4.53% late Wednesday.

MOVERS AND SHAKERS

GTC Biotherapeutics ((GTCB)) said it expects European regulators to issue a negative opinion on its Atryn treatment for blood clots because an insufficient number of patients were enrolled in a trial. Atryn is a form of human antithrombin, a protein in human plasma that has anticoagulant and anti-inflammatory properties. The stock tumbled 40%.

U.S. Lec Corp ((CLEC)), provider of Internet protocol, data and voice communications services, reported a wider Q4 loss of $30.3 million, or 99 cents a share vs. a loss of 33 cents last year. Revenue rose to $100.1 million from $92.1 million in the same period a year earlier. The company announced that it resolved two inter-exchange carrier disputes, resulting in a charge of $23.3 million in the fourth quarter. U.S. Lec expects to receive $9 million in cash as part of these settlements. The stock dropped 15.3%.

Express Scripts ((ESRX)), pharmacy distribution firm, posted Q4 net income jump of 37% to 75 cents a share vs. 53 cents a year ago on revenue of $4.6 billion. The quarterly results were in line with estimates. The company offered a 2006 earnings forecast that put street estimates at the low end of its range. The stock fell 6%.

Group 1 Automotive ((GPI)) posted a 44% rise in Q4 net income to $16.2 million, or 66 cents a share, as improving used vehicle retail margins and a decline in used vehicle wholesale losses offset a 1.1% decline to $1.43 billion in revenue. The company’s shares rose 11%.

Eclipsys Corp ((ECLP)), healthcare information technology software, swung to profit in Q4, reporting earnings of $5 million, or 10 cents a share, up from a year-ago loss of $2.9 million, or 6 cents a share. Revenue rose 20.5% to $105.1 million from $87.2 million in the same period a year earlier. The average estimate of analysts was for a profit of 10 cents a share on revenue of $99.8 million. The stock jumped 12%.

GlobalSantaFe Corp ((GSF)), offshore-drilling contractor, said a rise in day rates for offshore drilling rigs and the sale of one of its drillships propelled it to a solid fourth-quarter profit, reversing a year-ago loss. The company’s shares gained 2.3%.

ECONOMIC NEWS

Crude oil inventories ticked up in the latest week, according to government statistics released Thursday, though the advance was less strong than in the previous week. Meanwhile, stocks of gasoline recorded another rise as well.

The Department of Energy's Energy Information Administration revealed that crude oil inventories climbed by 1.1 million barrels for the week ended February 17, rising to 326.7 million barrels from the prior week's level of 325.6 million barrels. This followed an advance of 4.9 million barrels in the previous week. Oil inventories were 9.9% higher than their levels of the same time last year.

Gasoline inventories posted a week-over-week increase of 100,000 barrels, the government said. This added to a recent string of gains, but was a far smaller build than in the previous week. Gasoline stocks were 0.9% above their levels of last year. Inventories of distillate fuel oil ticked down by 1.3 million barrels in the most recent week.

Thursday morning, the Department of Labor released its report on initial jobless claims in the week ended February 18, showing that jobless claims fell unexpectedly.

The Labor Dept. said that jobless claims fell to 278,000 from previous week''s upwardly revised figure of 298,000. Economists had been expecting jobless claims to edge up to 300,000 compared to the 297,000 originally reported for the previous week.

The four-week moving average also moved back to the downside after ending a six-week streak of decreases in the previous week. The less volatile moving average fell to 281,750 from the previous week''s revised average of 283,250.

The report also showed that continuing claims rose to 2.495 million in the week ended February 11 from the preceding week''s revised level of 2.454 million.

INTERNATIONAL MARKETS NEWS

Asian-Pacific benchmarks posted solid gains to close Thursday session in the positive. Regional markets were boosted by U.S. markets gains, fresh multi-year highs in Europe and oil prices decline. The Nikkei led gainers, rising 2% on optimism about domestic economy. South Korea’s Kospi surged 1.5%, followed by Hong Kong’s Hang Seng which climbed 1.1% and Taiwan’s weighted index, up 0.9%. Shanghai composite recovered from early losses to rise 0.4%.

European stocks hit new multi-year highs at mid-day, lifted by gains in the utility sector amid takeover speculations. However, Reuters Group and BAE Systems weighed on market sentiment after releasing annual results. The German DAX 30 rose 0.2%, the French CAC 40 gained 0.1%, while London’s FTSE was slightly up at 5,873.

OIL, METALS, CURRENCIES

Crude oil prices retreated on expectations of higher oil inventories data. Light sweet crude April delivery declined 24 cents to $60.77 a barrel. Gasoline marginally rose to $1.4789, while heating oil was steady at $1.6513. Natural gas traded even at $7.292 per 1,000 cubic feet. London Brent for April delivery dropped 7 cents to $60.37 a barrel.

European gold rose, rebounding from recent declines. In London gold traded at the fixed price of $552.50 bid per troy ounce, up from $551.60. In Zurich the precious metal traded at $552.60, up from $552. In Hong Kong gold dropped $1.70 to close at $552. Silver fell to $9.50 from $9.57.

The U.S. dollar lost ground against other major currencies. The euro traded at $1.1943 up from $1.1900. The dollar bought 117.08, down from 118.51. The British pound stood at $1.7516, up from $1.7425.

EARNINGS NEWS

CBS Corp, ((CBS)), broadcasting company, posted a Q4 net loss of $6 a share, narrower than a loss of $10.99 a share in the year-earlier quarter. The company reported a profit of 41 cents a share on a pro forma basis from continuing operations. Revenue grew to $3.83 billion from $3.75 billion a year ago, lifted by growth in television, outdoor and parks/publishing. On a pro forma basis, the company topped analysts’ expectations of a profit of 39 cents a share.

Pinnacle Airlines Corp, ((PNCL)), carrier, reported that Q4 net income dropped 3% to 45 cents a share, from the year-ago period. If not for one-time items, the company would have gained 60 cents a share. Revenue declined 17%.

Hornbeck Offshore Services Inc, ((HOS)), OSVs serving the offshore oil and gas provider, reported Q4 net income of 55 cents a share, swinging from a loss of 48 cents a share a year ago on revenue growth, topping analysts’ forecasts of 46 cents a share. Operating income improved to $24.9 million from $10.2 million.

Host Marriott Corp, ((HMT)), hotel chain owner, announced that Q4 net income advanced 21% to 19 cents a share, from the year-ago quarter on revenue growth. Funds from operations for Q4 soared 26% to 44 cents a share, below analysts’ forecasts for FFO of 51 cents a share. The company expects comparable hotel revenue per available room to increase by 7% to 9% in Q1 and by 7% to 10% for the full year.

Sypris Solutions Inc, (SYPR)), technology-based outsourced services provider, reported a Q4 net loss of a penny a share, up from a loss of 4 cents a share a year-ago on revenue growth, topping analyst estimate of a loss of 3 cents a share. The company’s cash flow from operations advanced to $24.5 million from $21 million.

Noble Energy Inc, ((NBL)), energy company, reported Q4 earnings of $1.27 a share, up vs. a profit of 73 cents a share a year-ago on higher revenue. The company said that the rise in earnings was due to higher daily production and realized prices, beating analyst estimate of $1.23 a share.

EMC Insurance Group Inc, ((EMCI)), insurance company, reported Q4 net income of $1.40 a share, swinging from a net loss of 4 cents a share a year ago on revenue growth, as premiums earned soared 18%. Operating profit came to $1.34 a share in Q4. The company beat analyst estimate for earnings of $1.28 a share.

Marvel Entertainment Inc, ((MVL)), entertainment company, reported Q4 net income of 26 cents a share, a penny down from 27 cents in the same period the previous year, missing analyst views of 31 cents a share. A pretax cash charge of $12.5 million against results for the 2005 quarter was recorded for early termination of its licensing agreement with Toy Biz Worldwide Ltd. Q4 sales amounted to $117.1 from $100.5 million.

Hearst-Argyle Television, ((HTV)), network-affiliated television stations and radio stations operator, reported a 75% decline in Q4 net income to 11 cents a share, due to a lack of political advertising and a $29.2 million charge on assets from hurricane damage to the New Orleans station. If not for the charge, it would have earned 30 cents a share, topping analysts’ estimate of 26 cents a share.

NII Holdings, ((NIHD)), a provider of mobile communications services, reported that Q4 net income shed 3% to 33 cents a share, from a year ago. Operating revenue advanced 41% as the company added 202,500 net subscribers in Q4.