GM Climbs 5%

Elena
09 Mar, 2006
New York City

Stock markets opened higher, reflecting news that the Bank of Japan decided to end its easy monetary policy. Lower oil prices and easing inflation concerns also supported sentiment. TiVo Inc. reported narrower quarterly loss on 38% revenue rise. General Motors rose 5% as the company neared a deal with the United Auto Workers union for cutting costs.

9:45AM- Stocks opened higher
Stock market averages slightly advanced at opening due to easing inflation concerns and news that the Bank of Japan decided to return to a more normal monetary policy, abandoning the ultra-easy policy. The Nasdaq was up more than 0.5%, while the gains in the Dow and S&P 500 were each up about 0.3%. Investors’ attention will be also directed to bond yields to see whether parts of the yield curve stay normalized, after the yield on the 10-year note edged past the yield on the 2-year note. In economic news, the Commerce Department reported that January trade deficit jumped by 5.3% to an all-time high of $68.5 billion, exceeding analysts'' expectations. Meanwhile, the Labor Department said that unemployment claims rose by 8,000 last week to a seasonally adjusted 303,000 in contrast to expectations of a decline.

The gold sector was a notable gainer in the early going, rebounding from a 2-month low. The computer hardware sector moved to the upside to gain 1.1%. The semiconductor space rose about 1%. General Motors ((GM)) rose 5% as the company and the bankrupt auto parts maker Delphi Corp. neared a deal with the United Auto Workers union for cutting costs. Drug testing company SFBC Intl ((SFCC)) fired a middle manager and delayed Q4 earnings and outlook. The stock jumped 22%. Retailer Coldwater Creek ((CWTR)) advanced 15% on better-than-expected quarterly results. Software maker Wind River ((WIND)) dropped 20% on disappointing Q4 results. Electronics manufacturer Orbit International ((ORBT)) fell nearly 20% on quarterly data. Parlux Fragrances ((PARL)) declined 11%.

The Department of Labor reported that trade deficit reached an all-time high
The department of Labor released its report on the U.S. trade deficit in the month of January on Thursday, showing that the deficit widened more than expected in January to reach a new all-time high. The report showed that the trade deficit widened to $68.5 billion in January from a downwardly revised $65.1 billion in December. Economists had expected a trade deficit of $66.5 billion compared to the $65.7 billion shortfall originally reported for December. The wider trade deficit came as an increase in imports outpaced an increase in exports. The report said imports rose 3.6 percent to $182.9 billion while exports rose 2.5 percent to $114.4 billion.

The rise in imports was largely due to increases in imports of industrial supplies and materials, capital goods, automotive vehicles, parts, and engines, and consumer goods. An increase in oil prices also contributed to the rise in imports, with the price of imported oil increasing 4.4 percent to $51.93 a barrel in January from $49.76 a barrel in December. The U.S. ran an $8.4 deficit with OPEC in January, up 11.6 percent from December. The report also showed that the U.S. trade deficit with China rose nearly 10 percent to $17.9 billion in January from $16.3 billion in December. The trade deficit with China is the U.S.''s largest with any single country.

The Department of Labor released its report on initial jobless claims in the week ended March 4, showing that jobless claims increased unexpectedly. With the increase, jobless claims topped 300,000 for the first time since the week ended January 7. The report said jobless claims rose to 303,000 from the previous week''s revised figure of 295,000. The increase came as a surprise to economists, who had expected jobless claims to fall to 290,000 compared to the 294,000 originally reported for the previous week. The Labor Dept. also said that the less volatile 4-week moving average rose to 293,500 from the previous week''s unrevised average of 287,250. With the increase, the moving average has moved higher in three of out of the past four weeks.

Additionally, the report showed that continuing claims rose to 2.506 million in the week ended February 25 from the preceding week''s revised level of 2.477 million. On Friday, the Labor Dept. is due to release its report on employment in the month of February. The report is expected to show that the economy added around 220,000 jobs in February, while the unemployment rate is expected to remain at 4.7 percent.

9:00 AM Stock futures pointed to a higher opening on lower oil prices
U.S. stock futures were sitting above the flat level, indicating a higher start of Thursday session as investors’ inflation concerns got a relief from declining oil prices. Pre-market trading sentiment was positively influenced by solid gains in Japan after the Bank of Japan announced an end to its ultra-easy monetary policy.

Google announced late Wednesday it is close to a settlement of a class action lawsuit concerning click fraud which refers to the act of purposely clicking ad listings without intending to buy from the advertiser. The lawsuit, dating back to 2001, was filed by Lane''s Gifts & Collectibles LLC and alleged that Google and Yahoo conspired with its advertising partners to conceal the magnitude of click fraud in order to avoid making refunds. Under the settlement Google would pay up to $90 million, including the total amount of credits and the attorney fees. Meanwhile, Yahoo said it stands firmly by its proprietary click protection system.

Crude oil prices hovered over $60 a barrel as OPEC decided to keep output levels steady and inventory report showed ample fuel supplies. Light sweet crude April delivery gained 25 cents to $60.27 a barrel. Gasoline gained was up $1.6567. Heating oil added nearly a cent to $1.7025. Natural gas rose 3 cents to $6.679 per 1,000 cubic feet. London Brent for April delivery added 45 cents to $60.48 a barrel. European gold prices gained ground Thursday, rebounding from recent decline. In London gold rose to $545.60 bid per troy ounce, up from $542.10. In Zurich the precious metal advanced to $546.50 from $542.50. In Hong Kong gold fell $3.80 to $546.80. Silver opened at $9.82, down from $9.90. The U.S. dollar traded lower against other major currencies. The euro traded at $1.1926, up from $1.1919. The dollar bought 117.28 yen, down from 117.88. The British pound was quoted at $1.7387, up from $1.7373.

8:30 AM A Couple of Companies Report Decline in Quarterly Profit
PanAmSat Holding Corp., ((PA)), satellite operator, reported Q4 earnings of 40 cents a share, up from 26 cents a share in the year-ago period. The results included a $6.9 million gain on an interest rate swap agreement. The company beat analysts’ expectations for earnings of 18 cents a share. Revenue increased 10% to $229.2 million from last year''s $207.7 million.

Casella Waste Systems Inc, ((CWST)), solid waste hauler, reported Q3 net income of 2 cents a share, up a cent from 2 cents a share in the year-ago period. Revenue dropped 11%. The company beat analysts’ forecasts for earnings of 1 cent a share.

National Atlantic Holdings Corp, ((NAHC)), property-casualty insurer, reported Q4 net income of 19 cents a share, a decline from $1.28 a share in the year-ago period. Q4 profit reflected charges connected with losses in the company homeowners segment, due in part to what it called a disproportionate number of total losses resulting from fires. The effect of these losses amounted to 27 cents a share, the company added. The company missed analysts’ estimates for earnings of 31 cents a share. Revenues for Q4 dropped 23.2%, to $44.6 million from the prior year''s $58.1 million, as written premiums fell.

Methode Electronics Inc, ((METH)), manufacturer of electronic component and subsystem devices, reported Q3 net income of 8 cents a share, considerably down from 13 cents in the year-ago period. Analysts views were for earnings of 8 cents a share, in line with results. The company''s cost of products sold advanced to 81.6% of net sales in Q3 from previous year’s 77.8%.

Claire''s Stores Inc, ((CLE)), jewelry retailer, reported that Q4 net income gained 16.7% to 69 cents a share, as net sales advanced 5% to $414.7 million and same-store sales advanced 6% in Q4. The company topped analyst estimate by a penny. The company added that sales received a boost from its first stores in Spain, Holland and Belgium, which were opened during the last year, and added it intends to enter at least one other new country in the next 12 months.

EGL Inc, ((EAGL)), logistics firm, reported that Q4 net income jumped 48% to 47 cents a share on 9.6% revenue growth. Q4 included a number of charges and gains, including an overcharge penalty, a charge on a U.K. warehouse fire, and tax benefits.

Stage Stores Inc, ((STGS)), clothing retailer, reported Q4 net income rose 5.9% to 68 cents a share. Sales advanced 7.6% to $418.6 million. The company met analyst estimate for earnings of 68 cents a share. The company added that same-store sales advanced 5.6%, as same-store sales in Louisiana and Mississippi were particularly strong as customers hit by hurricanes Katrina and Rita replaced their lost belongings.

Hansen Natural Corp, ((HANS)), soft drink maker, reported that Q4 net income more than doubled to 75 cents a share, from owing to a substantial rise in the sale of Monster Energy drinks. The company''s net sales for Q4 increased 94.7% to $98 million.

8:00 AM The Bank of Japan abandons easy monetary policy
Asian-Pacific benchmarks traded mostly higher after the Bank of Japan brought relief to regional markets, stating a decision to abandon its ultra-easy monetary policy. The bank concluded that the economic and price conditions are favorable for making a shift to a more normal monetary policy. The Nikkei soared 2.6% to 16,036.91 ending a five-session decline. The yen also got a boost on the news, rising to 117.44 against the dollar. Across the region, Taiwan Weighted index rose 0.4%, Hong Kong’s Hang Seng gained 0.1%, recovering from recent losses with the help of property stocks, while South Korea’s Kospi fell 0.2% for a third session in a row, dragged by Samsung Electronics decline.

European stocks advanced at mid-day, rebounding from two consecutive lower sessions. Stocks were boosted by a slide in oil prices, comparatively strong close on Wall Street, and upbeat earning reports from insurance and retail companies, such as Royal & Sun Alliance and Carrefour. A sharp 22% jump in the shares of drug maker Elan also lifted sentiment. The German DAX 30 climbed 0.9%, the French CAC 40 advanced 0.5%, and London FTSE 100 rose 0.6%.The Bank of England announced a decision to leave interest rates on hold at 4.5%, as expected.