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Stocks Hovering Above Unchanged Mark In Mid-Morning Trading
Stocks have recovered from their slim losses at the open and are modestly higher in mid-morning trading on Tuesday, although the movement remains subdued amid another light day on the economic front. The major averages are looking for some gains after yesterday's mixed performance.
The move comes as the markets have focused on another batch of corporate news as the day is lacking any major economic reports.
Tax consulting service provider H&R Block Inc. (HRB) reported a 6.9 percent increase in third quarter earnings, beating Wall Street estimates, although the company's revenue failed to meet expectations.
Television service firm TiVo Inc. (TIVO) reported a wider net loss for the fourth quarter, hurt by lower subscription additions and higher operating expenses. Looking ahead, the company provided revenue guidance for the first quarter, forecasting revenue below current estimates.
Also on the corporate front, chipmaker Texas Instruments Inc. (TXN) raised the low end of its first quarter revenue and earnings guidance, with the mid-points of the new ranges coming in above analysts' current consensus estimates.
In a scheduled mid-quarter update, the Dallas, Texas-based company said it now expects first quarter revenue to be in the range of $3.07 billion to $3.19 billion, compared to its prior guidance of $2.95 billion to $3.19 billion.
In other news, Greek Prime Minister George Papandreou will meet with U.S. President Barack Obama in Washington, where he will appeal for assistance in regulating the currency traders and hedge funds that have bet against Greek debt.
The prime minister stressed the U.S. must play a vital role in stopping "unprincipled speculators" from aggravating the Greek debt problems, doing damage to already frail global financial markets.
The major averages have seen choppy movement in recent dealing as they attempt to hold on to their thin gains. The Dow is up 5.29 points or 0.1 percent at 10,557.81, the Nasdaq is up 5.82 points or 0.3 percent at 2,338.03 and the S&P 500 is up 0.66 points or 0.1 percent at 1,139.16.
Sector News
Airline stocks are some of the morning's best performers, driving the NYSE Arca Airline Index up by 2.9 percent. UAL Corp. (UAUA) is leading the sector higher, rising by 8 percent after its subsidiary United Airlines reported its February traffic. The stock has risen to its best intraday price in nearly two years.
Railroad stocks are also posting strong gains, further reflecting the day's strength in the transportation sector. The Dow Jones Railroads Index is up by 1.4 percent, setting a seventeen-month intraday high.
Networking, telecommunication, and defense stocks are also moving to the upside, while semiconductor and gold stocks are posting moderate losses, limiting the gains by the major averages.
Gold stocks are extending yesterday's weakness as the price of the precious metal for April delivery has slipped by $8.10 to $1,115.90 an ounce.
Stocks Driven By Analyst Comments
YUM! Brands (YUM) is on the rise in mid-morning trading after being upgraded at UBS from Neutral to Buy. The stock has gained 3.2 percent, setting a seven-month intraday high in earlier dealing.
St. Mary Land & Exploration Company (SM) is also moving higher following an upgrade at Wells Fargo from Market Perform to Outperform. Shares are currently up by 2.3 percent, climbing to a six-week intraday high.
On the other hand, Energy Conversion (ENER) is retreating after a downgrade by JP Morgan Chase to Underweight from Neutral. The stock has fallen by 3.5 percent, pulling back off of Monday's one-month closing high. |
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TSX May Trim Recent Gains On Weaker Commodity Prices
Canadian stocks are poised for yet another lackluster session Tuesday as the prices of commodities ticked lower in morning deals. With a light economic calender this week, traders are is likely to look to the movements in commodity prices and earnings reports from corporates.
However, financial stocks could support the main index after Scotiabank, in line with most other major banks, reported improved quarterly income that beat consensus estimates.
The U.S. stock futures also point to a lower opening.
On Monday, the S&P/TSX Composite Index ended losing a marginal 11.30 points or 0.09% to 11,963.84, after having gained nearly 3% in the previous week.
The price of crude oil was down $1.40 to $80.47 a barrel and gold for April moved down $7.20 to $1,116.80 an ounce.
In corporate news, Scotiabank reported that its earnings improved to C$0.93 a share in the first quarter from C$0.82 in the year ago period. Analysts were expecting the bank to report a net income of C$0.87 per share. Earlier this month, Toronto-Dominion Bank said its quarterly net income nearly doubled and RBC reported over 30% jump in its earnings.
Gold and copper explorer Northgate Minerals slipped to loss in fourth-quarter reporting net loss of $0.23 per share, as against a profit of $0.07 per share in the prior year period. Analysts were expecting the company to report earnings of $0.03 per share for the quarter.
Oil and gas explorer NuVista Energy reported lower fourth quarter net earnings of C$0.12 per share, compared to C$0.31 per share last year.
Oil and gas firm Pengrowth Energy Trust reported huge decline in its fourth-quarter profit at C$0.18 income per trust unit compared to C$0.58 in the prior year.
Aerospace and transportation equipments maker Bombardier Inc. has decided to withdraw its proposed institutional private placement of new senior notes, due to the current unfavorable conditions in the debt capital markets.
Software services provider Enghouse Systems posted first-quarter net income of $0.08 per share compared with $0.03 per share in the previous year period.
Communications network services provider Prestige Telecom said it will be acquiring all the issued and outstanding shares of Majetel Inc and believes this will be immediately accretive to Prestige.
Agriculture and construction equipments dealer Rocky Mountain Dealerships swung to profit in fourth quarter, reporting net earnings of C$0.35 per share, compared to a net loss of C$7.34 per share in the year ago period.
In brokerage updates, Raymond James trims its price target on Quadra Mining to C$35 from C$38. UBS cuts its rating on Bombardier Inc. to "Neutral" from "Buy". |
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Asian Markets End Mixed In Cautious Trading
The markets across Asia ended mixed in cautious trading on Tuesday amid profit taking as traders preferred to adopt a wait-and-watch attitude looking for more cues on global economy. While the markets in Japan and India ended in negative territory, the markets in Australia, China, Hong Kong, Singapore, South Korea and Taiwan ended in positive territory with minor gains as profit taking and caution capped gains.
In Japan, the benchmark Nikkei 225 Index fell 18.27 points, or 0.2%, to 10,567.65, while the broader Topix index of all First Section issues slipped 2.93 points, or 0.3%, to 924.
On the economic front, a preliminary report released by the Cabinet Office revealed that the country's leading index rose for the eleventh consecutive month in January. According to the report, the index stood at 97.1 in January, up from 94.7 in December. Economists expected the leading index for the month at 96.6.
Light sweet crude oil futures for April delivery ended at $81.45 a barrel in electronic trading, down $0.42 per barrel from previous close at $81.87 a barrel in New York on Monday.
Exporters declined on profit taking after the local currency, Japanese Yen, briefly slipped below the psychological mark of 90 yen per US dollar. Advantest Corp. declined 1.33%, Canon Inc. edged down 0.38%, and Sharp Corp. slipped 0.09%.
Steel stocks also ended weaker on profit taking. JFE Holdings slipped 0.70%, Pacific Metals Co., fell 1.11%, Nippon Steel lost 1.14% and Kobe Steel declined 1.11%. However, Sumitomo Metal Industries managed to end in positive territory with a marginal gain of 0.37%.
Trading companies also ended in negative territory on profit taking. Toyota Tsusho Corp. fell 1.18%, Itochu Corp., slipped 0.78%, Mitsubishi Corp. edged down 0.21%, Mitsui & Co. Ltd lost 0.33% and Marubeni Corp. declined 0.71%.
Bank stocks slipped on profit taking. Sumitomo Mitsui Financial declined 0.96%, Resona Holdings fell 0.83% and Mitsubishi UFJ Financial edged down 0.22%. Mizuho Financial managed to end unchanged from previous close.
Mixed trading was witnessed among shipping stocks. While Nippon Yusen ended in negative territory with a loss of 0.58%, Kawasaki Kisen Kaisha climbed 2.01% and Mitsui OSK Lines edged up 0.16%.
In Australia, the benchmark S&P/ASX 200 Index added 12.20 points, or 0.25% to close at 4,820, while the All-Ordinaries Index ended at 4,829, representing a gain of 9.70 points, or 0.20%.
On the economic front, results of a survey released by National Australia Bank revealed that its business confidence index came in at 19 for February, up from 15 reported for the previous month. The Bank noted that business confidence and conditions in the country rose for the second consecutive month as trading conditions and profitability improved.
The ANZ Bank, in a statement, revealed that total job advertisements in the country climbed 19.1% in February to 125,528, compared to the previous month where job advertisements unexpectedly contracted 8.1%. The statement further noted that Internet job ads climbed 19.6% on month in February, while newspaper job ads climbed 13.1% on month.
Light sweet crude oil futures for April delivery ended at $81.45 a barrel in electronic trading, down $0.42 per barrel from previous close at $81.87 a barrel in New York on Monday.
Banks led the gains following better than expected economic data related to business confidence and total job advertisements, on optimism that the economy will continue to grow. ANZ Bank gained edged up 0.08%, Commonwealth Bank of Australia advanced 0.71%, National Australia Bank climbed 2.05% and Westpac Banking added 0.52%. Investment banking company Macquarie Group, however, bucked the trend and ended in negative territory with a loss of 1.45%.
Retail stocks also ended in positive territory. David Jones remained unchanged from previous close; Harvey Norman added 0.51%, Reject Shop climbed 2.90%, Wesfarmers advanced 0.55% and Woolworths gained 0.68%. However, JB Hi-Fi Ltd bucked the trend and ended in negative territory with a loss of 1.21%.
Oil stocks also ended higher. Santos gained 1.81%, Oil Search rose 1.26% and Origin Energy advanced 0.47%. However, Woodside Petroleum ended in negative territory with a marginal loss of 0.07%.
Gold stocks ended in negative territory on lower bullion prices in the international market. Lihir Gold shed 1.70% and Newcrest Mining edged down 0.12%.
Mining stocks slipped in to red as traders preferred to lock in gains following recent rally. BHP Billiton shed 0.25%, Rio Tinto slipped 1.03%, Fortescue Metals fell 0.62%, Gindalbie Metals lost 1.75%, Iluka Resources declined 1.61% and Oz Minerals was down by 1.71%.
In Hong Kong, the Hang Seng Index ended in positive territory with a marginal gain of 10.68 points, or 0.05%, at 21,208, as traders preferred to lock in gains in late trading session and moved to the sidelines awaiting further cues on global economy.
In South Korea, the KOSPI Index ended flat with a marginal gain of 0.79 points, or 0.05% at 1,661, as traders preferred to lock in gains from recent rally and move to the sidelines awaiting further cues on global economy.
Profit taking in metal, public sector, oil/gas and realty stocks amid mixed global cues dragged the Indian market moderately lower on Tuesday. However, IT stocks gained, helping limit the loss. After moving choppily in a narrow range of 17,131-17,031, the 30-share BSE Sensex finished near the day's lows at 17,053, down 50 points or 0.29% while the Nifty fell 23 points or 0.44% to 5,101.
Among the other major markets, Singapore's Strait Times edged up 4.97 points, or 0.18% to close at 2,839, China's Shanghai Composite Index added 15.91 points, or 0.52%, to close at 3,069, Taiwan' s Weighted Index gained 8.32 points, or 0.11%, to close at 7,771, and Indonesia's Jakarta Composite Index advanced 30.72 points , or 1.17%, to close at 2,657. |
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After showing some strength in early trading on Tuesday, the major European averages have retreated into negative territory and are trading lower. The French CAC 40 Index and the German DAX Index are moving down 0.49% and 0.55%, respectively, while the U.K.’s FTSE 100 Index is receding 0.71%.
Banking stocks are leading the declines in the region after Moody’s warned that it may downgrade ratings on some U.K. banks after the government winds down some of its banking bailout programs.
In corporate news, real estate investment trust Liberty International plc is declining 3.49% after revealing its intention to separate into two listed companies. The company earlier reported a narrower loss for 2009.
EADS, the parent company of Airbus, reported a loss of 1.05 billion euros for the fourth quarter, with the results including a charge of 1.6 billion euros for the A400M military project and a 240 million euro charge for its A380 program.
On the economic front, the U.K. Office for National Statistics reported that the U.K.’s trade deficit widened to 8 billion pounds in January from a revised deficit of 7 billion pounds in December, with the recent month’s deficit the biggest since August 2008. The consensus estimate had called for a deficit of 7 billion pounds. Exports fell 6.9% month-over-month compared to a 1.6% decline in imports.
Meanwhile, the French trade deficit narrowed to 3.68 billion euros in January from a revised deficit of 4.15 billion in December. The French Customs Office reported that exports rose to 30.17 billion euros from 29.39 billion euros in December, while imports increased to 33.86 billion euros from 33.55 billion euros.
A survey by the U.K. Royal Institute of Chartered Surveyors showed that a net 17% saw house prices rising in February, lower than January's 31%. This was way below analyst expectations for a net house price balance of 30%. At the same time, a separate British Retail Consortium survey showed today that total retail sales value in the U.K. rose 2.2% on a like-for-like basis in February compared to a year ago. On a total basis, sales rose 4.5% compared to February 2009.
U.S. Economic Reports
Chicago Federal Reserve Bank President Charles Evans is due to speak to the NABE annual policy conference in Arlington, Virginia, at 9:30 AM ET. |
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Texas Instruments (TXN) receded in Monday’s after hours session after it revised its first quarter guidance, now expecting revenues of $3.07 billion to $3.19 billion compared to its earlier estimate of $2.95 billion to $3.19 billion. The company expects earnings of 48-52 cents per share compared to its earlier estimate of 44-52 cents per share. Analysts estimate earnings of 49 cents per share on revenues of $3.08 billion.
H&R Block (HRB) also moved lower in Monday’s after hour session after it reported third quarter earnings from continuing operations of 16 cents per share compared to 20 cents per share last year. Revenues fell 5.9% to $934.9 million. Analysts estimated earnings of 15 cents per share on revenues of $949.55 million.
Tivo (TIVO) is likely to move in reaction to its announcement that its fourth quarter revenues rose to $68.45 million from $59.18 million last year. The company reported a loss of 9 cents per share compared to a loss of 4 cents per share in the year-ago period. The consensus estimates had called for a loss of 12 cents per share on revenues of $47.45 million.
Diodes (DIOD) may trade higher after it raised its guidance for the first quarter, citing strength in global markets. The company lifted its first quarter revenue estimate to $134 million to $138 million from its earlier estimate of $131 million to $137 million. The company also raised its gross margin guidance to 32.5%-33.1% from 32%-33%.
ResCare (RSCR) could be in focus after it announced that its fourth quarter revenues fell 2% year-over-year to $387 million. The company’s adjusted earnings were 25 cents per share. Analysts estimated earnings of 25 cents per share on revenues of $388.37 million. For 2010, the company estimates earnings per share of $1.05-$1.15 and revenues of $1.6 billion. The consensus estimates call for earnings of $1.08 per share on revenues of $1.58 billion.
CDC Corp. (CHINA) rallied in Monday’s after hours session after it reported fourth quarter revenues that fell to $83 million from $97 million last year. The company reported break-even results compared to a loss of 76 cents per share last year. On a non-GAAP basis, the company reported earnings of 5 cents per share. Analysts estimated earnings of 3 cents per share on revenues of $81.91 million. For 2010, the company expects revenues of $352 million to $358 million, while analysts estimate revenues of $346.59 million.
Thor Industries (THOR) is likely to see some activity after it reported that its second quarter sales surged up to $430 million from $226.7 million last year. The company reported earnings of 22 cents per share compared to a loss of 27 cents per share last year. The consensus estimates had called for earnings of 28 cents per share on revenues of $428.33 million.
UAL Corp. (UAUA) is likely to gain ground after its subsidiary United Airlines said its consolidated passenger load factor rose 5.7 points year-over-year to 78.7%. Traffic rose 2.1% compared to a 5.3% decline in capacity.
Watson Pharma (WPI) may react to its announcement that its subsidiary Watson Labs has been sued by Endo Pharma (ENDP) and Penwest Pharma (PPCO) in connection with the filing of the company’s ANDA for Cxymorphone Hydrochloride Extended-Release tablet, which is a generic version of Endo’s Opana.
FMC Technologies (FTI) could see buying interest after it announced that it has received a $62 million contract from Statoil ASA for the manufacture and supply of subsea production equipment to support the Marulk field.
Northrop Grumman (NOC) is expected to be in focus after it said it would not submit a bid to the Department of Defense for the KC-X program. The company attributed its decision to the methodology defined in the RFP, which favors Boeing’s (BA) smaller refueling tanker and does not recognize the value of the added capability of a larger tanker.
Susquehanna Bancshares (SUSQ) could come under selling pressure after it announced the commencement of its public offering of about $300 million of its common stock. The company also noted that Susquehanna Capital Trust II has commenced a public offering of about $50 million worth of trust preferred securities. Another stock that could see weakness over an announcement of common stock offering is Comercia (CMA), which said it would offer $800 million worth of shares in a public offering.
Immunogen (IMGN) could rally after it announced that the FDA has granted orphan drug designation to its IMGN901 compound used for the treatment of Merkel cell carcinoma. The company also said the European Union concurrently granted the compound orphan medicinal product designation for the treatment of Merkel cell carcinoma.
Casey’s General Stores (CASY) receded in Monday’s after hours session despite reporting third quarter earnings of 34 cents per share, higher than 28 cents per share last year. Total revenues climbed to $1.11 billion from the year-ago’s $849.27 million. The consensus estimates had called for earnings of 38 cents per share on revenues of $1.12 billion.
Dick’s Sporting Goods (DKS) may react to its announcement that its fourth quarter earnings were 56 cents per share, while sales rose 10.7% to $1.3 billion. Analysts estimated earnings of 55 cents per share on revenues of $1.30 billion. For 2010, the company estimates consolidated earnings per share of $1.32-$1.35 and a 2%-3% increase in comparable store sales. Analysts estimate earnings of $1.32 per share for the year. |