US & World Daily Markets Financial Briefing 11-05-2010

DO YOU OWN THE RIGHT STOCKS?

Analyze Your Stocks FREE! – Click Here

Stocks Modestly Lower In Mid-Morning Trading

Stocks are down by modest margins in mid-morning trading on Tuesday, as lingering concerns about the European debt crisis despite the availability of a substantial bailout package are prompting selling pressure. Additional unknowns regarding the future of leadership in the U.K. and potential caps on China's economic growth are also weighing on the markets.

After digesting the joint EU/IMF plan amid a rally on Monday, questions remain in the markets regarding the funding for a euro-zone fund of 440 billion euros.

Meanwhile, in China, April data showed the fastest pace of inflation in eighteen months, with prices rising by 2.8 percent. The data prompted speculation that the nation may take further measures to curtail its booming growth, which would likely curb demand for commodities such as oil, steel and copper.

On the economic front in the U.S., wholesale inventories increased for the third straight month in March, according to a report released by the Commerce Department on Tuesday, with the pace of inventory growth coming in just below the expectations of economists.

Wholesale inventories increased by 0.4 percent in March following a 0.6 percent increase in February. Economists had expected inventories to increase by about 0.5 percent.

In earnings news, engineering and construction firm Fluor Corp. (FLR) reported first quarter earnings that exceeded analysts' expectations, while its quarterly revenues fell short of forecasts. At the same time, the company reaffirmed its full year 2010 earnings outlook.

Online travel company Priceline.com Inc. (PCLN) said that its first-quarter profit more than doubled from last year, boosted by higher revenues and strong bookings. Looking ahead, however, Priceline provided second quarter earnings guidance that was below Street consensus.

The major averages have moved well off their worst levels of the day, although they currently remain stuck in negative territory. The Dow is down 58.27 points or 0.5 percent at 10,726.87, the Nasdaq is down 10.81 points or 0.5 percent at 2,363.86 and the S&P 500 is down 5.89 points or 0.5 percent at 1,153.84.

Sector News

Steel stocks are some of the morning's worst performers, with the NYSE Arca Steel Index down by 2.9 percent. With the loss, the index has partly offset the strong gain posted in the previous session.

Airline, housing, semiconductor and commercial real estate stocks are seeing similar moves, moving back to the downside after yesterday's strong gains.

On the other hand, gold stocks are extending their recent upside, as reflected by the 4.9 percent advance by the NYSE Arca Gold Bugs Index. The gain has boosted the index to its best intraday level in five months.

The advance comes amid an increase in the price of the precious metal, with gold for June delivery up by $21.30 to $1,222.10 an ounce.

Stocks Driven By Analyst Comments

Dean Foods (DF) is seeing notable weakness after being downgraded at UBS from Buy to Neutral. Shares are currently posting a loss of 7.7 percent after sinking to their lowest intraday price in eleven and a half years in earlier trading.

Tyson Foods (TSN) is also moving lower after analysts at Credit Suisse downgraded the stock from Outperform to Neutral based on valuation. The stock is down by 3.8 percent, pulling back further off of last month's two and a half-year closing high.

On the other hand, MetroPCS (PCS) is on the rise after being upgraded at Deutsche Bank from Hold to Buy. The stock is up by 4.3 percent, hovering near a recent six-month closing high.

Our integrated pattern recognition technology identifies patterns in real-time. 

Download the free demo - Click Here

TSX May Open Lower On Easing Energy Prices, Euro Zone Anxiety

Bay Street stocks are likely poised for a soft open Tuesday amid easing energy prices and waning optimism over the huge bailout package by the EU and the IMF to debt-ridden euro nations.

Commodity stocks may come under pressure on speculation that China might resort to monetary tightening soon. Credit tightening concerns resurfaced after data revealed that property prices in China rose 12.8% in April from a year ago period and consumer prices rose 2.8% in April, the fastest pace in 18 months.

Also, profit taking after the main index surged over 2% in the previous session may cap gains. On Monday, the S&P/TSX Composite Index gathered 255.47 points or 2.18% to 11,947.90, registering its biggest single day gain in 2010.

European leaders and the IMF over the weekend agreed to a nearly $1 trillion rescue fund to support euro zone nations burdened by heavy debt.

The price of crude oil failed to hold on to its previous session's recovery and slipped in morning deals. Crude for June delivery was down $0.86 to $75.94 a barrel.

Gold stocks may be in play as the price of gold was hovering near its record high, hit in early December, amid a volatile currency markets. Gold for June delivery gained $19.7 to $1,220.50 an ounce.

In corporate news, gold and copper producer Northgate Minerals reported lower first-quarter net income of $0.02 per share, compared to $0.08 per share in the same quarter last year. Analysts were expecting the company to report $0.03 per share for the quarter.

Credit Suisse downgraded Eldorado Gold shares to Neutral from Outperform, while increasing its price target to $18 from $16. The brokerage raised its 2010 EPS estimate to $0.26 from $0.18, its 2011 estimate to $0.40 from $0.35 and its 2012 estimate to $0.50 from $0.42.

Silver explorer Pan American Silver reported improved first quarter net income of $0.18 per basic share, compared to $0.08 per basic share in the year-ago quarter. Analysts were expecting the company to earn $0.24 per share for the quarter.

Silver producer Silver Standard Resources reported a wider first quarter net loss of $0.10 per share, compared to a loss of $0.04 per share in the previous year quarter. Analysts were expecting the company to report loss of $0.10 per share for the quarter.

Oil production company Petrobakken Energy reported improved first-quarter funds flow from operations of C$1.00 per share, compared to C$0.67 per share a year ago.

Oil and gas income trust Baytex Energy Trust swung to profit in first-quarter, reporting net income of C$0.46 per unit, compared to net loss of C$0.09 per unit last year.

International energy company TransAtlantic Petroleum reported a narrower first-quarter net loss of $0.04 per share, compared to $0.09 per share in the prior year period.

Raymond James trimmed its price target on the stock of uranium miner Uranium One to $3.50 from $3.70. Yesterday, the company reported first-quarter net loss of $0.04 per share, compared to net income of $0.13 per share last year.

Mineral explorer Prophecy Resource announced the appointment of Mark Lotz as Chief Financial Officer, effective Monday.

Agriculture and construction equipment dealer Rocky Mountain Dealerships reported improved first-quarter net earnings of C$0.10 per share, up from C$0.05 per share in the year-ago period. The company declared a dividend of $0.045 per common share.

Watch us trade “Live”! Watch our Top Tier Traders make ($500 - $2000) a day
in “real time” and learn how to easily duplicate the process!  Click Here for more information

Asian Markets Decline On China's Inflation, Doubts About EU Aid

The markets across Asia ended in negative territory on Tuesday amid concerns that China might further tighten measures to cool-off its growing economy after latest economic data revealed that inflation surged up to 2.9% in April Fresh concerns about the implementation of the $1 trillion package to revive the European markets from debt crisis also impacted market sentiment, despite sharp gains on Wall Street in the previous session.

In Japan, the benchmark Nikkei 225 Index fell 119.60 points, or 1.1%, to 10,411.10, while the broader Topix index of all First Section issues fell 12.54 points, or 1.3%, to 932.10

Mizuho Financial led the declines in the market after the company stated that it is planning to raise nearly 1 trillion yen through fresh issue of shares. The stock plunged 2.34% on huge volume following the news. Among the other major banks, Sumitomo Mitsui Financial lost 3.63%, Resona Holdings shed 2.73% and Mitsubishi UFJ Financial lost 1.71%.

Securities stocks also ended in negative territory. Daiwa Securities declined 3.58%, Nomura Holdings fell 1.94%, Matsui Securities Co., slipped 0.90% and Mizuho Securities lost 0.78%.

Insurance stocks ended weaker. Tokio Marine Holdings declined fell 3.15%, MS & AD Insurance Holdings fell lost 2.20%, T&D Holdings shed 1.36% and NKSJ Holdings was down 3.12%.

Shipping stocks also dropped. Kawasaki Kisen Kaisha fell 1.60%, Nippon Yusen lost 1.12% and Mitsui OSK Lines shed lost 2.27%.


In Australia, the benchmark S&P/ASX200 Index declined 51.80 points, or 1.13% to 4,548, while the All-Ordinaries Index ended at 4,573, representing a loss of 49.00 points, or 1.06%.

Metals and mining stocks ended in negative territory. BHP Billiton declined 2.23%, Fortescue Metals plunged 5.02%, Gindalbie Metals slumped 5.00%, Iluka Resources edged down 0.23%, Macarthur Coal fell 1.94%, Mincor Resources shed 2.90%, Oz Minerals fell 1.87% and Rio Tinto was down by 2.47%.

Gold stocks also ended in negative territory. Lihir Gold slipped 0.51% and Newcrest Mining shed 0.77%.

Oil stocks also ended sharply lower. Woodside Petroleum declined 1.79%, Santos shed 0.54%, ROC Oil  firm plunged 3.70%, Origin Energy lost 1.18% and Oil Search was down by 1.06%.

Banks also ended weaker. ANZ Bank shed 1.14%, Commonwealth Bank of Australia declined 1.61%, National Australia Bank fell 1.10% and Westpac Banking Corp. slipped 0.78%. Investment banker Macquarie Group was down by 1.50%.

In Hong Kong, the benchmark Hang Sang Index ended in negative territory with a loss of 280.13 points, or 1.37%, at 20,146, as traders expressed fresh doubts about the aid package sanctioned by the EU for tackling debt crisis in Euro region. Economic data released in mainland China about inflation, retail sales and industrial production also caused jitters amid speculation that China might further tighten monetary policies to cool-off its economy. Weak trading across other markets in the region, despite sharp increase in indices on Wall Street in the previous session, impacted market sentiment.

Profit taking after a relief rally in the previous session amid fears that a near $1 trillion bailout plan may not offer a long-term solution to the eurozone's debt crisis dragged the Indian market sharply lower on Tuesday. The sliding euro, a retreat across Asian and European markets on Tuesday and caution ahead of an industrial report due on Wednesday also weighed on the market. The 30-share Sensex ended in negative territory at 17, 142, down 189 points or 1.09%, while the 50-share S&P Nifty average fell 57 points or 1.11% to 5,136.

Among the other major markets open for trading, China's Shanghai Composite Index declined 51.18 points, or 1.90%, to close at 2,648, Indonesia's Jakarta Composite lost 37.54 points or 1.32% to close at 2,813, Singapore's Strait Times Index declined 22.81 points, or 0.79%, to close at 2,858, and Taiwan's Weighted Index fell 56.29 points, or 0.73%,to close at 7,608.

DO YOU OWN THE RIGHT STOCKS?

Analyze Your Stocks FREE! – Click Here

The major European markets are giving back ground on Tuesday following the sharply rally seen in the previous session. The French CAC 40 Index and the U.K. FTSE 100 Index are moving down 2.19% and 2.06%, respectively, while the German DAX Index is receding 1.18%.

On the economic front, the German Federal Statistical Office reported that Germany’s wholesale prices rose 6% year-over-year in April, faster than the 4.3% growth in the previous month. On a monthly basis, wholesale prices rose 1.7%. Economists expected a 5.2% annual increase and 0.9% monthly growth.

The final consumer price inflation report released by the German Federal Statistical Office showed that German consumer prices rose at an unrevised 1% year-over-year rate in April compared to a 1.1% rate in the previous month. On a monthly basis, consumer prices edged up 0.1%, slower than the 0.5% growth seen in March.

The results of a housing survey by the U.K.’s Royal Institute of Chartered Surveyors showed that a net 17% saw house prices rising in April compared to March's 9%. The percentage was higher than economists' expectations for a net house price balance of 10%. The RICS said the number of people selling their homes climbed quicker than the number of buyers entering the market. The increase in house prices during the past year has been largely attributed to demand outstripping supply, and the shift in balance indicates that house prices may stabilize in the coming months.

Industrial output in the U.K. rose 2% month-over-month in March, according to a report released by the U.K. Office for National Statistics. Economists had expected a mere 0.3% increase in output following a 0.9% increase in February. Manufacturing production increased a solid 2.3%.

U.S. Economic Reports

The Commerce Department is due to release its wholesale inventories report at 10 AM ET. Economists expect wholesale inventories at the end of March to show a 0.5% increase.

Wholesale inventories rose 0.6% month-over-month in February to $393.5 billion, with durable and non-durable goods inventories showing monthly increases. Inventories rose for the second straight month, suggesting that inventory build up is picking up. Wholesale sales also improved, rising 0.8% month-over-month. The inventories to sales ratio came in at 1.16 compared to 1.38 in the year-ago period.

Atlanta Federal Reserve Bank President Dennis Lockhart is scheduled to open the bank's annual Financial Markets Conference, followed by discussion on structured finance moderated by Philadelphia Fed President Charles Plosser in Atlanta at 1:15 PM ET.

Our integrated pattern recognition technology identifies patterns in real-time. 

Download the free demo - Click Here

UAL Corp. (UAUA) may be in focus after its subsidiary United Airlines reported that its consolidated passenger load factor rose 1.5 percentage points year-over-year to 81.4% in April. Traffic rose 0.6%, while capacity fell 1.2%.

McDermott (MDR) is likely to see activity after it reported that its first quarter revenues fell to $1.18 billion from $1.49 billion in the year-ago period. The company reported earnings of 26 cents per share compared to 33 cents per share in the year-ago period. On an adjusted basis, the company’s earnings were 33 cents per share. The recent quarter’s results included an after-tax charge of $29.5 million. The company also said the spin-off of Babcock & Wilcox is on track to be completed as early as June 30, 2010. Analysts’ estimates, which typically exclude one-time items, called for earnings of 36 cents per share on revenues of $1.36 billion.

Green Mountain Coffee Roasters (GMCR) is also likely to be in focus after it reported that it has received Hart Scott-Rodino Antitrust clearance for its impending acquisition of Diedrich Coffee (DDRX). The tender offer for Diedrich Coffee is set to expire at midnight on May 10th, 2010.

GenCorp. (GY) may move in reaction to an announcement by its subsidiary Aerojet that it has been selected by Boeing (BA) to supply heavy alloy weights for Boeing’s revolutionary composite main rotor blade in support of the AH-64D Apache Block III program.

Live Nation Entertainment (LYV) is likely to see some activity after it reported that its first quarter revenues rose to $723 million from $484.9 million in the year-ago period. The company reported a loss from continuing operations of 76 cents per share, narrower than the loss of $1.29 per share last year. Analysts’ estimates, which typically exclude one-time items, called for a loss of 36 cents per share on revenues of $935.20 million.

Merck (MRK) may also be in the spotlight after it said it has reached a settlement agreement with Glenmark Pharma, USA and Glenmark Pharma Ltd. regarding patent litigation. The patent covers Merck’s Zetia. The agreement allows Glenmark to launch their product on December 12, 2016 or earlier under certain circumstances ahead of the expiration of Merck’s patent exclusivity for Zetia.

Intuit (INTU) could also be in focus after it announced that it has agreed to acquire privately-held Medfusion for $91 million. LDK Solar (LDK) may also see some activity after it reported first quarter net sales of $347.6 million, exceeding the $325.86 million consensus estimate. The company reported a net loss of 6 cents per ADS. For the second quarter, the company estimates revenues of $460 million to $490 million, while analysts estimate revenues of $382.30 million.

Priceline.com (PCLN) is expected to react to its announcement that its first quarter revenues rose 26.5% to $584.4 million. The company reported pro forma net income of $1.70 per share compared to $1.09 per share last year. Analysts estimated earnings of $1.66 per share on revenues of $597.20 million. For the second quarter, the company expects pro forma net income of $2.50-$2.70 per share and revenue growth of 18%-23%. The consensus estimates call for earnings of $2.83 per share on 25.80% revenue growth.

Fluor Corp. (FLR) may also be in focus after it reported first quarter net earnings of 76 cents per share compared with $1.12 per share last year. Revenues fell to $4.92 billion from the year-ago’s $5.80 billion. Analysts estimated earnings of 74 cents per share on revenues of $5.05 billion. The company reaffirmed its 2010 earnings per share guidance of $2.80-$3.20, while analysts estimate earnings of $2.98 per share.

Legg Mason (LM) could see some activity after it reported fourth quarter net income of 39 cents per share compared to a loss of $2.33 per share last year. Revenues rose 8.8% to $671.4 million. The consensus estimates called for earnings of 35 cents per share on revenues of $663.62 million.

DO YOU OWN THE RIGHT STOCKS?

Analyze Your Stocks FREE! – Click Here

Investors Hub Services