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Stocks Holding Onto Gains In Mid-Morning Trading
After a strong start, stocks have given back some ground and are up by only modest margins in mid-morning trading on Tuesday. Nonetheless, the major averages are all in positive territory, looking to build on yesterday's gains.
A lack of economic data and disappointing February motor vehicle sales have weighed on market sentiment, while continued merger and acquisition activity was responsible for the early optimism.
On the corporate front, CF Industries Holdings, Inc. (CF) said it has offered to acquire Terra Industries Inc. (TRA) for $37.15 in cash and 0.0953 of a share of CF Industries common stock for each Terra share. The offer has a total value of $47.40 per share based on CF Industries' closing price on Monday.
Additionally, the focus is also on major automakers as they report their monthly sales figures for February.
General Motors reported that its sales rose 11.5 percent compared with the same period last year but fell well short of the Wall Street estimate of a 24 percent sales spike.
The firm joined rival Toyota Motors (TM) by announcing its own recall this morning, recalling 1.3 million compact cars over a power-steering issue.
Amid a light day on the economic front today, speeches from Boston Federal Reserve Bank President Eric Rosengren and Minneapolis Federal Reserve Bank President Naranyana Kocherlakota are likely to be in focus in the early afternoon.
In earnings news today, AutoZone Inc. (AZO) reported second-quarter net income of $2.46 per share, topping the $2.35 per share forecast by analysts for the quarter. Net sales for the quarter totaled $1.51 billion, edging out estimates for $1.49 billion.
The major averages have moved back to the upside in recent trading, although they remain off their best levels. The Dow is currently up 28.11 points or 0.3 percent at 10,431.90, the Nasdaq is up 10.40 points or 0.5 percent at 2,283.97 and the S&P 500 is up 4.81 points or 0.4 percent at 1,120.52.
Sector News
Biotechnology stocks are extending their recent run-up in mid-morning dealing, with the NYSE Arca biotechnology Index up by 1.9 percent. The advance has lifted the index to a fresh historic intraday high.
Gold stocks are also moving notably higher, as reflected by the 1.8 percent gain by the NYSE Arca God Bugs Index. Within the sector, Golden Star Resources (GSS) is seeing a strong outing, rising by 1.9 percent to its best intraday price in six weeks.
The strength among gold stocks comes amid a pick-up in the price of the precious metal, with gold for April delivery currently up by $8.70 to $1,127.00 an ounce.
Telecommunications, banking and healthcare provider stocks are also seeing buying interest, while modest weakness is present among retail stocks.
Stocks Driven By Analyst Comments
Cinemark (CNK) is moving higher in mid-morning trading after being upgraded at BMO Capital Markets from Market Perform to Outperform. The stock has gained 2.6 percent, setting its best intraday price in over two years.
Westar Energy (WR) is also on the rise following an upgrade at Wells Fargo from Market Perform to Outperform. Shares are currently up by 1.9 percent but remain in a trading range.
On the other hand, Southern Union (SUG) is moving lower after being downgraded at Stifel Nicolaus from Buy to Hold. The stock has lost 1.7 percent, pulling back off of yesterday's eighteen month closing high. |
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Early Signals Positive On Bay Street As BoC Holds Steady
Bay Street stocks are poised to open higher Tuesday amid encouraging earnings reports from major companies. Also the Bank of Canada's today's decision to hold on to its interest rates at a record low likely to help lift sentiment. However, stocks may face pressure at higher levels as the main index was hovering near its weekly high.
The S&P/TSX Composite Index ended Monday adding 98.42 points or 0.85% to 11,728.06, after data revealed the economy grew at a faster rate in the fourth quarter of 2009.
In economic news, Bank of Canada left its interest rates unchanged at 0.25%, in line with economists' expectations. It also projected it would hold current policy rate until the end of the second quarter of 2010, barring inflationary pressures.
The price of oil edged up by $0.52 to $79.22 a barrel and the bullion added a marginal $5.1 to $1,123.40 an ounce.
In corporate news, Bank of Montreal said its first quarter income rose to C$1.12 per share from C$0.39 per share from the year ago quarter, beating analysts' estimates for a profit of C$1.03 per share.
Fertilizer stocks may be in play after CF Industries Holdings renewed it's offer to about $4.73 billion to acquire rival Terra Industries.
Gold miner Gleichen Resources reported net loss of C$0.04 per share for the year ended October 31, 2009, wider than a loss of C$0.01 per share in the prior year.
Natural food supermarkets operator Planet Organic Health reported that its second quarter net loss narrowed to C$2.16 million from C$2.8 million in the prior year quarter.
Mineral properties developer Silvermex Resources announced that it has appointed Hallein Darby as Chief Financial Officer.
Petroleum and Natural gas firm Penn West Energy Trust priced a proposed offering of senior unsecured notes to be issued by Penn West Petroleum Ltd., a wholly-owned subsidiary and administrator of the Trust, on a private placement basis in the US and Canada with an aggregate principal amount of about $300 million.
Software solutions provider CryptoLogic reported fourth quarter net loss of $1.97 per share, compared to net loss of $2.05 per share last year.
Hemisphere GPS reported a net loss of $0.04 per share in the fourth quarter 2009 compared to a net loss of $0.05 per share in the year ago period.
Investment banker GMP Capital swung to profit in fourth quarter reporting net income of C$0.25 per share compared with a net loss of C$0.27 per share in the prior year period. |
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Asian Markets Extend Gains Amid Cautious Trading On Recovery Hopes
The markets across Asia, excluding HongKong, China and Singapore, ended in positive territory on Tuesday but well off the highs on optimism about sustaining economic recovery. Positive cues from Wall Street where the major averages ended moderately higher, and expected 25 basis points rate hike from Reserve Bank of Australia lifted market sentiment. However, profit taking and caution ahead of key economic data later in the week in the US kept traders on sidelines.
In Japan, the benchmark Nikkei 225 Index advanced 49.78 points, or 0.49%, to 10,222, while the broader Topix index of all First Section issues was up 3.78 points, or 0.42%, to 903.
On the economic front, a report released by the Ministry of Internal Affairs and Communications revealed that unemployment rate in the country came in a seasonally adjusted 4.9% in January, beating expectations for a steady performance after showing 5.1% in December. The report noted that the number of employed persons in January was 62.13 million, a decrease of 790 thousand or 1.3% from the previous year. The number of unemployed persons in January was 3.23 million, an increase of 460 thousand or 16.6% from the previous year.
In a separate statement, the Bank of Japan revealed that the monetary base in the country rose 2.2% year-on-year in February to 95.69 trillion yen, after adding an annual 4.9% in January. Banknotes in circulation were up 0.1%, while coins in circulation shed 0.7%, the Bank noted.
Light sweet crude oil futures for April delivery ended at $78.53 a barrel in electronic trading, down $0.17 per barrel from previous close at $78.70 a barrel in New York on Monday.
Exporters ended in positive territory as the local currency, Yen, stabilized against the US dollar. Canon Inc., added 0.80%, Panasonic Corp. advanced 0.80%, Sharp Corp. gained 0.97% and Sony Corp. climbed 1.31%.
Shipping stocks also ended higher on optimism about economic growth. Kawasaki Kisen Kaisha remained unchanged from previous close. Mitsui OSK Lines climbed 2.62% and Nippon Yusen advanced 0.62%.
Among machinery stocks, Hitachi Construction Machinery gained 3.24%, Komatsu Ltd gained 2.07%, Mitsubishi Heavy Industries rose 1.81% and Sumitomo Heavy Industries advanced 0.87%.
Real estate related stocks however ended in negative territory. Mitsubishi Estate declined 1.06%, Mitsui Fudosan edged down 0.33% and Sumitomo Realty Development shed 0.75%.
In Australia, the benchmark S&P/ASX 200 Index added 15.40 points, or 0.33% to close at 4,702, while the All-Ordinaries Index ended at 4,710, representing a gain of 15.00 points, or 0.32%.
On the economic front, the Reserve Bank of Australia raised its interest rate by 25 basis points as growth is set to be close to the trend. The central bank said today's action is a step to move interest rates closer to average.
The Australian Bureau of Statistics revealed that retail sales in the country increased 1.2%, on a seasonally adjusted basis, in January, surpassing economists' mean expectations. The Bureau stated that retail sales rose to A$20.145 billion for the month, compared to a downwardly revised A$19.91 billion in December.
In a separate statement, the Australian Bureau of Statistics revealed that the number of building permits issued in the country decreased in January. According to the statement, building approvals totaled 14,045 during the month, down a seasonally adjusted 7.0% from the previous month. The statement further noted that approvals for private sector houses were up a seasonally adjusted 0.3% in January, while permits for other private sector dwellings were down 29.1%.
The Australian Bureau of Statistics revealed that the general government final consumption expenditure increased 1.8% or A$931 million in chain volume terms in the December quarter from the preceding quarter. The Statistics Bureau further noted that growth in general government gross fixed capital formation was 15.7%, and total public gross fixed capital formation was 10.2% higher than in the previous quarter.
Light sweet crude oil futures for April delivery ended at $78.53 a barrel in electronic trading, down $0.17 per barrel from previous close at $78.70 a barrel in New York on Monday.
Banks led the gains following rate hike decision by the central bank. ANZ Bank gained 1.02%, Commonwealth Bank of Australia advanced 0.86%, and Westpac Banking Corp. added 0.75%. National Australia Bank, however, bucked the trend and ended in negative territory with a marginal loss of 0.04%. Investment banker Macquarie Group increased 0.37%.
Mixed trading was witnessed among resource stocks. BHP Billiton added 0.27%, Iluka Resources advanced 0.82%, Mincor Resources rose 1.29%, Murchison Metals climbed 2.47% and Rio Tinto gainded 0.87%. Fortescue Metals and Minara Resources remained unchanged from previous close. However, Gindalbie Metals fell 1.45%, and Oz Minerals lost 1.37%.
Gold stocks ended in positive territory. Lihir Gold gained 1.46% and Newcrest Mining advanced 1.15%.
Oil stocks also ended mixed. Woodside Petroleum gained 1.40%, Santos climbed 2.29% and Oil Search rose 2.29%. However, Origin Energy bucked the trend and ended in negative territory with a loss of 1.94%.
In Hong Kong, the Hang Seng Index ended in negative territory with a loss of 150.82 points, or 0.72%, at 20,906, dragged down by HSBC Bank and Hang Seng Bank which reported results in the previous session. However, optimism about sustaining global economic recovery limited the losses with real-estate and china-related stocks lending support. HSBC Holdings plunged 7.04% and Hang Seng Bank lost 5.13%. Among the major gainers, Bank of China climbed 2.55%, retail major Li & Fung surged 2.95% and real estate company Hang Lung Property gained 2.07%.
In South Korea, the KOSPI Index ended in positive territory with a gain of 20.54 points, or 1.29%, at 1,615, as traders evinced fresh buying interest in stocks on increasing optimism about sustaining global economic recovery. Positive closing on Wall Street in the previous session and increasing optimism that the debt crisis in Greece will be tackled effectively lifted market sentiment.
Resuming trading after a 3-day weekend, the Indian market rose sharply to end near the day's high on Tuesday, boosted by strong global cues, data showing a surge in manufacturing activity in February and robust February auto sales. A realistic budget delivered by finance minister Pranab Mukherjee last week and data showing a rise in India's exports in January for a third straight month also offered some support. Broader indexes outperformed the frontline indexes. The benchmark Sensex finished at 16,773, up 343 points or 2.09% and the Nifty rose by 95 points or 1.92% to 5,017.
Among the other major markets, Singapore's Strait Times slipped 1.86 points, or 0.07% to close at 2,772, and China's Shanghai Composite Index declined 14.73 points, or 0.48%, to close at 3,073. However, Indonesia's Jakarta Composite Index advanced 21.92 points, or 0.86%, to close at 2,577, and Taiwan' s Weighted Index rose 19.87 points, or 0.26%, to close at 7,598. |
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ABM Industries (ABM) could move in reaction to its announcement that its first quarter revenues fell 2% to $869.9 million. The company reported income from continuing operations of 27 cents per share compared to 25 cents per share in the year-ago period. The company reiterated its 2010 adjusted income from continuing operations guidance of $1.25 -$1.45 per share. On an adjusted basis, the company expects earnings from continuing operations of $1.35-$1.45 per share, while analysts estimate earnings of $1.42 per share.
CMS Energy (CMS) may also see some activity after it reported that its fourth quarter adjusted earnings rose to 38 cents per share from 30 cents per share in the year-ago quarter. Operating revenues fell to $1.61 billion from the year-ago’s $1.84 billion.
Qualcomm (QCOM) is expected to move to move higher after it announced an increase in its quarterly dividend by 12% to 19 cents per share. The company’s board also approved a new $3 billion stock buyback program to replace an existing $2 billion stock repurchase program. Another stock that could trade higher over a stock buyback plan is URS (URS). The company’s board authorized an extension in its stock buyback plan to repurchase up to 1 million shares of its stock plus the cumulative number of additional shares issued or deemed issued under the equity incentive and employee stock purchase programs.
McDermott (MDT) may see weakness after it reported that its fourth quarter revenues fell 12.3% to $1.46 billion. However, the company’s earnings rose to 42 cents per share from 19 cents per share last year. The consensus estimates called for earnings of 39 cents per share on revenues of $1.53 billion.
Dress Barn (DBRN) is likely to react to its announcement that its second quarter net sales rose 73% to $594.1 million. On a non-GAAP basis, the company reported a profit of 37 cents per share compared to a loss of 3 cents and the consensus estimate of 29 cents per share. The company raised its 2010 earnings guidance to $1.55-$1.60 per share, while analysts estimate earnings of $1.53 per share.
MBIA (MBI) could be in focus after it reported a fourth quarter loss of $1.16 per share compared to a loss of $5.21 per share in the year-ago period. Analysts estimated a loss of $1.11 per share.
Nutrisystem (NTRI) is expected to see weakness after it reported a fourth quarter profit of 9 cents per share compared to a loss of 11 cents per share last year. On an adjusted basis, the company reported earnings of 18 cents per share, while revenues declined to $106.2 million from the year-ago’s $114.6 million. Analysts estimated earnings of 13 cents per share on revenues of $102.2 million.
Triumph (TGI) may be in focus after it announced that it has acquired Fabritech, a component manufacturer for critical military rotary-wing platforms. The acquired business is expected to add $25 million of revenues in 2011 and will be immediately accretive to earnings.
Plantronics (PLT) could gain ground after it announced that its board authorized a new 1 million share buyback program. The new program will follow the nearly completed program announced in November 2009.
Havertys’ (HVT) is expected to see some activity after it announced that its fourth quarter sales edged up 0.4% to $162.4 million, in line with the consensus estimate. The company reported net income of 42 cents per share compared to a loss of 44 cents per share in the year-ago period. On an adjusted basis, the company reported a profit of 45 cents per share compared to a loss of 5 cents per share last year. |