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Stocks Moving Modestly Lower In Mid-Morning Trade
Stocks are seeing modest selling pressure in mid-morning trading on Tuesday, as the markets digest the latest trade balance figures and corporate earnings results. The major averages are all negative after seeing modest upside in the previous session.
Before the start of trading, the Commerce Department reported that the U.S. trade deficit widened to $39.7 billion in February from a revised $37.0 billion in January. Economists had expected the deficit to widen to $38.5 billion compared to the $37.3 billion originally reported for the previous month.
The wider than expected deficit came as the value of imports surged up by 1.7 percent, more than outpacing a modest 0.2 percent increase in the value of exports.
Separately, the Labor Department released data showing that import prices rose by 0.7 percent in March after falling by a revised 0.2 percent in February. The rebound was largely due to a notable increase in the prices of fuel imports, which surged up by 2.9 percent.
Export prices also rose by 0.7 percent in March following a revised 0.4 percent decrease in the previous month. A 2.1 percent increase in the prices of agricultural exports contributed to the rebound.
On the corporate front, aluminum giant Alcoa Inc. (AA) unofficially kicked off the earnings season after the closing bell yesterday, saying that its first quarter loss narrowed from last year as sales rose amid improving demand and higher prices for the light metal.
The company reported adjusted earnings that came in line with analysts' estimates, while its quarterly sales missed forecasts.
Industrial and construction supply firm Fastenal Co. (FAST) reported first quarter earnings of $0.38 per share, topping forecasts that called for earnings of $0.33 per share Net sales rose to $520.77 million from $489.35 million in the prior year quarter, also beating estimates.
Additionally, Indian software services firm Infosys Technologies Ltd. (INFY) said its fourth-quarter profit increased from last year, helped by an increase in revenues due to the re-emergence of demand from its clients. Looking ahead, the company sees first quarter earnings in line with estimates.
The major averages have seen some further downside recently, falling to new lows for the session. The Dow is down 41.42 points or 0.4 percent at 10,964.55, the Nasdaq is down 9.39 points or 0.4 percent at 2,448.48 and the S&P 500 is down 6.21 points or 0.5 percent at 1,190.27.
Sector News
Gold stocks are some of the morning's worst performers, as reflected by the 2.5 percent loss being shown by the NYSE Arca Gold Bugs Index. The decline is pulling the index down further off of last Friday's two and a half month closing high.
The weakness among gold stocks comes as the price of the precious metal has sunk by $12.10 to $1,150.10 an ounce.
Health insurance stocks are also under pressure, with the Morgan Stanley Healthcare Payor Index posting a 1.7 percent loss. The index is being hurt by shares of Molina Healthcare (MOH), which are down by 1 percent, pulling back off of yesterday's eighteen-month closing high.
Oil service, computer hardware and banking stocks are also moving lower, while some commercial real estate stocks are bucking the downtrend.
Stocks Driven By Analyst Comments
DeVry (DV) is also moving higher following an upgrade at Credit Suisse from Neutral to Outperform. The broker also raised its price target on the stock to $75 from $55. Shares are currently up by 8.4 percent, setting an historic intraday high.
On the other hand, Ameristar Casino (ASCA) is retreating after being downgraded to Neutral from Overweight by analysts at JP Morgan Chase. The stock has lost 4.2 percent, slipping to a three-week intraday low. |
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TSX May Open Lower On Falling Commodities, Rate Hike Concerns
Canadian stocks are poised for a lower opening Tuesday amid falling commodities prices and after a discouraging quarterly numbers from aluminum producer Alcoa. Also, mixed economic data is likely to keep investors guessing on the Bank of Canada's interest rate outlook.
On Monday, the S&P/TSX Composite Index was down 28.18 points or 0.23% to 12,148.66.
The price of oil continued to slip for a fifth session, losing $0.53 to $83.81 a barrel. The price of gold also eased from its 4-month high, shedding $7.60 to $1,154 an ounce.
Meanwhile, the Canadian dollar was ticking higher near parity with the U.S. dollar after a survey by Bank of Canada showed corporates expect sales growth over the next year.
Mining stocks may be in play after the largest aluminum producer in U.S,. Alcoa Inc reported lower than-expected first quarter sales, after the market closed Monday.
In corporate news from Canada, dollar stores operator Dollarama said three of its major shareholders will sell at least 10.1 million shares for C$24.60 a share in a secondary offer.
Biotechnology company Thallion Pharmaceuticals reported a narrower net loss of C$0.08 per share for the first quarter of 2010, compared to C$0.10 per share in the year-ago quarter. The company attributed this to reductions in R&D expenses.
Medical devices maker Neovasc Inc. reported significantly narrower full-year consolidated net loss of C$0.18 basic loss per share compared to C$2.95 basic loss per share in the prior year period.
Natural gas focused energy trust Paramount Energy Trust said that it has agreed to sell three non-core properties for total proceeds of C$34.1 million.
Automobile dealer AutoCanada Inc. said it has completed the purchase of the assets of the dealership formerly known as Future Hyundai.
Oil and gas explorer Zone Resources said that it has arranged a non-brokered private placement of up to 3 million units at a price of C$0.15 per unit for total proceeds of up to C$450 thousand.
Oil and gas explorer Gale Force Petroleum announced the closure of C$1.74 million private placement.
Petroleum and natural gas explorer NuLoch Resources swung to profit in fourth quarter, reporting net earnings of C$0.02 per share, compared to a loss of C$0.01 per share in the prior year quarter.
Coal miner CIC Energy slipped into the red in first-quarter, reporting net loss of C$0.06 per share compared with a net profit of C$0.01 per share in the prior year period. |
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Asian Markets Slip On Profit Taking
The markets in Asia, except China, ended the session Tuesday in negative territory as traders digested the results from Dow component Alcoa (AA) with a tinge of disappointment as the company missed sales estimates. Profit taking across the markets led by resource stocks characterized trading in the region as traders await key earnings from companies such as Intel, JP Morgan, Google and Bank of America during the course of the week to provide further signs on the strength of economic recovery.
In Japan, the benchmark Nikkei-225 Index dropped 90.67 points, or 0.81%, to 11,161, while the broader Topix index of all First Section issues was down 6.34 points, or 0.64 percent, to 988.
On the economic front, a statement released by the Bank of Japan revealed that an index measuring corporate service prices in the country was down 1.3% on year in March, coming in at 102.6. That was slightly higher than forecasts for a 1.1% annual contraction following the 1.5% fall in February. On a monthly basis, corporate service prices were up 0.2%, in line with expectations for a 0.3% gain after the 0.1% increase in February.
Steel related stocks led the decline. JFE Holdings declined 2.91%, Pacific Metals Co., shed 1.85%, Nippon Steel Corp. lost 2.45%, Sumitomo Metal Industries slipped 1.40% and Nisshin Steel Co., fell 1.02%.
Shipping stocks ended in negative territory on profit taking. Mitsui OSK Lines fell 2.63%, Kawasaki Kisen Kaisha lost 1.59% and Nippon Yusen slipped 0.53%.
Trading companies slipped on profit taking. Toyota Tsusho shed 1.17%, Mitsui & Co., shed 0.97%, Sumitomo Corp., fell 0.70%, Marubeni Corp. declined 0.67%, Itochu Corp.edged down 0.11% and Mitsubishi Corp. slipped 0.04%.
Banks also ended in negative territory. Sumitomo Mitsui Financial shed 0.61%, Resona Holdings slipped 0.82%, and Mizuho Financial fell 1.05%. However, Mitsubishi UFJ Financial managed to remain unchanged from previous close.
Mixed trading was witnessed among real estate stocks. Sumitomo Realty & Development fell 2.27% and Heiwa Real Estate declined 0.67%. However, Mitsui Fudosan gained 1.00%, Mitsubishi Estate Co., added 0.32% and Tokyu Land Corp. advanced 0.27%.
In Australia, the bench mark S&P/ASX 200 Index declined 32.70 points, or 0.66% to close at 4,952, while the All-Ordinaries Index ended at 4,978, representing a loss of 33.20 points, or 0.66%.
On the economic front, results of a new survey conducted by the National Australia Bank revealed that its business confidence index stood at 16 in March, down from 19 reported in the previous month. Despite the fall in confidence, confidence remains at very robust levels and is still moving up in trend terms, the bank noted.
In a separate statement, the Australian Bureau of Statistics revealed that housing finance for owner occupation, excluding alterations & additions, declined a seasonally adjusted 4.4% month-on-month in February to A$14.09 billion. In contrast, personal finance edged up 0.7% to A$6.99 billion, while commercial finance increased 5.6% to A$28.08 billion and lease finance climbed 0.8% to A$365 million, all in seasonally adjusted terms.
Mining and metal stocks declined on profit taking. Alumina Ltd plunged 5.59% after Alcoa's first quarter sales revenue missed analysts' estimates. BHP Billiton slipped 1.37%, Rio Tinto shed 1.44%, Fortescue Metals declined 0.76%, Gindalbie Metals edged down 0.36%, Iluka Resources fell 4.02%, Macarthur Coal was down 3.51%, Mincor Resources declined 3.02%, and Oz Minerals lost 2.02%.
Oil stocks also ended in negative territory on lower crude oil prices. Woodside Petroleum fell 1.61%, Santos lost 1.88%, Oil Search shed 2.16% and Origin Energy declined 1.41%.
Gold stocks also ended weaker on lower gold prices in the bullion market. Lihir Gold fell 1.51% and Newcrest Mining lost 1.49%.
Mixed trading was witnessed among the bank stocks. ANZ Bank added 0.24% and investment banker Macquarie Group climbed 1.11%. However, Commonwealth Bank of Australia declined 0.53%, National Australia Bank slipped 0.36% and Westpac Banking shed 0.32%.
Retailers also ended in negative territory. David Jones fell 2.77%, Harvey Norman lost 1.65%, Myer Holdings shed 3.01%, Wesfarmers edged down 0.28% and Woolworths declined 1.80%.
In Hong Kong, the benchmark Hang Sang Index ended in negative territory with a loss of 34.64 points, or 0.16%, at 22,103 as traders preferred to lock in gains from recent rally, taking cues from other markets in the region, ahead of key earnings from the U.S slated for release during the course of the week.
In South Korea, the benchmark KOSPI Index ended flat with a marginal gain of 0.29 points, or 0.02%, at 1,711, as profit taking in resource related stocks after disappointing Alcoa's quarterly sales was offset by rise in exporters' stocks following the weakening of the local currency against the US dollar. Weak trading across the markets in the region also impacted market sentiment as most of the traders preferred to stay in the sidelines ahead of key earnings from chipmaker Intel later in the day in the U.S.
The Indian market continued its consolidation on Tuesday, tracking weak global cues. Profit taking before a public holiday on Wednesday and attempts by about thirteen opposition parties to bring a cut motion against the finance bill in the upcoming budget session beginning April 15 also resulted in lackluster trading. The 30-share Sensex average moved choppily within a range of 160 points before closing off the day's low at 17,822, down about 31 points or 0.17%, while the 50-share Nifty ended down 17 points or 0.31% at 5,322.
Among the other major markets open for trading, Indonesia's Jakarta Composite Index added 3.37 points, or 0.12%, to close at 2,885 and China's Shanghai Composite Index ended in positive territory with a gain of 31.99 points, or 1.02%, at 3,161. However, Singapore's Strait Times Index ended in negative territory with a loss of 5.57 points, or 0.19%, at 2,972, and Taiwan's Weighted Index plunged 88.02 points, or 1.08%, to 8,030. |
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The major European markets are showing a considerable degree of volatility on Tuesday after the major averages in the region scrambled to a flattish close in the previous session despite the euphoria over the Greek bailout plan approved by the European Union nations.
The French CAC 40 Index and the German DAX Index are moving down 0.01% and 0.14%, respectively, while the U.K.’s FTSE 100 Index is receding 0.18%.
In corporate news, U.K. department store Debenhams reported that its pre-tax profit before exceptional items rose 18.6% in the first half to 123.6 million pounds. The department store chain said it expects the trading environment to be broadly neutral in the second half.
Telecom Italia slashed its medium term revenue growth guidance for 2010 to a decline of 2%-3% compared to its earlier estimate for 2% revenue growth per year. Over the 2010 to 2012 period, the company expects revenue growth of 2%. The company also suggested that it expects to increase its savings in order to reduce its debt burden.
On the economic front, the results of a survey by the Royal Institute of Chartered Surveyors showed that a net 9% saw house prices rising in March, lower than February's 18%. This was well below analyst expectations for a net house price balance of 19%.
On the contrary, the U.K. Department of Communities and Local Government’s survey showed that house prices rose 7.4% year-over-year in February, stronger than the 6.2% increase in the previous month. On a monthly basis, house prices edged down 0.1%.
Meanwhile, a separate British Retail Consortium and KPMG survey showed today that total retail sales value in the U.K. rose 6.6% in March compared to a year ago. This marks the sharpest rate of the growth in four years. BRC said the surge in the pace of growth was mainly due to the distortion of Easter holidays falling in March this year compared to April last year.
The Office for National Statistics reported that the U.K.’s trade deficit narrowed to 6.2 billion pounds in February from a deficit of 8.1 billion pounds in January. Economists had expected a deficit of 7.4 billion pounds for the month.
French statistical office INSEE released its consumer price inflation report, showing a 0.5% monthly increase in March, slightly slower than the 0.6% rate in the previous month. On a year-over-year basis, consumer prices rose 1.6%. At the same time, a report released by the Bank of France showed that the French current account deficit narrowed to 3.6 billion euros in February from 4 billion euros in January, with the improvement coming about due to a narrowing of the trade deficit.
Meanwhile, the final German consumer price inflation report released by the German Federal Statistical Office showed a 1.1% year-over-year increase in consumer prices in March. On a monthly basis, the consumer price inflation rate was 0.5%.
U.S. Economic Reports
The Commerce Department reported that the U.S. trade deficit widened to $39.7 billion in February from a deficit of $37 billion for January. Economists had estimated a deficit of $38.5 billion for the month.
The wider deficit reflected a faster rate increase in imports than the exports. Imports rose by $3 billion to $182.9 billion, while exports edged up by $0.3 billion to $143.2 billion. The goods deficit rose $1.9 billion, while the surplus on the trade in services declined by $0.8 billion.
A separate report released by the Labor Department showed that import and export prices both rebounded during the month after showing modest decreases in the previous month.
The report showed that import prices rose by 0.7% in March after falling by a revised 0.2% in February. The rebound was largely due to a notable increase in the prices of fuel imports, which surged up by 2.9%.
Additionally, the Labor Department said that export prices also rose by 0.7% in March following a revised 0.4% decrease in the previous month. A 2.1% increase in the prices of agricultural exports contributed to the rebound.
Richmond Federal Reserve Bank President Jeffrey Lacker is due to speak on the economic outlook to West Virginia business leaders in Morgantown, West Virginia, at 7:15 PM ET. |
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Alcoa (AA) eased modestly in Monday’s after hours session after it reported a first quarter loss from continuing operations of $194 million or 19 cents per share, which included restructuring charges of $295 million or 29 cents per share, compared to a loss from continuing operations of $480 or 59 cents per share last year. Excluding the charges, Alcoa’s earnings would have been 10 cents per share. Revenues fell 10% year-over-year to $4.9 billion. Analysts estimated earnings of 10 cents per share on revenues of $5.24 billion.
Google (GOOG) could move in reaction to a report from comScore (SCOR), which said the Internet giant’s share of the U.S. core search market slipped 0.4 points in March to 65.1%. Yahoo (YHOO) saw its share rise 0.1 points to 16.9% and Microsoft’s market share (MSFT) rose by 0.2 points to 11.7%.
Infosys (INFY) may see some activity after it reported an increase in its fourth quarter earnings to 61 cents per share from 56 cents per share last year. Revenues climbed to $1.30 billion from the year-ago’s $1.12 billion. Analysts estimated earnings of 56 cents per share on revenues of $1.26 billion. However, reflecting the strengthening of the Indian rupee, the company’s rupee denominated profit declined year-over-year. The company’s revenue guidance for the first quarter as well as the fiscal year ended 2011 were above the consensus estimates, while its earnings guidance for both periods was almost in line with the mean analysts’ estimates.
Massey Energy (MEE) is likely to be in focus after CtW Investment Group sought the resignation of the company’s Chairman and CEO Donald Blankenship. The investment group said the company had failed to respond to its earlier letter relaying its opposition to the three directors up for election at its May 18th shareholder meeting unless it takes steps to enhance its independence and accountability.
H&R Block (HRB) may see weakness after the company said it is initiating a search for a new CFO. The company noted that its current CFO Becky Shulman would be leaving the company on April 30th, 2010 and said its corporate controller Jeff Brown would serve as the interim CFO until a replacement is found.
Maxim Integrated (MXIM) gained ground in Monday’s after hours session after it announced a deal to buy privately held Teiridian Semiconductor, an energy measurement and communication electronics company, for about $315 million in cash.
Progress Software (PRGS) may see some activity after it announced that its CFO Norman Robertson wishes to retire this year. The company clarified that Robertson will continue in his current role until his successor is appointed.
Group 1 Automotive (GPI) is also likely to be in focus after it announced that it has acquired Harrelson Toyota/Scion in Rock Hill. The company said the dealership will fetch $55 million in estimated annual revenues.
Medical Properties Trust (MPT) receded sharply in Monday’s after hours session after it announced that it has commenced a cash tender offer to buy the aggregate principal amount of its outstanding 6.125% exchangeable senior notes due 2011. Additionally, the company said it plans to offer 24 million shares in a public offering.
Talbots (TLB) may also be in focus after it said its fourth quarter adjusted earnings from continuing operations were 13 cents per share compared to an adjusted loss from continuing operations of $2.30 per share in the year-ago quarter. Net sales fell to $315.93 million from the year-ago’s $327.91 million, although the sales exceeded the $314.44 million expected by analysts. For 2010, the company expects top line growth of 3%-5% and for the first quarter, the company estimates sales growth of 4%-5%. |