US & World Daily Markets Financial Briefing 23-03-2010

DO YOU OWN THE RIGHT STOCKS?

Analyze Your Stocks FREE! – Click Here

Stocks Modestly Higher After Modest Drop In Existing Home Sales

Stocks are showing modest strength in mid-morning trading on Tuesday, as a slightly smaller than expected drop in the rate of existing home sales largely pleased the markets. The major averages are all in positive territory, adding to yesterday's solid gains.

The National Association of Realtors reported that existing home sales saw a modest decrease in the month of February, with modest gains in the Northeast and Midwest offset by softer sales in the South and West.

Existing home sales edged down by 0.6 percent to a seasonally adjusted annual rate of 5.02 million units in February from a 5.05 million unit rate in January. Economists had expected sales to fall to a 5.00 million unit rate.

Treasury Secretary Timothy Geithner is testifying before the House Financial Services Committee regarding the future of housing finance, with the markets looking for any indications regarding the future of lenders Fannie Mae (FNM) and Freddie Mac (FRE).

In corporate news, drugstore chain operator Walgreen Co. (WAG) reported a year-over-year increase in its profit for the second quarter, helped by margin expansion and a 10 percent increase in prescription sales. Pharmacy sales were impacted by lower incidences of flu, the company noted.

Earnings per share for the quarter grew 4.6 percent but missed analysts' expectations by three cents. Quarterly revenues also increased yet came in below consensus estimate.

Apparel maker Phillips-Van Heusen Corp. (PVH) said that it swung to a fourth quarter profit, helped by higher revenue, improved gross margins and fewer restructuring as well as other charges.

The company's quarterly earnings per share, excluding items, also came in above analysts' as well as its own expectations.

The major averages have seen some reluctant upside in recent dealing and are near their highs of the session. The Dow is up 43.84 points or 0.4 percent at 10,829.73, the Nasdaq is up 5.72 points or 0.2 percent at 2,401.12 and the S&P 500 is up 2.62 points or 0.2 percent at 1,168.43.

Sector News

Steel stocks are notably higher in mid-morning trading, as reflected by the 2.4 percent gain being shown by the NYSE Arca Steel Index. The sector is being helped higher by shares of Cliffs Natural Resources (CLF), which have gained 4.7 percent, setting an eighteen-month intraday high.

Computer hardware stocks are also seeing a strong outing, with the NYSE Arca Computer Hardware Index rising by 1.6 percent. The advance is helping the index to offset last Friday's steep loss, although it remains rangebound.

Semiconductor, telecommunications and networking stocks are also moving higher, while healthcare related stocks are sliding, with the Morgan Stanley Healthcare Provider Index down by 1.3 percent. The Morgan Stanley Healthcare Payor Index is also down, slipping by 0.7 percent.

Airline stocks are also moving lower, although they remain rangebound, bouncing around along with the choppiness in the price of oil.

Stocks Driven By Analyst Comments

Shares of Saks Inc. (SKS) have shown a strong upward move in morning trading, with the luxury retailer currently posting a 6.6 percent gain. At its high for the session, Saks was at its best intraday level in eighteen months.

The gain by Saks comes after J.P. Morgan upgraded its rating on the company's stock to Overweight from Neutral. J.P. Morgan noted that Saks has reported same-store sales growth for three straight months due in part to a resumption of luxury spending.

American Semiconductor (AMSC) is also turning in a strong performance after Jefferies raised its rating on the stock to Buy from Hold, citing its attractive price level. Shares of American Semiconductor are currently up 6.8 percent, bouncing off an eight-month closing low.

On the other hand, shares of PetSmart (PETM) are currently down 1.2 percent after Janney Montgomery Scott downgraded its rating on the pet supplies retailer to Neutral from Buy. With the loss, PetSmart is pulling back off the more than one-year high set in the previous session.

Early Signals Point To Lackluster Session For Canadian Stocks

Canadian stocks may struggle to find direction Tuesday morning amid mixed clues. Commodities prices were paring their yesterday's late session gains, drifting lower in early morning deals. Meanwhile, Statistics Canada said the country's leading index rose again in February.

However, lingering worries over the Greece debt situation may continue to weigh on investor sentiment, capping any big upside movements in the stocks.

On Monday, the S&P/TSX Composite Index edged up 19.19 points or 0.16% to settle at 11,967.17, breaking its two-day losing streak.

The price of oil and bullion were marginally weak in early morning deals, after having recovered their intra-session losses in late deals yesterday. Crude for May was almost flat at $81.60, while gold for April eased $2.5 to $1,097 an ounce.

Mining stocks may be in play. In a major M&A deal, Quadra Mining and rival FNX Mining have agreed to merge a $1.51 billion all stock deal. Each FNX share will be exchanged for 0.87 Quadra shares, valuing each FNX share at C$15.12.

Mineral explorer Crowflight Minerals announced the appointment of Stephen Davies as its Chief Operating Officer.
 
Investment banker C.A. Bancorp Inc. reported break-even net income for the fourth quarter, compared to a net loss of C$0.39 per share for the year-ago quarter.

Oil and natural gas firm Monterey Exploration reported lower funds from operations of C$0.05 per share in the fourth quarter, compared to C$0.11 per share in the prior year quarter.

Oil and gas explorer Angle Energy reported lower net income for the fourth quarter at C$0.04 per share, compared to C$0.07 per share for the year-ago quarter.

Information technology company Glacier Media reported lower net income of C$0.15 per share for 2009, compared to C$0.30 per share for the year-ago quarter.

Gold mining company Jaguar Mining reported a wider fourth quarter net loss of $0.36 per share, compared to a net loss of $0.05 per share in the prior year quarter.

Agricultural products dealer Alliance Grain Traders reported diluted net income of $2.74 per share compared to $2.91 per share in the year ago period

Automobile dealer AutoCanada turned to profit reporting fourth quarter net earnings of C$1.68 million, compared to a net loss of C$67.12 million a year earlier.

Real estate mortgage company Quest Capital slipped into the red in fiscal 2009, reporting a net loss of $0.14 per share, compared to net income of $0.16 per share a year earlier.

In economic news, Statistics Canada said the country's leading indicators rose 0.8% in February after a 0.7% advance in January. Economists were expecting the leading composite index to rise 0.9%. The growth was largely led by household demand, with the housing index accelerating to 1.7% growth.

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

The major Asian markets had a mixed session on Tuesday, with the Japanese market, which opened after Monday’s public holiday, declining along with the Taiwanese and the Chinese markets, while the rest of the markets rebounded, taking cues from Wall Street’s positive performance overnight.

Japan’s Nikkei 225 average opened lower and declined steadily throughout the session to close down 50.57 points or 0.47% at 10,774.

A majority of stocks declined, with All Nippon Airways leading the slide with a decline of 6%. Last week, the airline forecast that its loss for the full year may be double what it had estimated earlier. Auto, financial, construction, real estate, utility, heavy equipment and most technology stocks also came under selling pressure.

On the other hand, electronics makers showed some strength. Auto parts retailer Clarion climbed 6.25%, Mitsubishi Heavy rallied 3.10%, Olympus gained 3.33%, Sony moved up 3.55%, Toshiba advanced 3.56% and Fuji Electric Holding rose 3.17%. Toshiba received support from a Nikkei newspaper report that said the company is in discussions with a Bill Gates company to develop nuclear reactors.

Meanwhile, Australia’s All Ordinaries rose sharply in early trading and consolidated its gains thereafter before ending up 40.40 points or 0.83% at 4,888, slightly off its 2-month highs reached last Friday.

Most sectors, barring telecommunications, IT, healthcare and real estate stocks advanced in the session. The major miners, with the exception of gold mining stocks Lihir Gold and Newcrest Mining, firmed up in the session. Energy and bank stocks also closed higher. On the other hand, Qantas, building contractor Leighton and CSL came under selling pressure.

Hong Kong’s Hang Seng Index opened higher and moved sideways till the afternoon. Thereafter, the index pared some of its gains to close up 54.53 points or 0.26% at 20,998. Twenty of the forty-two index components closed the session higher. Retailer Esprit Holdings and Li & Fung rallied 3.06% and 4.73%, respectively. Property stocks also showed modest buying interest.

DO YOU OWN THE RIGHT STOCKS?

Analyze Your Stocks FREE! – Click Here

The major European markets opened Tuesday�s session modestly higher. The French CAC 40 Index and the German DAX Index are rising 0.59% and 0.18%, respectively, while the U.K.�s FTSE 100 Index is moving up 0.45%.

In corporate news, oil firm Cairn Energy reported that its full year 2009 net profit fell to $24.7 million from $348.8 million in the previous year, with the decline mainly due to lower one-time gains and a one-time impairment charge. However, excluding one-time items, profits rose to $53 million from $11 million last year.

Meanwhile, U.K. insurer Legal & General reported a full year profit of 863 million pounds compared to a loss of 1.07 billion pounds in the year-ago period. The company also announced a 33% increase in its dividend.

Imperial Tobacco said its first-half performance is tracking to expectations. However, the company said cigarette volumes were down around 4%.

On the economic front, French statistical office INSEE released the results of its business climate survey, which showed that the industrial economic situation in France improved. The business climate indicator rose by 4 points to 94 in March, although it remained below its long-term average. The index measuring personal production expectations improved to 3 from �4, while the index of general production expectations remained unchanged at �5.

The U.K. consumer price inflation report released by the U.K. Office for National Statistics showed that the U.K.�s annual inflation rate came in at 3% in February from 3.5% in the previous month. Economists had expected a more modest decline in the inflation rate to 3.1%. Nevertheless, the rate remains above the Bank of England�s 2% target. On a monthly basis, consumer prices rose 0.4%, slower than the 0.5% increase expected by economists.

U.S. Economic Reports

The National Association of Realtors is scheduled to release its report on existing home sales for February at 10 AM ET. Economists estimate existing home sales of 5 million for the month.

Existing home sales showed a decline to 5.05 million units in January compared to 5.44 million in December. Single-family home sales as well as condominium/co-ops sales fell. Inventories measured by months supply rose to 7.8 from 7.2 in the previous month, while in absolute terms, the number of existing homes available for sales fell to 3.265 million units, the lowest since March 2006. The median selling price was flat year-over-year at $164,700.

The Federal House Finance Agency set to release its house price index for January at 10 AM ET. The index is a weighted, repeat-sales index that measures average price changes of single-family houses in repeat sales or refinancings on the same properties. The house price index fell 1.6% month-over-month in December compared to expectations for a 0.4% increase.

San Francisco Federal Reserve Bank President Janet Yellen is due to speak on the economic outlook and central bank independence to Town Hall Los Angeles at 3 PM ET.

Earnings

Walgreen (WAG) said its second quarter sales rose 3.1% to $17 billion and net earnings rose 4.6% to 68 cents per share. The second quarter�s results included a charge of 2 cents per share. Analysts estimated earnings of 71 cents per share on revenues of $17.17 billion.

KB Home (KBH) reported revenues of $264 million, down 14% year-over-year. The company reported a net loss of 71 cents per share, narrower than the 75 cents per share loss in the year-ago period.

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

Phillips-Van Heusen (PVH) rose in Monday’s after hours session after it reported fourth quarter non-GAAP earnings of 61 cents per share, a two-fold increase from 30 cents per share in the year-ago period. Revenues rose 9% to $614.6 million. Analysts estimated earnings of 59 cents per share on revenues of $609.33 billion. Excluding the impact of its Tommy Hilfiger agreement, the company expects 2010 non-GAAP earnings of $3.20-$3.28 per share and revenues of $2.47 billion to $2.50 billion. Phillips-Van Heusen expects the Tommy Hilfiger deal to be immediately accretive to earnings on a non-GAAP basis, with the firm predicting a 20-25 cents per share earnings boost in 2010 and a 75 cents to $1 per share earnings accretion in 2011.

Delta Airlines (DAL) and US Airways (LCC) could be in focus after the companies announced an agreement to transfer 12% of the takeoff and landing slots involved in a previously announced transaction between the carriers at New York’s LaGuardia and Washington’s Reagan’s National airports to four airlines, AirTran Airways (AAI), Spirit Airlines, WestJet (WJA.TO) and JetBlue Airways (JBLU).

RLI Corp. (RLI) may see some activity after rating agency Fitch announced that it has upgraded the company’s senior debt rating to ‘BBB-‘ from ‘BBB’ and raised its insurer financial strength rating for its operating subsidies to ‘A+’ from ‘A’.

ViaSat (VSAT) could see some weakness after it announced that it has commenced an underwritten public offering of 5.5 million shares, consisting of 2.5 million shares offered by ViaSat and 3 million shares offered by certain selling shareholders.

Glacier Bancorp. (GBCI) may also be in focus after it said it has completed its previously announced public offering of 10.29 million shares at a price of $14.75 per share, a discount to its previous session’s closing price of $15.94. The company expects net proceeds of $145.6 million from the offering and intends to use it for supporting growth of its banks and for general corporate purposes.

Massey Energy (MEE) may also see weakness after it announced a public offering of 8.5 million shares in a registered underwritten public offering. Abbott Labs (ABT) could also see some activity after it announced the completion of its acquisition of laboratory information management system company STARLIMS Technologies.

Coca-Cola Enterprises (CCE) is likely to move in reaction to its announcement that its subsidiary Bottling Holdings has entered into an agreement with Coca-Cola (KO) to acquire the latter’s bottling operations in Norway and Sweden for $822 million.

DO YOU OWN THE RIGHT STOCKS?

Analyze Your Stocks FREE! – Click Here

Investors Hub Services