US & World Daily Markets Financial Briefing 07-01-2010

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Stocks Little Changed In Mid- Morning Trading

Stocks are near the flatline in mid-morning trading on Thursday, recovering from some initial profit taking. The major averages are mixed after a largely in-line weekly jobless claims report released ahead of the opening bell this morning.

This morning, the Labor Department said that initial jobless claims for the week ended January 2nd inched up by 1,000 to 434,000 from last week’s revised total of 433,000. Economists expected a larger increase.

The report also showed that continuing claims, a statistic that measures the number of people receiving ongoing unemployment help, dropped 179,000 to 4.802 million.

The markets are now looking forward to Friday’s all-important monthly employment report, with today’s movement coming as traders position themselves for the data.

On the corporate front, same-store sales figures for December were mixed. Saks Inc. (SAKS) reported that its comparable sales rose by nearly 10 percent, Kohl`s Corp.(KSS) sales were up by more than 4 percent, while Barnes & Noble Inc.(BKS) saw sales slip by just over 5 percent.

In earnings news, Bed Bath & Beyond (BBBY) reported third quarter earnings that bested analyst estimates, while its fourth quarter and full-year EPS forecast also soundly beat analyst projections.

Home-builder Lennar Corp. (LEN) announced a fourth quarter profit compared to a heavy loss in the same period last year. The bottom-line, along with quarterly revenues, handedly beat Street estimates.

The Dow is currently up by 13.15 to 10,586.83, the S&P 500 is up by 0.77 points to 1,137.91 while the Nasdaq is down by 3.16 to 2,297.93.

Sector News

Trucking stocks are some of the morning’s worst performers, with the Dow Jones Trucking Index posting a loss of 1.3 percent. The index is down for a third straight session, setting a one-month intraday low.

Electronic storage, gold and semiconductor stocks are also under pressure, while the day’s losses are being moderated by gains in airline stocks. The NYSE Arca Airline Index is up by 2.3 percent, setting a fresh twenty-two month intraday high.

Housing, health insurance and banking stocks are also notably higher, further helping to offset the losses in the major averages.

Stocks Driven By Analyst Comments

Brigham Exploration (BEXP) is moving lower in mid-morning trading after being downgraded at BMO Capital Markets from Market Perform to Underperform. Shares have slipped by 5 percent, puling off of the seventeen-month closing high posted on Wednesday.

Infosys (INFY) is also retreating following a downgrade by Jefferies & Co from Buy to Hold. The stock has lost 2.7 percent, falling further off of the nearly three-year closing high set earlier this week.

On the other hand, shares of Gartner (IT) are on the rise after being upgraded by Piper Jaffray from Neutral to Overweight. The broker also raised its target price on the stock from $19 to $27. The stock is currently up by 5.2, jumping out to its best intraday level in nearly two months.

Bay Street May Pause For A Breather After 5-day Rally

Toronto stocks are likely to open marginally lower on Thursday and pause for a breather after advancing for the last five days. Easing commodities prices are also likely to weigh on the resource heavy Bay Street. The U.S. stock futures also point to a slack opening.

The Canadian main index had moved up over 2% in the last five sessions, posting particularly a strong performance on Monday with a triple digit gain. On Wednesday, the S&P/TSX Composite Index gained 56.45 points or 0.48% to settle at 11,944.54, a new 15-month high.

In commodities market, the price of oil slipped by $0.59 to $82.59 and bullion prices eased $4.70 to $1,131.20.

In corporate news, information technology provider MacDonald, Dettwiler and Associates said that it has received a contract valued in excess of C$22.5 million from Thales Alenia Space to provide a number of advanced technology solutions.

Andean Resources announced that it has appointed Scott Brunsdon as Chief Financial Officer, effective January 06.

Toromont Industries said Wednesday that it has varied and extended its offer to acquire all of the outstanding trust units of Enerflex Systems Income Fund and all of the exchangeable limited partnership units of Enerflex Holdings Limited Partnership. Toromont revised it offer price to C$14.25.
 
Coalcorp Mining Inc. said that it had entered into an agreements to sell the La Francia mine and all of the issued and outstanding shares of Adromi Capital Corp. to Goldman Sachs Group for over $150 million.

Gold Corp. said it had agreed with New Gold to acquire 70% of the El Morro project from Xstrata Plc.

Vehicle component maker Magna International took part in $10.5 million equity financing by Toronto based Lithium America Corp, which would help it to gain regular supply of its raw material.

Pacific Rubiales Energy said it had entered into an agreement with Oleoducto Central SA to acquire preferential rights to use available capacity on its pipeline systems.

Canadian airline operator Air Canada said system traffic rose 3.4% year over year in December 2009.

From across the border, the U.S. labor Department said initial claims for jobless benefits rose by 1,000 to a seasonally adjusted 434,000 compared to the 447,000 expected by economists Traders will also look ahead for Ivey Purchasing Managers Index from Canada, scheduled to be released later today.

Commodity, Currency Markets

Crude oil futures are receding $0.64 to $82.54 a barrel after advancing for the tenth straight session on Wednesday. In the previous session, the commodity rose $1.41 to $83.18 a barrel despite the release of the weekly oil inventory report showing a 1.3 million increase in crude oil stockpiles to 327.3 million barrels in the week ended January 1st. Inventories of crude oil were above the upper limit of the average range for this time of the year.

Gasoline stockpiles also increased, rising by 3.7 million barrels, with the inventories of gasoline remaining above the upper limit of the average range. However, distillate inventories edged down by 0.3 million barrels, but were above the upper boundary of the average range. Refinery capacity utilization averaged 80% over the four weeks ended January 1st compared to 80.3% in the previous week.

The firming trend in crude oil is partly due to the weakening of the dollar and party due to expectations that the extreme cold weather in the Northern hemisphere can drive up demand for the commodity.

Gold futures are currently receding $6.20 to $1,130.30 an ounce. In the previous session, gold rose $17.80 to $1,136.50 an ounce, as the dollar weakness helped the precious metal gain ground.

On the currency front, the U.S. dollar is trading at 93.133 yen compared to the 92.3195 yen it fetched at the close of New York trading on Wednesday. At the same time, against the euro, the dollar is currently valued at $1.4325 versus yesterday’s $1.4407.

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Profit Taking Drags Asian Markets Into Negative

The markets across Asia snapped their three-day gains and ended in negative territory as traders preferred to lock in gains from the recent rally and move to the sidelines awaiting economic data from the U.S.

In Japan, the benchmark Nikkei-225 Index ended down 49.79 points, or 0.46%, to 10,682, while the broader Topix index of all First Section issues gained 0.72 points, or 0.08% to 932.

Profit taking after three days of gains dragged the indices lower. Lack of direction amid fears of overheating in the market as well as caution ahead of key economic data in the U.S also impacted market sentiment.

Automotive stocks ended weaker on profit taking. Honda Motor lost 1.59%, Toyota Motor fell 1.28%, Suzuki Motor declined 1.97%, Nissan Motor shed 1.13% and Isuzu Motors slipped 2.25%.

Exporters also ended in negative territory. Canon fell 2.94%, Sharp declined 1.25% and Sony Corp. edged down 0.04%.

Japan Airlines dragged the index with a loss of 7.14% on huge volumes amid speculation that shareholders will have to shoulder some responsibility in the struggling carrier's restructuring. The other airline company All Nippon Airways managed to end in positive territory with a gain of 1.82%.
 
Banking stocks ended in positive territory limiting the losses on profit taking as traders evinced fresh buying interest. Sumitomo Mitsui Financial surged up 4.29%, Mizuho Financial gained 1.72%, Mitsubishi UFJ Financial advanced 0.85% and Resona Holdings climbed 2.58%.

Shipping stocks also advanced after Morgan Stanley raised its evaluation on the sector. Nippon Yusen surged up 5.84%, Mitsui OSK Lines gained 3.16% and Kawasaki Kisen Kaisa rose 3.41%.

In Australia, the benchmark S&P/ASX Index declined 22.00 points, or 0.45% to close at 4,899, while the All-Ordinaries Index ended at 4,931, representing a loss of 16.30 points, or 0.33%.

On the economic front, data released by the Australian Bureau of Statistics revealed that retail sales unexpectedly rose a seasonally adjusted 1.4% during November, surpassing the mean economists' expectations of a 0.3% rise. Total retail sales for the month was A$20.08 billion, the data noted.

Bank stocks ended in negative territory dragging the index into red. ANZ Bank declined 2.38%, Commonwealth Bank of Australia shed 0.96%, National Australia Bank fell 0.91% and Westpac Banking slipped 1.31%.

Mining and metal stocks ended mixed. BHP Billiton edged down 0.11%, Fortescue Metals shed 0.58%, and Macarthur Coal slipped 0.50%. However, Gindalbie Metals rose 1.67%, Iluka Resources gained 1.61%, Murchison Metals climbed 1.90% and Rio Tinto added 0.53%..

Among gold stocks, Lihir Gold added 0.29% and Newcrest Mining rose 1.17%.

Mixed trading was witnessed among Oil stocks. Woodside Petroleum advanced 1.03% and Origin Energy climbed 2.27%. However, Oil Search Ltd lost 0.98% and Santos fell 1.16%.

In Hong Kong, the Hang Seng Index snapped the gains and ended in negative territory with a loss of 147.22 points, or 0.66% at 22,269, as traders preferred to lock in gains from the recent rally and move to the sidelines ahead of key economic data in the U.S. Chinese banks led the losses after Chinese central bank unexpectedly tightened liquity.
 
In South Korea, the KOSPI Index ended in negative territory with a loss of 21.87 points, or 1.28% at 1,683 as traders preferred to lock in gains following recent gains. Foreign institutional investors offloaded technology and auto stocks on profit taking. Weak cues from other markets in the region and caution ahead of key economic data in the US also impacted market sentiment. LG Electronics declined 7.63% and LG Display lost 5.76%.

Profit taking near resistance levels, subdued global cues and a heavy sell-off in the IT sector ahead of third-quarter earnings announcement from Infosys early next week dragged Indian shares notably lower on Thursday. The benchmark Sensex slipped into the red and ended at 17,616, down 85 points or 0.48%, while the Nifty fell 19 points or 0.35% to 5,263.

Among other major markets open for trading in the region, Taiwan's Weighted Index declined 90.20 points, or 1.08% to close at 8,237, Straits Times Index in Singapore lost 17.24 points, or 0.59%, to close at 2,913, Indonesia's Jakarta Composite Index fell 16.40 points, or 0.63% to close at 2,587, and China's Shanghai Composite Index shed 61.44 points, or 1.89%, to close at 3,193.

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The major European averages are also trading lower on Thursday, with the French CAC 40 Index, the German DAX Index and the U.K.’s FTSE 100 Index moving down 0.15%, 0.37% and 0.02%, respectively.

On the economic front, the Monetary Policy Committee of the Bank of England announced its decision concerning interest rates following its 2-day rate setting meeting. The central bank opted to hold interest rates unchanged at 0.5%. The decision was in line with the expectations of economists. The bank also decided to continue with its program of asset purchases totaling GBP 200 billion financed by the issuance of central bank reserves.

Meanwhile, German Federal Ministry of Economics and Technology said German industrial orders rose 0.2% month-over-month in November following the 1.9% increase in the previous month. Annually, orders rose 1.8%.

The results of the Halifax survey showed that house prices in the U.K. rose 1.1% annually in December, representing the first increase since March 2008. On a monthly basis, house prices climbed 1% in December, slower than the 1.3% increase in the previous month.

Continuing with the positive readings, a monthly survey done by the European Commission showed that economic confidence in the 16-nation bloc rose to 91.3 in December from 88 in November. The industrial confidence index rose to –16 from –19, while the index measuring confidence in the construction sector fell to –28 from –26.

However, on a sour note, a report released by the German Federal Statistical Office showed that retail turnover in Germany fell a seasonally and calendar adjusted 1.1% in November compared to the previous month. Economists had estimated a 0.3% increase for the month.

U.S. Economic Reports

The U.S. Labor Department revealed that initial jobless claims came in at 434,000 for the week ended on January 2. This was up 1,000 from the previous week's revised total of 433,000.

Continuing claims, a statistic that measures the number of people receiving ongoing unemployment help, dropped 179,000 to 4.802 million.

Kansas City Federal Reserve Bank President Tom Hoenig is scheduled to speak on the economic outlook at the Central Exchange in Kansas City at 1 PM ET.

Earnings

Constellation Brands (STZ) reported that third quarter sales fell to $987.7 million from $1.031 billion in the year-ago period. The company’s comparable earnings fell 10% to 54 cents per share. Analysts estimated earnings of 52 cents per share on revenues of $905.33 million. On a comparable basis, the company estimates full year 2010 earnings of $1.60-$1.70 per share compared to the $1.66 per share consensus estimate.

Lennar’s (LEN) reported fourth quarter earnings of 19 cents per share compared to a loss of $5.12 per share last year. The recent quarter’s results benefited from a tax benefit and also included a charge of 89 cents per share related to adjustments in the value of land and other write offs. Revenues declined 29% year-over-year to $913.7 million. Analysts expected a loss of 48 cents per share on revenues of $863 million.

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Beazer Homes (BZH) may react to its announcement that it has priced its previously announced offering of 19.5 million shares at $4.60 per share. Separately, the company said it has priced its previously announced offering of $50 million aggregate principal amount of its 7-1/2% notes due 2013. These notes will be converted into its common stock at a conversion rate of 4.4547-5.4348 shares per $25 principal amount of notes.

CDC Software (CDCS) is likely to see some activity after it said it would acquire all outstanding shares of customer experience software and services provider Chordiant (CHRD) for $105.1 million or $3.46 per share.

Bed Bath & Beyond (BBBY) traded higher in Wednesday’s after hours session after it reported third quarter net earnings of 58 cents per share compared to 34 cents per share last year. Net sales rose 10.8% to $1.975 billion. The consensus estimates called for earnings of 43 cents per share on revenues of $1.90 billion. For the fourth quarter, the company expects earnings of 67-71 cents per share and for the year, it estimates earnings of $2.11-$2.15 per share. Analysts estimate earnings of 62 cents per share for the fourth quarter and $1.91 per share for the year.

A. Schulman (SHLM) could move to the upside after it reported first quarter adjusted net income of 76 cents per share compared to 33 cents per share last year. Net sales fell 6.6% to $362.9 million. The Street had estimated earnings of 43 cents per share.

Immucor (BLUD) is also likely to see some buying interest after it said its second quarter revenues rose 13% to $73 million. The company’s earnings per share rose to 28 cents per share from 24 cents per share last year. The recent quarter’s earnings included a charge of 2 cents per share. Analysts estimated earnings of 26 cents per share on revenues of $79.06 million. For fiscal 2010, the company expects earnings of $1.10-$1.17 per share, including a 5-6 cents per share charge, on revenues of $322 million to $332 million. The consensus estimates call for earnings of $1.15 per share on revenues of $329.99 million.

Ruby Tuesday (RT) could also be in focus after it reported second quarter earnings of 1 cent per share compared to a loss of 73 cents per share in the year-ago period. The year-ago results included a pre-tax charge of 71 cents per share. Revenues fell 5.6% to $273.46 million. The Street estimated a loss of 2 cents per share on revenues of $267.37 million.

Tessera Technologies (TSRA) may move to the downside after it reported preliminary results, expecting revenues of $56 million for the fourth quarter. For the full year, the company expects revenues of $299 million. The company guided first quarter revenues to $59 million to $61 million. The consensus estimates call for revenues of $61.30 million for the fourth quarter, $64.52 million for the first quarter and $305.81 million for 2009.

Websense (WBSN) is likely to see some activity after it reported that its fourth quarter billings of $118 million and 2009 billings of $352 million were above its previous guidance range of $106 million to $116 million for the quarter and $340 million-$350 million for the year.

Shaw Group (SHAW) could move in reaction to its announcement that it reported a loss of 25 cents per share for the first quarter compared to a loss of 48 cents per share for the year. Excluding its Westinghouse business, which is subject to currency fluctuations, the company noted that its earnings were 57 cents per share, lower than 75 cents per share in the year-ago period. Analysts estimated earnings of 45 cents per share for the quarter. Revenues eased to $1.86 billion from the year-ago’s $1.90 billion.

Zymogenetics (ZGEN) could also be in focus after it announced that it has commenced an underwritten public offering to sell 12 million share.

Christopher & Banks (CBK) is likely to see some activity after it reported that its third quarter earnings from continuing operations were 19 cents per share on revenues of $132 million. Analysts estimated earnings of 21 cents per share on revenues of $132 million. The company expects fourth quarter same store sales to decline in the high single digits.

Among retailers, Hot Topic (HOTT) reported a 10.9% drop in comparable store sales for December. The company lowered its fourth quarter earnings estimate to 18-20 cents per share from its earlier estimate of 23-26 cents per share. Analysts estimate earnings of 24 cents per share for the quarter. Meanwhile, Zumeiz (ZUMZ) said its comparable store sales edged up 0.3% in December compared to a 12.3% decline in the year-ago period. Based on better than planned quarter-to-date sales and product margins, the company raised its earnings and sales guidance for the January quarter. Costco (COST) reported a 9% increase in comparable store sales for December.

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