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Stocks Turning In A Lackluster Performance In Morning Trading
Stocks are showing a lack of direction in morning trading on Monday, with the major averages having difficulty sustaining any significant moves. The choppy trading comes as traders express some uncertainty about the outlook for the markets following recent weakness.
A lack of significant economic news is also contributing to the lackluster performance by the broader markets, as many traders are staying on the sidelines ahead of the release of key January retail sales data Thursday morning.
Nonetheless, shares of Hasbro (HAS) are seeing notable strength after the toy maker reported fourth quarter net earnings that surged up 77 percent to $165.56 million or $1.09 per share from $93.58 million or $0.62 per share in the year-ago quarter. Analysts had expected the company to earn $0.81 per share.
Hasbro also reported net revenues for the quarter of $1.38 billion, up 12 percent from $1.23 billion in the same quarter last year. On average, analysts had estimated revenues of $1.34 billion.
Additionally, CVS Caremark (CVS) reported fourth quarter net income that rose to $1.05 billion or $0.74 per share from $949 million or $0.65 per share in the same quarter last year. Excluding items, the company reported earnings of $0.79 per share, a penny above analyst estimates.
The drug store operator also said its net revenues increased to $25.82 billion from $24.14 billion in the fourth quarter of 2008. Analysts had a consensus revenue estimate of $26.22 billion for the quarter.
In other corporate news, CIT Group (CIT) is likely to be in focus after it appointed former Merrill Lynch CEO John Thain as its Chairman and CEO. Thain will replace Peter Tobin, who was appointed on an interim basis after long-time CEO Jeffrey Peek resigned on January 15th.
Thain was ousted from Bank of America (BAC) about a year ago after investors expressed displeasure over the bonuses paid to executives at Merrill Lynch and his lavish spending on redecorating his office when the company was grappling with huge losses.
The major averages are currently turning in a mixed performance, with the tech-heavy Nasdaq currently posting a modest gain. While the Nasdaq is up 1.62 at 2,142.74, the Dow is down 23.05 at 9,989.18 and the S&P 500 is down 0.26 at 1,065.93.
Sector News
Gold stocks are turning in some of the market's worst performances in mid-morning trading, with the NYSE Arca Gold Bugs Index currently down by 1.6 percent. The index is moving back to the downside after surging up by more than 5 percent last Friday.
The pullback by gold stocks comes in spite of a notable increase by the price of the precious metal, which is regaining some ground after falling sharply last week. Gold for April delivery is currently up $12.30 at $1,065.10 an ounce.
Notable weakness is also visible among software stocks, as reflected by the 1 percent loss currently being shown by the NYSE Arca Software Index. The loss extends a recent downward move by the index, which has trended lower for much of the past month.
SAP AG (SAP) is helping to lead the sector lower after announcing the resignation of CEO Leo Apotheker, who will be replaced by two Co-CEOs, Bill McDermott and Jim Hagemann Snabe. Shares of SAP are currently down 2.8 percent after hitting a nearly two-month intraday low.
On the other hand, notable strength has emerged in the housing sector, as reflected by the 1 percent gain currently being shown by the Philadelphia Housing Sector Index. Despite the gain, the index currently remains stuck in a range.
Most of the other major sectors are showing only modest moves, reflecting the lack of direction being shown by the broader markets.
Stocks Driven By Analyst Comments
Shares of BioMarin Pharmaceuticals (BMRN) are under pressure in morning trading after Brean Murray downgraded its rating on the biopharmaceutical company to Hold from Buy. BioMarin is currently down 5.7 percent after hitting its worst intraday level in well over a month.
Dun & Bradstreet (DNB) is also extending a recent downward move, with the business analytics provider falling 2.7 percent. The loss by Dun & Bradstreet comes after JP Morgan downgraded its rating on the company's stock to Neutral from Overweight and cuts its price target to $80 from $87.
On the other hand, shares of Winnebago (WGO) are currently up 7.2 percent after Robert W. Baird upgraded its rating on the recreation vehicle maker to Neutral from Underperform. Winnebago is bouncing off the nearly two-month closing low set last Friday. |
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Bay Street Poised For A Lackluster Start Monday
Canadian stocks may struggle to extend Friday's late hour rally Monday morning, as commodity prices have failed to move up convincingly and were hovering just above their monthly lows. Moreover, the last hour rally in Friday was seen more of a short covering after the main index had hit its multi-month lows.
The S&P/TSX Composite Index gained 94.36 points or 0.85% to 11,223.12, on late buying Friday.
The U.S stock futures also point to a flat opening. The price of oil edged up $0.28 to $71.47 a barrel and the price of bullion was up $16.10 to $1,068.30 an ounce.
In corporate news, educational publisher McGraw-Hill Ryerson reported fourth quarter earnings of C$1.83, up from C$1.73 in the previous year.
Potash stocks may be in play on signals of improved demand for potash. Canpotex Ltd. said it has reached an agreement with Sinofert on a spot sale of approximately 350,000 MT of Canadian potash at competitive prices. With this the company is now fully committed on sales through the first quarter of 2010. Canpotex is the offshore marketing company owned by the three Saskatchewan potash producing companies, Agrium Inc. Mosaic Canada Crop Nutrition, LP, a subsidiary of The Mosaic Company, and Potash Corporation of Saskatchewan Inc.
Online search service provider Multiplied Media said that it has agreed to acquire UnoMobi Inc. together with its wholly owned subsidiary Innovation Fund III LLC for $6.175 million.
Commercial forestry plantation operator Sino-Forest said it has completed the acquisition of Mandra Forestry Holdings.
Information technology provider WebTech Wireless noted that its real-time passenger information service was officially launched on February 4th by the Societe de Transport de Laval.
Logistic services provider Vitran Corp. said its fourth-quarter net loss narrowed to $0.14 per share from $5.85 per share in the prior year period.
Broadband wireless communications service provider Wi-LAN announced that the company has signed a letter of intent to settle a lawsuit filed against it by TELUS.
Drug delivery company IntelGenx Corp. announced receipt of a Complete Response Letter from the U.S. FDA for its antidepressant CPI-300.
Brookfield Infrastructure Partners slipped to loss reporting a fourth-quarter net loss of $0.10 per share compared with a profit of $0.55 per share in the prior year period.
Modular structures rental operator Black Diamond Group said Friday that it has completed the acquisition of all of the shares of Paragon Energy Services (Saskatchewan) Ltd. for total consideration of $556,000.
In economic news, Canada Mortgage and Housing Corp. said housing starts were up 5.8% in January to a seasonally adjusted 186,000 units Economists expected the annual rate of starts to come in at about
Commodity, Currency Markets
Crude oil futures are edging up $0.20 to $71.39 a barrel after the commodity extended its losses in the week ended February 5th. In the previous week, oil fell $1.70 or 2.33% to $71.19 a barrel.
Last Monday, oil rose sharply, advancing over $1.50 a barrel after encouraging manufacturing and personal income data generated buying interest in the commodity. Oil extended its gains on Tuesday, rising close to $3 a barrel.
However, crude oil futures declined modestly on Wednesday amid the release of the weekly oil inventory report showing an increase in crude oil stockpiles. The commodity slumped by a little less than $4 a barrel on Thursday and pulled back again on Friday to close the week lower.
Gold futures, which slid $52.20 or 4.72% to $1,052.80 an ounce in the week ended February 5th, are currently rising by $16.50 to $1,069.30 an ounce.
On the currency front, the U.S. dollar advanced against most currencies in the week ended February 5th due to its appeal as a safe haven. The increase in risk aversion led to dollar buying, as traders shunned risky bets like equities and commodities.
However, the dollar fell against the yen to close the week down 1.13% at 89.25 yen. Against the euro, the dollar gained 1.33% to $1.3678. Currently, the U.S. dollar is trading at 89.29 yen and is valued at $1.367 versus the euro. |
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Asian Markets End In Negative Territory On Economic Concerns
The markets across Asia ended in negative territory on increasing concerns about the sovereign credit concerns in Europe. A recovery in the final hour of trading on Wall Street that helped major averages end in positive territory failed to enthuse Asian markets, as traders look for more cues to support the sustainability of the economic recovery.
In Japan, the benchmark Nikkei 225 Index fell 105.27 points, or 1.1%, to 9952, while the broader Topix index of all First Section issues fell 8.77 points, or 1.0%, to 883.01
On the economic front, the Ministry of Finance revealed that the country's current account surplus stood at 900.8 billion yen in December, slightly lower than economists expectation of 1.011 trillion yen for the month and also lower than 1.103 trillion surplus reported in November. On a seasonally adjusted basis, the current account surplus for the month was 1.100 trillion yen, lower than a surplus of 1.304 trillion reported in the previous month.
In a separate report, the Bank of Japan revealed that M2 money stock plus CDs rose 2.9% on year in January, coming in at 766.5 trillion yen, following a revised 3.1% annual gain in December. The report further noted that the M3 money stock climbed 2.1% on year to 1,066 trillion yen, following the 2.2% annual gain in the previous month.
Automotive stocks ended in negative territory. Toyota Motor lost 1.06%, Honda Motor fell 2.10%, Suzuki Motor slipped 1.77%, Nissan Motor slumped 2.59% and Mitsubishi Motor declined 1.63%.
Trading companies also ended weaker. Mitsubishi Corp. slipped 0.99%, Toyota Tsusho Corp. fell 1.38%, Sumitomo Corp., lost 1.28%, Mitsui & Co., declined 0.85% and Marubeni Corp. edged down 0.40%.
Mixed trading was witnessed among bank stocks. Sumitomo Mitsui Financial declined 1.21%, and Mitsubishi UFJ Financial slipped 0.44%. However, Mizuho Financial added 0.58% and Resona Holdings gained 2.26%.
Kirin Holdings was the major loser in the market, having slumped 7.35% after the company announced that the proposed merger talks with Suntory Holdings fell through.
Panasonic Corp., which reported results on Friday, declined 5.32%, while Sony Corp shed 3.63% on concerns about sustaining global economic recovery.
In Australia, the benchmark S&P/ASX 200 Index added 7.30 points, or 0.16% to close at 4,521, while the All-Ordinaries Index ended at 4,539, representing a modest gain of 6.30 points, or 0.14%.
Light sweet crude oil futures for March delivery ended at $71.55 a barrel in electronic trading, up $0.36 per barrel from previous close at $71.19 a barrel in New York on Friday.
Banks ended in positive territory after Treasurer Swan announced on Sunday that the Federal Government would wind back the wholesale funding guarantee for local lenders by 31st March 2010. Among the major banks, Westpac Banking climbed 2.83%, ANZ Bank added 0.33%, Commonwealth Bank of Australia edged up 0.19% and National Australia Bank advanced 0.63%. Investment banker Macquarie Group gained 0.24%.
Mixed trading was witnessed among metals and mining stocks. BHP Billiton edged up 0.13%, Rio Tinto added 0.87%, Fortescue Metals rose 1.11%, Iluka Resouces advanced 0.88% and Oz Minerals gained 1.53%. However, Gindalbie Metals lost 1.10%, Macarthur Coal fell 2.20%, Minara Resources declined 2.40%, and Murchison Metals slipped 0.48%.
Gold stocks ended in positive territory after bullion prices gained in the international market. Lihir Gold advanced 1.82% and Newcrest Mining gained 1.19%.
Mixed trading was witnessed among oil stocks. Woodside Petroleum gained 1.95% and Oil Search added 0.39%. However, Santos slipped 0.38% and Origin Energy lost 1.05%.
Retail stocks also ended mixed. JB Hi-Fi Ltd plunged 5.12%, David Jones edged down 0.22% and Woolworths lost 0.58%. However, Harvey Norman gained 1.93% and Wesfarmers added 0.48%.
In Hong Kong, the Hang Seng Index ended in negative territory with a loss of 114.19 points, or 0.58%, at 19,551, dragged down by property stocks, china related resource stocks and banks amid increasing concerns about global economic recovery after sovereign credit risks rattled European markets last week. Fresh concerns about sustaining economic recovery in the US, especially amid weak unemployment numbers, is impacting market sentiment.
In South Korea, the KOSPI Index ended in negative territory with a loss of 14.33 points, or 0.91%, at 1,553, as traders led by foreign institutional investors and domestic institutional investors preferred to sell-off blue chips technology and banking stocks amid increasing concerns about global economic recovery. Sovereign credit concerns in Europe, failure of the G7 meeting to arrive at some meaningful conclusions, and weak trading across other markets in the region also impacted market sentiment.
The Indian market ended a volatile session moderately higher Monday. Tracking mixed Asian cues, the benchmark Sensex slipped to a low of 15,652 by noon before crawling back into positive territory. The Sensex gained over 400 points from the day's lows, helped by short covering and bargain hunting in battered stocks near crucial support levels, buoyed by a positive opening of the European markets and higher U.S stock futures. However, as the session progressed, the recovery proved short-lived and the indexes pared gains. After moving in a range of 16,061- 15,652, the Sensex finished at 15,936, up 20 points or 0.13% from its previous close. Likewise, the Nifty recovered nearly 50 points from the day's lows before ending almost flat at 4,760.
Among other major markets open for trading in the region, Indonesia's Jakarta Composite Index lost 43.40 points, or 1.72% to close at 2,476 and China's Shanghai Composite Index slipped 4.23 points, or 0.14%, to close at 2935. However, Taiwan's Weighted Index managed to end in positive territory with a marginal gain of 3.01 points, or 0.04% at 7,216, and Strait Times Index in Singapore edged up 10.00 points, or 0.37%, to close at 2,694. |
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After seeing notable strength in early trading, the major European markets have pulled back well off their highs, but they are currently all in positive territory. The French CAC 40 Index and the German DAX Index are up 0.5% and 0.6%, respectively, while the U.K.’s FTSE 100 Index is clinging to a modest gain.
On the economic front, a survey by the Sentix research group revealed that the index for euro zone investor sentiment fell to –8.2 in February from –3.7 in January. Economists had expected an increase in the index to –2.7.
The expectations indicator dropped to 3.75 for February from January's 11.25. The reading is the weakest since July last year. The current situation index also fell to -19.5 from -17.5, equaling December's level.
U.S. Economic Reports
Following the slew of data released last week, the economic calendar for this week is relatively light. Nevertheless, traders who seek increased visibility on the economic recovery are now closely watching each piece of economic data.
The Commerce Department's retail sales report for January, the weekly jobless claims report and the preliminary consumer sentiment report of Reuters/University of Michigan are likely to be on the radar in the unfolding week.
Market participants may also pay attention to the Commerce Department's trade balance report for December, a Fed speech scheduled for the week and announcements concerning treasury auctions of 3-year notes, 10-year notes and 30-year bonds. The wholesale and business inventories reports for December and the Treasury Budget are among the other reports due to be released during the week.
Retail sales are likely to show fairly decent growth in January, as some of the strength in late holiday shopping carried into January. While solid chain store sales and gasoline sales could lend some support to the headline number, weak auto sales and softness in building material sales could act as drags.
The Reuters/University of Michigan's consumer sentiment index has been trending between 65 and 75 since last April. Given the state of the labor market, very few expect an improvement in their personal finances this year. The stock market volatility we have been witnessing in recent sessions could also impact sentiment. |
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Shares of Hasbro could see early strength after the toy maker reported fourth quarter net earnings that surged up 77% to $165.56 million or $1.09 per share from $93.58 million or $0.62 per share in the year-ago quarter. Analysts had expected the company to earn $0.81 per share.
Hasbro also reported net revenues for the quarter of $1.38 billion, up 12% from $1.23 billion in the same quarter last year. On average, analysts had estimated revenues of $1.34 billion.
Additionally, CVS Caremark reported fourth quarter net income that rose to $1.05 billion or $0.74 per share from $949 million or $0.65 per share in the same quarter last year. Excluding items, the company reported earnings of $0.79 per share, a penny above analyst estimates.
The drug store operator also said its net revenues increased to $25.82 billion from $24.14 billion in the fourth quarter of 2008. Analysts had a consensus revenue estimate of $26.22 billion for the quarter.
CIT Group, which emerged from insolvency last December, is likely to be in focus after it appointed former Merrill Lynch CEO John Thain as its Chairman and CEO. Thain will replace Peter Tobin, who was appointed on an interim basis after long time CEO Jeffrey Peek resigned on January 15th.
Thain was ousted from Bank of America about a year ago after investors expressed displeasure over the bonuses paid to executives at Merrill Lynch and his lavish spending on redecorating his office when the company was grappling with huge losses.
Strum, Ruger & Co. could see some activity after it announced that its board has expanded its stock repurchase program to $10 million from $4.7 million.
Cathay General Bancorp. may also be in focus after it said it completed its previously announced offering of 13.07 million shares. The company also said the net proceeds from the offering were $125.2 million.
Xerox may move in reaction to its announcement that the shareholders of Affiliated Computer Services and Xerox approved its impending acquisition of Affiliated Computer Services. |