US & World Daily Markets Financial Briefing 08-04-2010

DO YOU OWN THE RIGHT STOCKS?

Analyze Your Stocks FREE! – Click Here

Stocks Seeing Moderate Weakness In Mid-Morning Trading

Stocks are down by moderate margins in mid-morning trading on Thursday, as continued concerns over the beleaguered labor market and Greek debt have given way to selling in today's session. The major averages are all in negative territory, extending yesterday's downward move.

Today's downside has been partially driven by news from the Labor Department, which reported an unexpected increase in jobless claims in the week ended April 3rd.

Initial jobless claims rose to 460,000 from the previous week's revised figure of 442,000. The increase came as a surprise to economists, who had expected jobless claims to edge down to 435,000 from the 439,000 originally reported for the previous week.

Further weighing down the markets today have been ongoing uncertainties regarding the Greek debt crisis. The country's ten-year bond issue has seen weak support as traders are little willing to invest capital without a specific outline of a bailout package from international powers.

Meanwhile, strong March retail sales data may be limiting the downside in equities. Recently, Nordstrom reported that its March same store sales were up by 16.8 percent, while Saks' same store sales rose 12.7 percent and Kohl's said its same store sales surged up by 22.5 percent.

Earlier, Bon-Ton (BONT) revealed that its same store sales rose by 11.4 percent, Macy's (M) same store sales jumped 10.8 percent, and Target's (TGT) same store sales rose 10.3 percent.

In earnings news from the sector, Bed Bath & Beyond Inc. (BBBY) said that its fourth quarter profit rose 60 percent from a year ago, helped by strong same-store sales growth and improved margins. The company's quarterly earnings also beat Wall Street estimates as did its quarterly sales. The firm also forecast first quarter earnings above analysts' current consensus estimate.

Additionally, market focus has also been on UAL Corp. (UAUA) and US Airways Group (LCC), which have reportedly been discussing the possibility of a merger.

The major averages have moved well off their worst levels of the day in recent trading, although they remain negative. The Dow is down 30.38 points or 0.3 percent at 10,867.14, the Nasdaq is down 8.90 points or 0.4 percent at 2,422.26 and the S&P 500 is down 2.94 points or 0.3 percent at 1,179.50.

Sector News

Semiconductor stocks are some of the morning's worst performers, prompting a 1.7 percent decline by the Philadelphia Semiconductor Index. The decline is taking the index further off of the well over one-year closing high set on Monday.

Electronic storage, oil service, networking and health insurance stocks are also under pressure. Notably, the Morgan Stanley Healthcare Payor index is down by 1 percent, dragged lower by Covenant Healthcare (CVH). Covenant is down by 1.1 percent, setting its lowest intraday level in nearly a month's time.

Meanwhile, airline stocks are bucking the downtrend following the reports about merger talks between UAL and US Airways. The NYSE Arca Airline Index is up by 2.8 percent, setting a one-month intraday high.

Railroad and software stocks are also moving to the upside, helping to offset some of the weakness in other market segments.

Stocks Driven By Analyst Comments

eBay Inc. (EBAY) is under pressure following a downgrade by analysts at Kaufman Bros., who slashed their rating on the stock from Buy to Hold. The stock is down by 1.4 percent, sinking to its lowest intraday price in nearly a month's time.

On the other hand, BMC Software Inc. (BMC) is on the rise after Credit Suisse upgraded shares to Outperform from Neutral. The broker also raised its target price on the stock from $39.50 to $46. Currently, the stock is up by 4.2 percent, setting a three-week intraday high.

Bay Street Poised For A Lower Opening Thursday

Canadian stocks may struggle to move higher Thursday amid falling oil prices. Also, lingering worries over the Greece debt situation and the just just released weekly jobs report from the U.S., which revealed unexpected rise in claims, may weigh on sentiment. Canada will release its jobs number Friday.

On Wednesday, the S&P/TSX Composite Index lost 45.81 points or 0.38% to close at 12,110.90, easing from its 18-month high for a second day.

The price of crude oil continued to slip for a second day after hitting its 18-month high. Crude for May was down $0.68 to $85.20 a barrel. Meanwhile, the price of gold eased back below $1,150 an ounce. Gold for June eased $7.10 to $1,145.20 an ounce in morning deals.

Meanwhile, the Canadian dollar eases from its parity with the U.S. dollar.

While energy stocks may ease on slipping crude prices, gold stocks may retreat on profit taking after a spectacular run in the previous session. The Gold Index added nearly 3% Wednesday.

However, stock specific action may not be ruled out with the new listing of Athabasca Oil. Also earnings reports from Dollarama and Cogeco Cable that have bet consensus estimates may attract traders attention.

In corporate news, oil explorer Athabasca Oil Sands that raised C$1.35 billion in Canada's biggest initial public offering since 1999, will start trading Thursday on the Toronto Stock Exchange. Athabasca sold 75 million shares, or a 19% stake, at C$18 each, on March 30.

Dollar store operator Dollarama Inc. reported improved fourth quarter net earnings at C$0.45 per share, compared to C$0.15 per share in the year ago period. For the full year, the company reported earnings of C$1.37 per share compared to a loss of $0.36 in the previous year. Analysts were expecting the company to earn C$0.37 per share.

Telecommunications services provider Cogeco Cable swung to profit in second-quarter, reporting net income of C$0.63 per share, compared to a net loss of C$6.88 per share in the year ago period. Analysts were expecting the company to post earnings of C$0.51 per share.

Semiconductor maker Gennum Corp. turned to profit in the first quarter, reporting net earnings of $0.12 per share, compared to a net loss of $0.02 per share in the same quarter a year-ago. It also declared cash dividend of 0.035 per share.

Data services provider Matrikon Inc. reported higher second-quarter net income of C$0.09 per share, compared with C$0.06 per share in the same quarter last year.

Retail stores operator Loblaw Companies said it will repurchase of up to 13.86 million of common shares, by way of a normal course issuer bid.

Gold explorer Alder Resources announced that it will buy 80% interest in La Montanita Gold Project in Colombia.

In economic news from the U.S., the Labor Department said weekly jobless claims rose to 460,000 from the previous week's revised figure of 442,000. The increase surprised economists, who were expecting jobless claims to edge down to 435,000 from the 439,000 originally reported for the previous week.

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 Slip On Concerns About Economic Recovery

The markets in Asia, except South Korean market, ended in negative territory on Thursday taking cues from Wall Street where the major averages ended in negative territory in the previous session as traders raised fresh concerns about the strength of economic recovery after economic data revealed sharp drop in monthly consumer credit. Fresh concerns about debt crisis in Greece also provided opportunity for profit taking in the markets. In South Korea, the market bucked the trend and ended in positive territory on fresh buying interest from foreign investors on blue-chip stocks.

In Japan, the benchmark Nikkei-225 Index dropped 124.63 points, or 1.10%, to 11,168.20, while the broader Topix index of all First Section issues was down 9.55 points, or 0.96%, to 986.

On the economic front, a preliminary report released by the Cabinet Office revealed that core machinery orders declined 7.1% year-over-year in February, following 1.1% contraction in the previous month. Analysts expected core machinery orders to rise 2.1% for February. On a monthly basis, core machinery orders were down 5.4% - again well below forecasts for a 3.7% increase after the 3.7% decline in January.

A report released by the Ministry of Finance revealed that the country posted a current account surplus of 1.471 trillion yen in February, up 29.6% year-over-year. Analysts expected a surplus of 1.620 trillion yen for the month, following the 899.8 billion yen surplus reported for January. The report further noted that the adjusted current account balance showed a surplus of 1.119 trillion yen - again missing forecasts for a 1.248 trillion yen surplus after the 1.712 trillion yen surplus in the previous month.

A report released by Tokyo Shoko Research Ltd revealed that the number of corporate insolvencies in the country declined 14.5% year-on-year in March to 1,314 cases. The report further noted that the construction sector had the highest number of insolvency cases, totaling 341 in March, followed by the other services sector at 289. The manufacturing sector registered a total of 211 insolvency cases. On a monthly basis, the total number of corporate insolvencies increased 20.5% in March.

Tire company Bridgestone Corp. lost 2.73% and the Yokohama Rubber Co., slipped 1.35%.

Credit Siason Co., engaged in financial services, fell 2.85%.

Exporters ended in weaker territory on stronger yen against the US dollar as a stronger local currency reduces the value of export proceeds in local terms when repatriated, affecting the bottom line. Canon Inc. declined 1.47%, Sony Corp. lost 2.44%, Panasonic Corp. fell 2.22%, Sharp Corp. shed 1.90% and Fanuc Ltd slipped 0.58%.

Trading companies also ended in negative territory on profit taking. Toyota Tsusho Corp. fell 1.63%, Mitsubishi Corp. shed 0.69%, Marubeni Corp. slipped 0.51%, Sumitomo Corp. lost 0.71% and Mitsui & Co., edged down 0.31%.

Flat trading was witnessed among large banking stocks. Sumitomo Mitsui Financial and Mitsubishi UFJ Financial ended unchanged from previous close. Mizuho Financial Group gained 0.54%, while Resona Holdings ended in negative territory with a loss of 0.41%.

In Australia, the bench mark S&P/ASX 200 Index declined 23.00 points, or 0.46% to close at 4,938, while the All-Ordinaries Index ended at 4,960, representing a loss of 22.90 points, or 0.46%.

On the economic front, a report released by the Australian Bureau of Statistics revealed that unemployment rate in the country remained unchanged in March compared to February, while the number of employed persons increased in line with expectations. According to the report, the unemployment rate in the country stood at a seasonally adjusted 5.3% in March, in line with the economists' expectations. The unemployment rate among males stood at 5.4% and that among females stood at 5.3%. The report noted that the total number of employed people in the country increased by 19,600 in March to 10.99 million. Further, as much as 619,000 Australians were unemployed by the end of March, up 4,200 from February.

Gold stocks ended in positive territory on higher gold prices in the bullion market and speculation that gold prices will continue to rise further. Lihir Gold gained 1.80% and Newcrest Mining advanced 0.65%.

Mixed trading was witnessed among mining and metal stocks on profit taking. BHP Billiton slipped 1.84%, Rio Tinto shed 1.06%, Fortescue Metals was down by 0.79%, Mineral Resource fell 1.29% and Oz Minerals lost 0.81%. However, Gindalbie Metals gained 1.54%, Iluka Resources climbed 1.97% and Mincor Resources added 0.47%.

Oil stocks ended in negative territory. Woodside Petroleum shed 0.97%, Santos fell 1.14%, Oil Search lost 1.17% and Origin Energy slipped 1.00%.

Banks also ended weaker on profit taking. ANZ Bank fell 1.29%, National Australia Bank lost 1.39% and Westpac Banking slipped 1.07%. However, Commonwealth Bank of Australia bucked the trend and ended in positive territory with a gain of 0.80%.

Mixed trading was witnessed among retail stocks. David Jones slipped 1.05%, Harvey Norman shed 0.27% and JB Hi-Fi Ltd fell 0.79%. On the other hand, Myer Holdings added 0.30%, Reject Shop Limited also added 0.30%, Wesfarmers Ltd climbed 1.36% and Woolworths rose 1.05%.

In Hong Kong, the benchmark Hang Sang Index ended in negative territory with a loss of 61.73 points, or 0.28%, at 21,867. Weak cues from Wall Street where the major averages ended in negative territory amid fresh concerns about sustaining economic recovery and weak trading across other markets in the region impacted market sentiment. Banks, realty stocks and resource stocks declined as traders took the opportunity to lock in some gains from recent rally. Out of 42 components in the index, as many as 32 stocks ended in negative territory with minor losses.

In South Korea, the benchmark KOSPI Index ended in positive territory with a marginal gain of 7.18 points, or 0.42%, at 1,734. Fresh buying interest evinced by foreign institutional investors in blue-chip technology stocks on optimism about economic recovery helped the market buck the weak sentiment prevailing across other markets as well as weak monthly consumer credit report for February released in the U.S in the previous session. Traders also discounted the resurfaced debt crisis in Greece.

Sluggish global cues on concerns over Greece's debt problems and fears about a hike in domestic interest rates following a spike in food price inflation dragged the Indian market sharply lower on Thursday. India's annual food inflation rose to 17.7 percent for the week ended March 27 from 16.35 percent in the previous week, owing to a rise in the prices of milk, fruits and pulses, data released Thursday showed, signaling an imminent rate hike in the upcoming monetary policy meeting on April 20. The 30-share Sensex average closed near the day's lows at 17,714, down about 256 points or 1.42%, while the 50-share Nifty ended down 70 points or 1.31% at 5,304.

Among the other major markets open for trading, Indonesia's Jakarta Composite Index declined 47.75 points, or 1.65%, and closed at 2,851, Singapore's Strait Times Index fell 24.91 points, or 0.83%, to close at 2,963, Taiwan's Weighted Index fell 64.18 points, or 0.79%, to close at 8,058, and China's Shanghai Composite Index ended in negative territory with a loss of 29.51 points, or 0.94%, at 3,119.

DO YOU OWN THE RIGHT STOCKS?

Analyze Your Stocks FREE! – Click Here

The major European markets are moving to the downside on Thursday, with the French CAC 40 Index and the German DAX Index declining 1.66% and 1.14%, respectively, while the U.K.’s FTSE 100 Index is receding 1.17%.

On the economic front, the U.K. Office for National Statistics reported that the U.K.’s industrial production rose 1% month-over-month in February following a revised 0.5% drop in the previous month. Economists had expected a 0.6% increase for the month. The industrial production growth was aided by a 1.3% increase in manufacturing output.

Meanwhile, Germany industrial output remained unchanged compared to the previous month in February, according to a report released by Germany’s Federal Ministry of Economics and Technology. Economists had estimated a 1% increase.

The Bank of England as well as the European Central Bank announced separately that they are holding their respective benchmark interest rates unchanged. The Bank of England announced following the end of its two-day meeting that it is maintaining interest rates unchanged at 0.5%. The Monetary Policy Committee also voted to maintain the stock of asset purchases financed by the issuance of central bank reserves at 200 billion pounds.

The European Central Bank also held its key interest rate unchanged at a record low of 1% for an eleventh straight month. The decision was in line with economists' expectations. The central bank also retained its interest rate on the marginal lending facility at 1.75% and that on the deposit facility at 0.25%. The last change in the key interest rate was in May 2009, when the bank cut the rate by 25 basis points to the current level of 1%. The bank has lowered the key interest rate by a total of three and a quarter percentage points since early October 2008.

U.S. Economic Reports

After easing labor market concerns with the release of an upbeat monthly employment report last Friday, the Labor Department is likely to renew some of the concerns with the release of a separate report showing an unexpected increase in jobless claims in the week ended April 3rd.

The report showed that initial jobless claims rose to 460,000 from the previous week's revised figure of 442,000. The increase came as a surprise to economists, who had expected jobless claims to edge down to 435,000 from the 439,000 originally reported for the previous week.

Minneapolis Federal Reserve Bank President Narayana Kocherlakota is due to speak to the Helena, Montana, Business Leaders Luncheon at 12:45 PM ET. Additionally, Bernanke will speak on the topic of 'Economic Policy: Lessons from History' at an event in Washington at 8:30 PM ET.

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

Regions Financial (RF) could be in focus after its brokerage arm Morgan Keegan said that it strongly disagrees with the decision by the SEC, the Financial Industry Regulatory Authority and several states to bring charges against the company regarding the artificial inflation of the values of subprime securities.

Apogee (APOG) receded sharply in Wednesday’s after hours trading after it reported that its fourth quarter revenues fell 26% to $148.6 million and its earnings per share from continuing operations plunged to 1 cent from the year-ago’s 40 cents. Analysts estimated earnings of 9 cents per share on revenues of $163.77 million. The company expects 2011 revenues to decline 10%-15% year-over-year, while analysts estimate a 10.6% drop.

NewMarket Corp. (NEU) may gain ground after Standard & Poor’s announced that it would replace 3COM Corp. (COMS) in the S&P MidCap 400 Index after the close of trading on April 12th, 2010. Meanwhile, Dolan Media (DM) will replace NewMarket in the S&P SmallCap 600 Index. 3COM is due to be acquired by Hewlett-Packard (HPQ).

Fluor (FLR) is likely to move to the upside after it announced that it has secured a facilities management contract from IBM (IBM). United Airlines (UAUA) may also be in focus after it said its March consolidated passenger load factor rose 4.8 points year-over-year to 83.5%, as consolidated traffic increased 3.2% and capacity declined 2.7%.

ScanSource (SCSC) could recede after it said it expects sales for the March quarter to be in the range of $495 million to $505 million, trailing the consensus estimate of $532.95 million.

Pep Boys (PBY) may see some activity after it announced that its fourth quarter sales fell 2.7% to $452.9 million. The company reported a profit of 4 cents per share compared to a loss of 63 cents per share last year. Analysts’ estimates, which typically exclude one-time items, called for a loss of 3 cents per share on revenues of $476.36 million.

Bed Bath & Beyond (BBBY) is likely to gain ground after it reported that its fourth quarter earnings rose to 86 cents per share from the year-ago’s 55 cents per share, as net sales rose 16.7% year-over-year to $2.244 billion. Analysts estimated earnings of 73 cents per share on revenues of $2.11 billion. The company expects first quarter earnings of 44-48 cents per share and a 10%-15% earnings per share growth for fiscal year 2010. For the first quarter, analysts estimate earnings of 42 cents per share and for the full year, analysts estimate earnings per share growth of 14.3%.

Lawson Software (LWSN) could also be in focus after it reported that its third quarter revenues rose 7% to $186.22 million. The company reported non-GAAP net income of 11 cents per share compared to 10 cents per share last year. The consensus estimates called for earnings of 9 cents per share on revenues of $179.25 million. For the fourth quarter, the company estimates non-GAAP earnings of 10-12 cents per share on revenues of $194 million to $198 million. Analysts estimate earnings of 11 cents per share on revenues of $201.35 million.

Ruby Tuesday (RT) is likely to move in reaction to its announcement that its third quarter earnings rose to 28 cents per share from 9 cents per share last year. The recent quarter’s results included a charge of 2 cents per share compared to 17 cents per share in the year-ago period. Total revenues fell to $307.27 million from $317.52 million last year. Analysts’ estimates, which typically exclude one-time items, called for earnings of 23 cents on revenues of $303.71 million. The company raised its 2010 earnings per share guidance to 60-65 cents per share, while the Street estimates earnings of 63 cents per share.

FUQI International (FUQI) is likely to be in focus after it said it is working diligently on a plan to strengthen internal financial controls and re-mediate issues surrounding its financial restatement. While stating that it is progressing with its year-end analysis of 2009 results and will release the results as soon as it is practicable, the company noted that it received a notification letter on April 1st from the Nasdaq Stock Market over its failure to file its periodic reports on time.

WD-40 (WDFC) is also likely to see some activity after it reported that its second quarter net sales rose 30.3% to $80.6 million. The company’s earnings rose to 64 cents per share form the year-ago’s 25 cents per share. Analysts estimated earnings of 38 cents per share on revenues of $67.34 million. The company updated its 2010 guidance, now expecting earnings of $1.92-$2.01 per share on revenues of $308 million to $321 million. The consensus estimates call for earnings of $1.93 per share on revenues of $300.43 million.

Allscripts-Misys Healthcare (MDRX) may move in reaction to its announcement that its third quarter revenues rose to $179.9 million from $160.7 million last year and non-GAAP earnings rose to 17 cents per share from the year-ago’s 14 cents per share. Analysts estimated earnings of 16 cents per share on revenues of $175.48 million. For the full year, the company raised its revenue guidance to $700 million to $705 million and raised its non-GAAP earnings per share guidance to 64-65 cents per share. The guidance was above the consensus estimates.

Among retailers, Fred’s (FRED) reported comparable store sales growth of 3.6% year-over-year in March following a 1.9% increase in the year-ago period. Hot Topic (HOTT) reported a 7.5% drop in same store sales for March, reversing the 7.1% increase in the year-ago period. The company also announced a one-time special cash dividend of $1 per share.

At the same time, Zumeiz (ZUMZ) fell in Wednesday’s after hours session despite reporting a 13.2% increase in same store sales in March following a 17.9% drop last year.

DO YOU OWN THE RIGHT STOCKS?

Analyze Your Stocks FREE! – Click Here

Investors Hub Services