US & World Daily Markets Financial Briefing 01-10-2010

Click Here

Stocks Turn Mixed After Tepid Economic Data

Stocks have turned mixed in mid-morning trading on Friday, as the markets are digesting a mixed batch of economic data. While consumer spending and income rose more than expected and construction spending picked up unexpectedly, manufacturing activity surprised to the downside.

The major averages are currently on opposite sides of the unchanged line, with the Nasdaq posting a modest loss. The Nasdaq is currently down 4.68 points or 0.2 percent at 2,363.94, the Dow is up 10.60 points or 0.1 percent at 10,798.65 and the S&P 500 is up 0.04 or less than 0.1 percent at 1,141.24.

A report released by the Institute for Supply Management on Friday showed a notable slowdown in the pace of growth in the manufacturing sector in the month of September, although activity in the sector still expanded for the fourteenth consecutive month.

The ISM said its index of activity in the manufacturing sector fell to 54.4 in September from 56.3 in August, but a reading above 50 indicates continued growth in the sector. Economists had been expecting the index to fall to a reading of 54.8.

Norbert J. Ore, chair of the ISM Manufacturing Business Survey Committee, said, "While the headline number shows relative strength this month as the PMI reading of 54.4 percent is still quite positive, the overall picture is less encouraging."

Meanwhile, the Commerce Department released a report showing that construction spending rose by 0.4 percent in August to an annual rate of $811.8 billion after falling 1.4 percent to an annual rate of $808.6 billion in July. The increase surprised economists, who had expected spending to decrease by 0.5 percent.

A separate report released by Thomson Reuters (TRI) and the University of Michigan showed a notable upward revision to their reading on consumer sentiment in the month of September, but the index was still down from the previous month.

The report showed that the consumer sentiment index for September was revised up to a reading of 68.2 from the previously reported reading of 66.6. The index came in above economist estimates of 67.0, although it is down from 68.9 in August.

Before the start of trading, the Commerce Department reported that personal spending increased by 0.4 percent in August, matching the increase that was seen in July. The increase in spending came in slightly above the expectations of economists, who had expected spending to rise by 0.3 percent.

The report also showed that personal income rose by 0.5 percent in August after edging up by 0.2 percent in July. Economists had been expecting income to increase by 0.3 percent.

On the corporate front, Hewlett-Packard (HPQ) announced that it has appointed Leo Apotheker as CEO and president. Apotheker is the former CEO of German tech firm SAP AG (SAP).

Meanwhile, oil giant BP Plc (BP) reported that the total cost of the oil spill in the Gulf of Mexico has ballooned to $11.2 billion. The firm also said it has put up assets for collateral in regards to its $20 billion spill liability fund.

Technology outsourcing and consulting firm Accenture (ACN) said that its fourth-quarter profit surged 75 percent from last year, mainly due to the absence of restructuring charge that impacted prior year results.

Nearly every segment of Accenture recorded positive revenue growth, which led to its quarterly earnings exceeding analysts' expectations. Further, the company's board boosted its semi-annual cash dividend by 20 percent.

Sector News

Despite some of the recent downside, oil stocks remain elevated, with the NYSE Arca Oil Index posting a 1.2 percent gain. The advance has the index on pace for a five-month closing high, as the price of oil is up by $0.95 at $80.92 a barrel.

Software, airline and steel stocks also remain on the upside but have moved well off of their best levels of the day.

Meanwhile, notable weakness has emerged among railroad stocks, with the Dow Jones Railroads Index down by 1.6 percent. The decline is pulling the index down further off of last week's two-year closing high.

Health insurance and healthcare provider stocks are also trading lower but are seeing less pronounced losses.

Stocks Driven By Analyst Comments

Electric utilities firm IdaCorp (IDA) is trading higher after being upgraded at KeyBanc Capital Markets from Hold to Buy. Shares are currently up by 1.3 percent after setting a two-month intraday high earlier.

Walgreen (WAG) is also on the upside after an upgrade at Morgan Stanley from Equalweight to Overweight. The stock is posting a 0.6 percent gain, challenging the four-month closing high set earlier this week.

On the other hand, JA Solar (JASO) is seeing notable weakness after being downgraded at Auriga from Buy to Hold. The stock is down by 5.3 percent, pulling back off of a two-year closing high set on Thursday.

Other Markets

Overseas, stock markets in the Asia-Pacific region ended mostly higher on Friday. Japan's benchmark Nikkei 225 Index gained 0.4 percent, while India's BSE 30 Index advanced by 1.9 percent. The Chinese markets were closed on the day.

Meanwhile, the major European markets are mixed. The U.K.'s FTSE 100 Index is up by 0.6 percent, while the French CAC 40 Index and the German DAX Index are down by 0.9 percent and 0.4 percent, respectively.

In the bond markets, treasuries are little changed. The yield on the benchmark ten-year note is holding near the flat line at 2.515 percent.

DO YOU OWN THE RIGHT STOCKS?

Analyze Your Stocks FREE! – Click Here

TSX Set To Open Higher Amid Firm Global Cues

Bay Street stocks may open higher Friday amid firm commodities prices after China reported a strong manufacturing growth in August. Positive cues from the global equity market might also lift trader sentiment.

On Thursday, the S&P/TSX Composite Index eased 14.16 points or 0.11% to 12,368.65, a day after rising to its highest level in 2 years.

The price of crude oil moved up to a fresh two month high after a reading on China's purchasing managers' index came in better than expected. Crude for November was up $1.35 to $81.32 a barrel.

The price of gold continued to move higher, hitting fresh highs amid a weak U.S. dollar. Gold for December was up $7.50 to $1,317.10 an ounce.

In the M&A patch, TD Bank said it has completed the acquisition of The South Financial Group, Inc.

Paper manufacturer Domtar Corp. said it would sell its Woodland hardwood market pulp mill and related assets to International Grand Investment Corp. for $60 million plus working capital of $4 million.

Telecommunications industry services provider EXFO Inc. announced that it has sold its Life Sciences and Industrial Division to a global private equity firm, The Riverside Company for $24.3 million in cash.

Entertainment technology company IMAX Corp. announced that it has expand its joint venture agreement with Regal Entertainment Group to include installation of an additional 16 to 25 new IMAX theatres in the U.S.

Energy sector seismic data services provider Pulse Seismic said it acquired the entire 2D and 3D seismic data library from Divestco Inc. to more than double the size of its 3D seismic data library from approximately 12,900 to 26,400 net square kilometres.

Precious metals miner Halo Resources said it has increased the size of its non brokered private placement up to 1.8 million units for a gross proceeds of C$450,000, mainly to fund an accelerated drill program at its West Red Lake Project Ontario

Gold miner Centerra Gold announced that production was suspended at its Kumtor Mine in the Kyrgyz Republic, due to labor strike.

Oil transportation pipes maker Yalian Steel said Lan Shangguan has been appointed as the CFO and corporate secretary effective immediately.

In economic news, Canadian consumer confidence fell significantly in August, the latest survey by the Royal Bank of Canada revealed. The Canadian Consumer Outlook Index fell to 94 in August from a reading of 108 in July, the bank said.

From south of the border, the Commerce Department said that personal spending increased by 0.4%in August, matching the increase that was seen in July. Economists were expecting the spending to rise by 0.3%. Additionally, the Department said that personal income rose by 0.5% in August after edging up by 0.2% in July. Economists had been expecting income to increase by 0.3%.

Elsewhere, China said its purchasing managers' index rose to 53.8 from 51.7 in the previous month, beating economists' expectation for a reading of 52.5.

Open an account with CMS Forex with at least $500 and you will receive a 100% deposit bonus.  Every time you trade 10 lots you will get $50 until you have received all 100% of your deposit.  There is no maximum - deposit $100,000 and you can earn up to $100,000. Already have a CMS account?  You can still get the 100% bonus on your next deposit. Click here

Asian Markets End In Positive Territory

Asian markets open for trading on Friday, the first day of the new month and the fourth quarter, ended the trading session in positive territory on optimism about sustaining global economic recovery. Positive economic data in the US related to second quarter GDP and weekly jobless claims, as well as pick-up in manufacturing growth in the world's second largest economy during September lifted market sentiment. The markets in China and Hong Kong were closed for a holiday. All the other markets, excluding Australian market, ended in positive territory.

In Australia, the benchmark S&P/ASX200 Index slipped 3.70 points, or 0.08%, and closed at 4,579 points, while the All-Ordinaries Index ended at 4,635, representing a loss of 2.20 points, or 0.05%.

On the economic front, a report released jointly by the Australian Industry Group and PriceWaterhouse Coopers revealed that manufacturing activity in the country fell into a state of contraction in September. As per the report, the group's latest Performance of Manufacturing Index reading was 47.3 points, down 4.4 points from the August reading of 51.7. Readings below 50.0 indicate contraction of activity in the measured sector.

Light sweet crude oil futures for November delivery ended at $80.46 a barrel in electronic trading, up $0.49 per barrel from previous close at $79.97 a barrel in New York on Thursday.

Banks ended in negative territory. ANZ Bank slipped 0.72%, Commonwealth Bank of Australia shed 0.53%, National Australia Bank fell 1.34% and Westpac Banking lost 1.33%. Investment banker Macquarie Group was down 0.30%.

Mixed trading was witnessed among oil related stocks. Woodside Petroleum advanced 0.96%, ROC Oil Ltd surged up 3.95% and Oil Search Ltd gained 1.30%. However, Santos Ltd declined 0.78% and Origin Energy edged down 0.06%.

Resource related stocks also witnessed mixed trading. BHP Billiton gained 1.41%, Rio Tinto advanced 0.39%, Fortescue Metals gained 1.15%, Gindalbie Metals added 0.55%, Iluka Resources rose 0.50%, Macarthur Coal was up by 0.85%, Murchison Metals climbed 1.20% and Oz Minerals increased by 0.69%. Mincor Resources remained unchanged from previous close. However, Minara Resources bucked the trend and ended in negative territory with a loss of 1.31%.

In Japan, the benchmark Nikkei 225 Index rose 34.88 points, or 0.37%, to 9,404, while the broader Topix index of all First Section issues was up 0.46 point, or 0.06%, to 830.

On the economic front, a report released by the Ministry of Internal Affairs and Communications revealed that nationwide core consumer prices in Japan were down 1.0% on year in August, matching expectations following the 1.1% decline in July. Overall nationwide inflation was unchanged at -0.9% on year, again in line with forecasts. Overall inflation for Tokyo - considered a leading indicator for the nationwide trend, showed a 0.6% decline on year in September. Analysts had been expecting a 0.9% decline following the 1.0% contraction in August. Core inflation in Tokyo came in at -1.0%, matching forecasts after shedding 1.1% in August.

In a separate report, the Ministry of Internal Affairs and Communications revealed that average household spending in the country climbed 1.7% on year in August, standing at 293,361 yen. That beat forecasts for a 1.4% following the 1.1% gain in July. Wage earner household spending jumped an annual 2.7% to 323,758 yen. The report further noted that the propensity to consume added 1.6% points on year to 83.3%.

In yet another report, the Ministry of Internal Affairs and Communications revealed that the unemployment rate in the country came in at a seasonally adjusted 5.1% in August, in line with analysts' expectations, easing from 5.2% reported for the previous month. As per the report, the number of unemployed persons in August was 3.37 million, a decline of 240,000 or 6.6% from the previous year. The number of employed persons was 62.78 million, down 180,000 or 0.3% on year. The report further noted that the job-to-applicant ratio was 0.54, matching expectations after showing 0.53 in July, and the labor force participation rate was 59.9%, down 0.3% on year.

Light sweet crude oil futures for November delivery ended at $80.46 a barrel in electronic trading, up $0.49 per barrel from previous close at $79.97 a barrel in New York on Thursday.

Real estate stocks led the gains in the market. Mitsui Fudosan gained surged up 3.69%, Mitsubishi Estate climbed 3.24%, Sumitomo Realty & Development advanced 0.58%, Tokyo Tatemono Co gained 2.19%, Tokyu Land Corp. added 1.16% and Heiwa Real Estate was up 1.01%.

Pharmaceuticals also advanced into positive territory. Astellas Pharma gained 1.82%, Takeda Pharmaceuticals advanced 0.78%, Dainippon Sumitomo Pharma climbed 3.43%, Daichi Sankyo added 1.35% and Chugai Pharmaceuticals was up 1.11%.

Adding to yesterday's gains, the Indian market rose sharply on Friday, buoyed by positive global cues and strong growth in monthly sales numbers reported by auto makers like Tata Motors, Maruti Suzuki and TVS Motors. A split but pragmatic verdict on the Ayodhya dispute, data showing continued FII buying in Indian equities and a rise in India's exports for the 10th consecutive month in August also underpinned sentiment, while investors shrugged off a survey report which showed a slowdown in India's manufacturing sector growth in September.

The seasonally adjusted HSBC Purchasing Managers' Index, which measures the overall health of the manufacturing sector, fell to 55.1 in September from 57.2 in August, as growth in overall new business intake slowed for a second successive month. Elsewhere, reports about stronger growth in Chinese manufacturing activity for September and upbeat U.S. data on second-quarter GDP, weekly jobless claims and Midwest business activity for September helped ease concerns over a double-dip recession in the world's largest economy.

The 30-share BSE Sensex ended up about 375 points or 1.87% near the day's high at 20,445 and the broader Nifty rose by 113 points or 1.88% to 6,143.

The markets in China and Hong Kong were closed for a holiday.

Among the other markets in the region, Jakarta Composite Index in Indonesia gained 45.82 points, or 1.31%, to 3,547, the Strait Times Index in Singapore advanced 33.27 points, or 1.07%, to close at 3,131, and Taiwan Weighted Index edged higher by 6.42 points, or 0.08%, to close at 8,244.

DO YOU OWN THE RIGHT STOCKS?

Analyze Your Stocks FREE! – Click Here

The major European markets are trading higher on Friday, with the French CAC 40 Index rising 0.10%, while the German DAX Index and the U.K.’s FTSE 100 Index is rising 0.52% and 0.92%, respectively.

In economic news, Markit Economics reported that eurozone manufacturing activity fell to an eight-month low in September, whil e new orders received by manufacturers grew at the slowest pace in a year. The manufacturing purchasing managers' index came in at a seasonally adjusted 53.7, down from 55.1 in August, but up from the preliminary estimate of 53.6.

Meanwhile, a separate report showed that the euro area’s unemployment rate stayed at a 12-year high of 10.1% in August. The unemployment rate had remained at this level since May.

German retail sales fell 0.2% month-over-month in August, according to a report released by the German Federal Statistical Office. Economists expected a 0.4% increase for the month. On a year-over-year basis, retail sales were up 2.2%, bigger than the 1.2% increase in July.

U.S. Economic Reports

Personal spending showed another moderate increase in the month of August, according to a report released by the Commerce Department, with the report also showing a notable increase in personal income during the month.

The report showed that personal spending increased by 0.4% in August, matching the increase that was seen in July. The increase in spending came in slightly above the expectations of economists, who had expected spending to rise by 0.3%.

Additionally, the Commerce Department said that personal income rose by 0.5% in August after edging up by 0.2% in July. Economists had been expecting income to increase by 0.3%.

Individual automakers are scheduled to release their monthly U.S. sales results for September. The data will reveal the unit sales of domestically produced cars and light duty trucks, including sports utility vehicles and mini-vans, during the month.

The results of the manufacturing survey of the Institute for Supply Management, which are based on data compiled from purchasing and supply executives nationwide, are due out at 10 AM ET. Economists expect the index of activity in the sector to show a reading of 54.8 for September.

The manufacturing purchasing managers' index unexpectedly rose to 56.3 in August from 55.5 in July. The production index rose 2.9 points to 59.9, while the new orders index edged down 0.4 points to 53.1 and the order backlogs index fell 3 points to 51.5. On a surprising note, the employment index climbed 1.8 points to 60.4, a 27-year high. The inventories index also increased, rising 1.2 points to 51.4.

The Reuters/University of Michigan's final report on the consumer sentiment index for September is scheduled to be released at 9:55 AM ET. The consumer sentiment index is expected to be upwardly revised to 67 from the mid-month reading of 66.6.

The Commerce Department's construction spending report to be released at 10 AM ET is expected to show a 0.5% decline in spending for August.

Construction spending fell 1% month-over-month in July, steeper than the 0.7% decline expected by economists. Private as well as public construction spending declined from month-ago levels, dropping by 0.8% and 1.2%, respectively. In the private category, single-family and multi-family construction spending was down 2.5% each, while private non-residential construction rose 0.8%.

We Have Two Picks for September Premium Newsletter Free to join! Click here

Hewlett-Packard lost some ground in Thursday’s after hours session after it announced the appointment of Leon Apotheker, a former SAP executive, as its president and CEO, effective November 1st.

Accenture may see some buying interest after it reported that its fourth quarter earnings rose to 66 cents per share from 39 cents per share last year. Net revenues rose to $5.42 billion from the year-ago’s $5.15 billion. The company also increased its semi-annual cash dividend by 20% to 45 cents per Class A ordinary share. Analysts estimated earnings of 63 cents per share on revenues of $5.31 billion. The company expects first quarter revenues of $5.6 billion to $5.8 billion and fiscal year 2011 revenue growth of 7%-10% in local currency. Also, the company expects earnings of $3-$3.08 per share. The consensus estimates had called for full year earnings of $2.92 per share on 5.7% revenue growth.

Resource Connection could see some activity after it reported first quarter net income of 3 cents per share compared to a loss of 16 cents per share last year. The recent quarter’s results included a charge of 1 cent per share compared to 9 cents per share last year. Revenues rose 4.6% to $123.7 million. Analysts expected break-even results on revenues of $120.59 million.

Christopher & Banks may also be in focus after it reported a second quarter net loss of 7 cents per share, wider than the net loss of 6 cents per share last year. The recent quarter included a charge of 1 cent per share compared to a benefit of 2 cents per share last year. Net sales remained almost flat at $101.3 million. For the third quarter, the company expects a low single digit increase in comparable store sales. Analysts expected a loss of 5 cents per share on revenues of $105.38 million.

Lawson Software is likely to see some activity after it reported that its first quarter non-GAAP net income rose to 11 cents per share from 9 cents per share last year. Revenues climbed 3% to $174.66 million. The consensus estimates had called for earnings of 9 cents per share on revenues of $171.88 million. The company expects second quarter non-GAAP earnings of 11-12 cents per share on revenues of $184 million to $189 million. Meanwhile, analysts estimate earnings of 12 cents per share on revenues of $189.64 million.

United Natural Foods could react to its announcement that it has priced its previously announced public offering of 3.85 million shares at $33 per share.

Meanwhile, CLARCOR may move to the upside after it announced a 7.7% increase in its regular quarterly dividend from $0.0975 per share to $0.105 per share.

Merck is expected to see some activity after it announced that it would vigorously appeal a Massachusetts federal court jury verdict concerning allegations that a former subsidiary of Schering-Plough caused the Commonwealth of Massachusetts to overpay local pharmacists for prescriptions of albuterol.

Our "Value Packed" online trading seminar will show you how you can.

Click Here To Find Out More

Investors Hub Services