US & World Daily Markets Financial Briefing 13-05-2010

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Stocks Mostly Higher After Recovering From Lower Open

Stocks have rebounded from a weak start and are mostly higher in mid-morning trading on Thursday, as the markets have focused on upbeat news from the labor market but European worries remain on traders' minds. The major averages have climbed into positive territory and are posting modest gains.

On the economic front this morning, the Labor Department reported that first-time claims for unemployment benefits showed another modest decrease in the week ended May 8th, although the number of claims exceeded estimates due to an upward revision to the previous week's data.

Initial jobless claims edged down to 444,000 from the previous week's revised figure of 448,000. Economists had expected jobless claims to slip to 440,000 from the 444,000 originally reported for the previous week.

With the modest decrease, jobless claims fell for the fourth consecutive week, further offsetting the notable increases seen in late March and early April.

Earlier in the day, RealtyTrac, an online marketplace for foreclosure properties, revealed that foreclosure filings on U.S. properties in April fell 2 percent compared to the previous year. In its U.S. Foreclosure Market Report for April, RealtyTrac said one in every 387 U.S. housing units received a foreclosure filing during the month.

In earnings news, Kohl's Corp. (KSS) reported first-quarter net income and revenues that topped Wall Street forecasts. Meanwhile, Kohl's firm issued second-quarter and fiscal 2010 guidance that was short of analyst estimates.

After the markets closed for trading in the previous session, Cisco Systems (CSCO) said its third quarter profit rose 63 percent from last year, as sales jumped 27 percent amid a pickup in global economic recovery and technology spending by corporations. The company's adjusted earnings per share came in above analyst estimates.

In other corporate news, Sybase (SY) is on the rise amid news that SAP (SAP) has agreed to acquire the company in a deal worth $5.8 billion or $65 a share.

The major averages have seen further upside in the past few minutes, rising to new highs for the session. The Dow is up 19.65 points or 0.2 percent at 10,916.56, the Nasdaq is up 7.70 points or 0.3 percent at 2,432.72 and the S&P 500 is up 1.59 points or 0.1 percent at 1,173.26.

Sector News

Airline stocks are seeing a strong outing in mid-morning trading, driving the NYSE Arca Airline Index up by 1.4 percent. The index is further recouping recent losses, setting a nine-day intraday high.

Steel, internet, brokerage and electronic storage stocks have also moved to the upside, while weakness remains visible among housing, trucking and commercial real estate stocks.

Notably, the Philadelphia Housing Sector Index is down by 1 percent, offsetting the majority of yesterday's rally.

Stocks Driven By Analyst Comments

Teradata (TDC) is on the rise in morning trading after being upgraded at Oppenheimer from Perform to Outperform. The stock has gained 8.1 percent, setting an historic intraday high.

Meanwhile, Conway (CNW) is under pressure after being downgraded at Bank of America to Neutral from Buy. The broker also lowered its price target on the stock to $39 from $42. Shares are currently down by 7.8 percent after setting a two-month intraday low in earlier trading.

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Bay Street Likely Poised For A Mixed Open

Toronto stocks are likely to open mixed Thursday amid varied cues from the commodities prices. While lingering worries over the euro zone debt issues may weigh on sentiment, a mixed bag of earnings reports from a host of Canadian companies will likely to lead to stock specific action during the day.

Meanwhile, traders may book profits at higher levels capping major gains, after the main index had a smart run-up in the past three sessions.

On Wednesday, the S&P/TSX Composite Index gained 195.36 points or 1.63% to 12,195.37, taking its cumulative gains in the past three sessions to over 500 points or 4.25%.

The price of oil moved down for a third session on concerns over demand growth. Crude for June delivery shed $0.78 to $74.87 a barrel.

The price of gold was leveling off from its record high of $1,250 hit in the previous session, with gold for June delivery easing $5.0 to $1,238.10 an ounce.

In corporate news, HSBC Bank Canada, a subsidiary of HSBC Holdings Plc (HBC, HSBA.L), said its first-quarter net income attributable to common shares declined slightly to C$84 million from C$85 million in the prior year period. Basic earnings per share for the quarter stood at C$0.17, flat with last year.

Financial service company Grey Horse Corp. reported higher first quarter net income of C$0.07 per share, compared to C$0.03 per share in the year-ago quarter.

Petroleum and natural gas firm Crescent Point Energy said it would buy the remaining 79% stake in Shelter Bay Energy Inc., a private oil and gas producer, for about C$1.1 billion.

Natural gas explorer Open Range Energy turned to profit in first quarter, reporting net earnings of C$0.01 per share, compared to a net loss of C$0.05 per share in the previous year quarter.

Energy exploration company Arsenal Energy reported a narrower net loss for the first quarter at C$0.01 per share, compared to a net loss of C$0.03 per share in the year-ago quarter.

Oil field services company Canyon Services Group reported considerable growth in first quarter net income of C$0.25 per share, compared to net income of C$0.04 per share in the same period last year.

Oil exploring company Midnight Oil Exploration reported a narrower first quarter net loss of C$0.02 per share, compared to a loss of C$0.04 per share in the same period last year.

Oil and natural gas firm Crocotta Energy reported improved first-quarter funds from operations of C$0.06 per share, compared to C$0.04 per share in the prior year period.

Natural resources company Sprott Resource posted a wider first quarter net loss of C$0.06 per share, compared to C$0.01 per share in the previous year period.

Gold miner Allied Nevada Gold said it will place 13 million shares at $21.00 per share on bought deal basis to a syndicate of underwriters for aggregate gross proceeds of $273 million.

Gold and silver explorer Gammon Gold reported lower first-quarter net earnings of $0.01 per share compared to $0.02 per share in the same period in 2009. However excluding other items, net earnings were $0.09 per share compared to $0.04 per share. Analyst were expecting the company to report $0.06 per share for the quarter.

Gold producing company Aura Minerals reported first quarter net loss of $0.01 per share, compared to a loss of $0.07 per share in the prior year quarter. The company reaffirmed 2010 gold production guidance at 185,000 oz - 195,000 oz.

Mineral explorer European Goldfields reported a wider first quarter net loss of $0.03 per share, compared to $0.02 in the earlier period.

Base metals explorer FNX Mining swung to profit in first-quarter, reporting net earnings of C$0.02 per share, compared to a net loss of C$0.31 per share for the comparable period in 2009.

Metals exploring company Capstone Mining turned to profit in first quarter, reporting earnings of $0.07 per share, compared to a loss of $0.10 per share in the prior year quarter. The company announced the appointment of Gregg Bush as Chief Operating Officer, effective May 24, 2010.

Base and precious metals explorer Imperial Metals reported a narrower first quarter net loss of C$0.07 per share, compared to a loss of C$0.23 per share in the prior year quarter.

Precious metals explorer Greystar Resources reported first-quarter loss of C$0.07 per share, compared to C$0.08 per share in the same quarter a year earlier.

Silver streaming company Silver Wheaton reported a notably higher first-quarter net earnings of $0.13 per share, compared to $0.06 per share in 2009. Analysts were expecting the company to report earnings of $0.16 per share for the quarter.

Silver explorer Silvercorp Metals reported higher fourth-quarter net earnings of $0.06 per share, compared to earnings of $0.01 per share, in the same quarter last year. Net earnings improved primarily due to higher metal production and higher realized selling prices. For fiscal 2011, the company expects a 13% increase in silver production to 5.3 million ounces, generating revenues of $140 million. The company envisages 2011 capital expenditure of $13 million.

Apparels maker Gildan Activewear reported a notably higher second quarter net earnings of $0.40 per share, compared to $0.06 per share last year. Analysts were expecting the company to report earnings of $0.36 per share. The company now projects full year sales revenues of approximately $1.3 billion, reflecting an increase of about 25% from fiscal 2009.

Natural and organic food products company SunOpta Inc. swung to profit in first quarter, reporting net earnings of $0.07 per share, compared to a loss of $0.03 per share in the same period last year. Analysts were expecting the company to post earnings of $0.04 per share for the quarter.

Packaging and tissue products company Cascades Inc. reported breakeven for the first quarter, compared to net earnings of C$37 million or C$0.38 per share last year.

Communications services provider TeraGo Inc. reported first-quarter net loss of C$0.13 per share, compared to net loss of C$0.14 per share last year.

Pharmaceutical company Aeterna Zentaris reported a narrower first-quarter net loss of $0.09 per share, compared to a loss of $0.23 per share in the year ago period. Analysts were expecting the company to report loss of $0.12 per share this quarter.

Bio-pharmaceutical company YM BioSciences reported a wider third quarter net loss of C$0.09 per share from C$0.06 per share last year.

Industrial software services provider Matrikon Inc. said that it will be acquired by Honeywell International Inc.(HON) for C$145 million

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The markets across Asia ended the trading session on Thursday in positive territory, taking cues from Wall Street where the major averages registered modest gains, offsetting some of the losses sustained in the previous trading sessions as concerns about the debt crisis in EU region showed signs of easing. Positive earnings results and optimism that the global economic recovery might not be affected also lifted market sentiment with almost all stocks gaining on bargain hunting.

In Japan, the benchmark Nikkei 225 Index rose 226.52 points, or 2.2%, to 10,620.55, while the broader Topix index of all the First Section issues also rose 15.07 points, or 1.6%, to 948.

On the economic front, a report released by the Ministry of Finance revealed that the country posted a balance of payment trade surplus of 1.0747 trillion yen in March, surging a record 745.4 % on year. Imports jumped 22.0% on year to 4.6313 trillion yen, while exports climbed an annual 45.4% to 5.7061 trillion yen. Goods and services surged 606.8% on year to 1.0891 trillion yen. The report further noted that the current account also saw a surplus of 2.534 trillion yen - rising 65.1% on year and beating forecasts for a surplus of 2.212 trillion yen after coming in at 1.47 trillion yen in February. The adjusted current account surplus was 1.773 trillion yen.

As many as 31 sectors of the 33 sectors in the index posted gains during the session as traders preferred to do bargain hunting across the stocks that declined sharply following previous week's decline.

In Australia, the benchmark S&P/ASX200 Index surged up 79.80 points, or 1.75% to 4,653, while the All-Ordinaries Index ended at 4,680, representing a gain of 79.80 points, or 1.73%.

On economic front, a report released by the Australian Bureau of Statistics revealed that unemployment rate remained unchanged in April compared to March. As per the report, the unemployment rate stood at a seasonally adjusted 5.4% in April, higher than forecasts for a rate of 5.3%. The March unemployment rate was also revised up to 5.4% from 5.3%.

Light sweet crude oil futures for June delivery ended at $75.72 a barrel in electronic trading, up $0.07 per barrel from previous close at $75.65 a barrel in New York on Wednesday.

Banks ended in positive territory. ANZ Bank gained 2.42%, Commonwealth Bank of Australia advanced 1.18%, National Australia Bank rose 1.88% and Westpac Banking climbed 1.69%. Investment banker Macquarie Group surged up 4.43%.

Gold stocks continued to march northwards on higher bullion prices. Lihir Gold rose 1.72% and Newcrest Mining climbed 2.24%.

Retailers also advanced on optimism about economic growth. David Jones advanced 1.36%, Harvey Norman climbed 3.28%, JB Hi-Fi Ltd gained 1.45%, Myer Holdings added 1.31%, Reject Shop rose 1.64%, Wesfarmers was up 1.05% and Woolworths increased by 1.14%.

Mining and metal stocks also ended in positive territory. BHP Billiton gained 1.78%, Fortescue Metals surged up 3.57%, Gindalbie Metals remained unchanged from previous close, Macarthur Coal advanced 1.84%, Murchison Metals climbed 5.21%, Oz Minerals added 0.47% and Rio Tinto increased by 1.89%.

In Hong Kong, the benchmark Hang Sang Index surged up 209.97 points, or 1.04%, and closed at 20,422, taking cues from Wall Street where the major averages ended in positive territory with modest gains, offsetting some of the losses in the past week, on increasing optimism that the EU crisis is showing signs of easing. Positive closing across other markets in the region, including main land China, lifted market sentiment as traders went bargain hunting at lower levels.

Strong global cues amid easing worries about Europe's debt crisis helped the Indian market end higher for a second straight session on Thursday. However, fluctuating U.S. stock futures dampened sentiment to some extent. After rising by about 200 points at mid-session, the 30-share Sensex average pared some of its gain before finishing at 17,266, up 70 points or 0.41%, while the 50-share Nifty ended up 22 points or 0.43% at 5,179.

Among the other major markets open for trading, China's Shanghai Composite Index gained 54.79 points, or 2.06%, to close at 2,711, and Taiwan's Weighted Index surged up 167.87 points, or 2.21%, to 7,771. However, Singapore's Strait Times Index bucked the trend and ended in negative territory with a loss of 13.07 points, or 0.45%, to close at 2,867.

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The major European markets are trading higher for a second straight session on Thursday, with the French CAC 40 Index and the German DAX Index rising 0.03% and 1.10%, respectively, while the U.K.’s FTSE 100 Index is gaining 0.78%.

Consumer morale in the U.K. rose slightly in April following a sharp drop in March as consumers were more wary about the future, the results of a survey showed. The Nationwide Building Society's consumer confidence index rose to 74 in April from an upwardly revised score of 73 in March, beating analyst expectations for the index to stand at 73. The indicator stood at 82 in February.

The present situation index, which assesses consumer sentiment about the current economic situation, rose to 28 in April from 25 in March, while the expectations index fell to 104 from 106. An indicator of whether now is a good time to spend fell to 96 from 97.

The U.K. Office for National Statistics said that the U.K.'s visible trade deficit widened significantly to 7.5 billion pounds in March compared to a deficit of 6.3 billion pounds in February. The deficit for March was bigger than the 6.4 billion pound deficit forecast by economists.

U.S. Economic Reports

First-time claims for unemployment benefits showed another modest decrease in the week ended May 8th, according to a report released by the Labor, although the number of claims exceeded estimates due to an upward revision to the previous week's data.

The report showed that initial jobless claims edged down to 444,000 from the previous week's revised figure of 448,000. Economists had expected jobless claims to slip to 440,000 from the 444,000 originally reported for the previous week.

The Labor Department released its report on import and export prices in the month of April, showing that import and export prices both increased for the second consecutive month. The increase in import prices was partly due to a notable increase in prices for fuel imports.

The report showed that import prices rose by 0.9 percent in April following a 0.5 percent increase in March. Excluding a 2.3 percent jump in prices for fuel imports, import prices increased by a more modest 0.5 percent in April compared to a 0.2 percent increase in the previous month.

Additionally, the Labor Department said that export prices increased by 1.2 percent in April after rising by 0.7 percent in March. A 0.7 percent drop in prices for agricultural exports partly offset a 1.4 percent increase in prices for non-agricultural exports.

Federal Reserve Chairman Ben Bernanke is due to host a Q&A session with Philadelphia Fed Deputy Chair Jeremy Nowak at the bank's conference on community development at 9 AM ET. At the same time, Federal Reserve Vice Chairman Donald Kohn is scheduled to be on a panel on lender of last resort at the Centre for Monetary and Financial Economics Conference in Ottawa. Minneapolis Federal Reserve Bank President Narayana Kocherlakota is also due to speak to Eau Claire business leaders in Altoona, Wisconsin at 12 PM ET.

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Shares of Wendy's/Arby's Group Inc. (WEN) are likely to be in focus after the fast food company reported a first-quarter net loss of $0.01 per share compared to a loss of $0.02 per share in the year-ago quarter. Consolidated revenues for the quarter fell to $837.4 million from $864.0 million in the comparable quarter last year. On average, analysts expected the company to earn $0.01 per share on revenue of $835.2 million.

Additionally, Urban Outfitters Inc. (URBN) may attract attention after the retailer reported that its first-quarter net income rose to $0.31 per share from $0.18 per share a year ago, exceeding analyst estimates by a penny. T

he company said its net sales for the quarter rose to $479.96 million from $384.80 million in the prior year quarter analysts had consensus revenue estimate of $475.29 million for the quarter. U

rban Outfitters said it expects further improvement in the annual effective tax rate for the remainder of the current fiscal year.

Sony Corp. (SNE) reported a fourth-quarter net loss attributable to stockholders of 56.57 billion yen, or 56.37 yen per share, compared to net loss of 165.14 billion yen or 164.56 yen per share last year.

Sales and operating revenue rose to 1.72 trillion yen from 1.52 trillion yen in the same quarter a year earlier. For the fiscal year ending March 31, 2011, Sony expects net income attributable to stockholders of 50 billion yen on sales and operating revenue of 7.6 trillion yen.

Shares of St. Jude Medical, Inc. (STJ) could see early strength after the company revealed FDA approval and first U.S. implants of its Unify cardiac resynchronization therapy defibrillator and Fortify implantable cardioverter defibrillator.

The new devices feature advanced battery technology and circuitry that allow for the smallest device footprint in the industry and rapid charge times without any compromise in device longevity or power.

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