US & World Daily Markets Financial Briefing 23-06-2010

DO YOU OWN THE RIGHT STOCKS?

Analyze Your Stocks FREE! – Click Here

Stocks Notably Lower As New Home Sales Figures Sink Sentiment

Stocks are posting notable losses in mid-morning trading on Wednesday, as the markets are reacting to far worse than expected May new home sales numbers. The major averages are all in negative territory, slipping further away from Friday's one-month closing highs.

Equities turned firmly lower after a slow start as the Commerce Department reported a much steeper than expected decline in new home sales in the month of May, with the expiration of the homebuyer tax credit resulting in reduced demand.

New home sales plunged by 32.7 percent to an annual rate of 300,000 in May from the downwardly revised April rate of 446,000. Economists had expected sales to fall to a rate of 430,000 from the 504,000 originally reported for the previous month.

With the monthly decrease, new home sales in May were down 18.3 percent compared to the same month a year ago, falling to their lowest annual rate since the government began tracking the data in 1963.

At 2:15 p.m.ET, the Federal Reserve, at the conclusion of the 2-day Federal Open Market Committee meeting, will release its much awaited policy statement.

Economists are likely to focus on the Fed's economic commentary more so than its interest rate decision, as interest rates are almost universally forecast to remain unchanged. In its commentary, the Fed is expected to acknowledge a slight cool off in the pace of the economic recovery.

On the corporate front, BP plc (BP) is officially following through in changing leadership of its Gulf of Mexico operations in connection with the oil spill. Chief Executive Tony Hayward is handing over control of the oil spill cleanup to another BP executive, Robert Dudley, who will now be the president of the firm's Gulf Coast Restoration Organization.

The major averages have moved well off their worst levels of the day in recent trading, although they remain stuck in the red. The Dow is down 36.42 points or 0.4 percent at 10,257.10, the Nasdaq is down 16.71 points or 0.7 percent at 2,245.09 and the S&P 500 is down 7.01 points or 0.6 percent at 1,088.30.

Sector News

Housing stocks are among the morning's worst performers, dragging the Philadelphia Housing Sector Index down by 1 percent. Earlier, the index slumped to its worst intraday level in over seven months after the day's disheartening new home sales data.

Oil service stocks are also under pressure, resulting in a 1.1 percent decline by the Philadelphia Oil Service Sector Index. Despite the drop, the index remains rangebound.

Weakness is also visible among airline, software, commercial real estate and gold stocks, further indicating the day's broad-based selling pressure.

Meanwhile, some strength among tobacco and wireless stocks is limiting the drop by the broader markets.

Stocks Driven By Analyst Comments

DreamWorks (DWA) is notably higher after being upgraded at Stifel Nicolaus to Buy from Hold. Shares are up by 1.9 percent, attempting to extend a recovery from the nearly one-year closing low set earlier this month.

Holly Corp (HOC) is also on the upside by a notable margin following an upgrade by analysts at Bank of America from Neutral to Buy based on valuation. The broker also raised its price target on the stock to $35 from $32. The stock has gained 4.1 percent but remains rangebound.

On the other hand, Edwards Lifesciences (EW) is moving lower after being downgraded at Goldman Sachs from Buy to Neutral. The stock is down by 5.5 percent, pulling back further off of this month's historic closing levels.

Our integrated pattern recognition technology identifies patterns in real-time. 

Download the free demo - Click Here

TSX Poised For A Mixed Open Wednesday

Toronto stocks are poised for a mixed open Wednesday amid easing energy prices and weak cues from the global equity markets. Traders might also play the 'wait and watch' game ahead of an interest rate decision from the FOMC due out later in the day.

Meanwhile, stocks across Asia and Europe fell Wednesday amid concerns over global economic growth. European financial stocks were under pressure after French bank Credit Agricole trimmed earnings outlook for its Greek unit, Emporiki.

Earlier Tuesday, a Fitch rating downgrade of French bank BNP Paribas and a surprise decline in existing home sales in the U.S. in May sent equities lower.

On Tuesday, the S&P/TSX Composite Index lost 138.14 points or 1.16% to 11,797.94, after ending with marginal changes in the past four sessions.

The price of crude oil eased for a second session, with crude for August delivery slipping $0.49 to $77.36 a barrel. Traders turned cautious ahead of the outcome of two-day long FOMC meeting and the new home sales data.

Meanwhile, the price of gold edged up $3.70 to $1,244.50 an ounce.

In international M&A news, Germany based chemical company BASF said it will acquire Cognis, a supplier of raw materials, for $858 million in cash.

In Canadian corporate news, gold mining company Royal Gold announced pricing of public offering of 5.2 million common shares at $48.50 per share.

Precious metals explorer Paramount Gold and Silver said it has agreed to acquire X-Cal Resources Ltd. for about C$31.8 million. Under the agreement, eight X-Cal shares will be exchanged for one Paramount share. Shares of X-Cal rallied 38% in the previous session.

Base metals miner HudBay Minerals said it found notable amounts of gold, silver, copper and zinc at the Lalor deposit near Snow Lake.

Oil and gas explorer Pacific Rubilaes Energy said it has been awarded six new land blocks in Colombia.

Oil exploration company, Petrominerales said it has been awarded two more blocks in Llano Basin, Colombia, taking its exploration blocks in Colombia to 17.

Merchant banker Clairvest Group reported lower fourth quarter net income of C$0.11 per share, compared to C$0.23 per share for the year-ago quarter.

In economic news, Statistics Canada said retail sales in the nation decreased 2.0% in current dollars to C$36.20 billion in April after gaining 2.1% in March. Economists were expecting retail sales to fall only 0.4% in April.

Decline in sales were recorded across sectors and provinces. Among sectors, sales of motor vehicle and parts declined 4.8% and clothing and accessories saw sales dip by 5.2% in April.

Yesterday, Statistics Canada said the consumer prices index (CPI) rose 1.4% year-over-year in May following a 1.8% increase in April. Economists were expecting CPI to rise to 1.3% year-over-year in May.

Our "Value Packed" online trading seminar will show you how you can.

Click Here To Find Out More

Asian Markets End Mixed Ahead Of US Data

Mixed trading was witnessed among the Asian markets on Wednesday with the markets in Australia, China, Japan, South Korea and Taiwan ending in negative territory while the markets in Hong Kong and India ended in positive territory with minor gains. Weak closing on Wall Street in the previous session, and resurfacing Europe financial crisis impacted market sentiment. Volume was relatively lower as most traders preferred to adopt a cautious mode ahead of FOMC announcement.

In Japan, the benchmark Nikkei 225 Index fell 189.19 points, or 1.9%, to 9924, while the broader Topix index of all First Section issues fell 13.72 points, or 1.5%, to 881.

As many as 216 of the 225 stocks in the Nikkei index ended in negative territory with traders concerned about the debt crisis in Europe and weaker economic data in the US, that might hinder prospects for economic recovery.

Shipping stocks declined after the customary Baltic Dry Index declined to a new yearly low in the previous session. Mitsui & Co. declined 2.55%, Kawasaki Kisen Kaisha fell 1.50% and Nippon Yusen plunged 3.64%.

Exporters also ended in negative territory following stronger yen. Canon Inc. fell 2.65%, Advantest Corp. lost 2.98%, Panasonic slipped 2.44%, Sharp Corp. shed 2.14% and Sony Corp. was down 0.59%.


Oil explorer Impex Corp. was a major loser, having shed 2.91%.

Automotive stocks also ended in the red on weak economic data in the US, the major export market for Japanese vehicles. Toyota Motor fell 1.67%, Honda Motor slipped 1.52%, Hino Motor lost 2.04%, Mitsubishi Motors declined 1.69% and Isuzu Motors was down 1.99%.

Mixed trading was witnessed among the large banks. Sumitomo Mitsui Financial shed 0.78%, Resona Holdings slipped 0.44%, and Mitsubishi UFJ Financial 0.70%. However, Mizuho Financial bucked the trend and ended in positive territory with a gain of 0.64%.

In Australia, the benchmark S&P/ASX200 Index slumped 72.20 points, or 1.58% and closed at 4,486, while the All-Ordinaries Index ended at 4,509, representing a loss of 71.90 points, or 1.57%.

On the economic front, results of a survey of Queensland resources companies revealed that at least A$25 billion in new investment and 14,500 jobs are under threat from the Australian government's proposed resource super tax. Queensland Resources Council chief executive Michael Roche says the proposed 40% tax is threatening more than half the project expansions and start-ups under consideration by survey respondents

Banks led the decline amid concerns about sustaining global economic recovery. ANZ Bank fell 1.34%, Commonwealth Bank lost 2.53%, National Australia Bank slipped 1.63% and Westpac Banking plunged 3.26%. Investment banker Macquarie Group was down 3.13%.

Resource stocks also ended weaker on concerns about super tax and its implications on growth and expansion plans. BHP Billiton lost 1.31%, Rio Tinto fell 2.18%, Fortescue Metals declined 1.56%, Gindalbie Metals shed 2.48%, Iluka Resources plunged 4.87%, Macarthur Coal slumped 5.31%, Mincor Resources was down 4.45% and Oz Minerals slipped 2.86%.

Oil stocks also ended in negative territory. Woodside Petroleum fell 1.43%, Santos Ltd declined 3.03%, ROC Oil Ltd plunged 4.23%, Oil Search Ltd shed 2.22% and Origin Energy lost 2.34%.

Gold stocks bucked the trend and ended in positive territory with minor gains. Lihir Gold advanced 0.46% and Newcrest Mining gained 0.83%.


James Hardie Industries plunged 3.46% on weak existing home sales in the U.S for May. Mixed trading was witnessed among retail stocks. David Jones slipped 0.68%, Harvey Norman shed 0.58%, Pacific Brands plunged 3.06%, Reject Shop fell 1.15%, and Woolworths lost 0.47%. However, Wesfarmers managed to remain unchanged from previous close and JB Hi-Fi gained 0.36%,

In Hong Kong, the benchmark Hang Seng Index ended in positive territory with a marginal gain of 37.53 points, or 0.18%, at 20,857, on bargain hunting at lower levels following recent decline on optimism about global economic recovery. Positive trading in US futures lifted the market sentiment in late trading session on speculation that FOMC statement might provide direction to the global markets.

The Indian market ended a volatile session modestly higher on Wednesday, a day before the expiry of June series derivatives contracts. Sector-wise, while realty, healthcare, telecom, consumer durable, IT and auto stocks closed firm, capital goods and metal stocks fell, limiting the gains. After struggling in the red for most part of the session, the 30-share Sensex average finally closed up 6 points or a mere 0.04% at 17,756 and the 50-share Nifty ended up by 7 points or 0.12% at 5,323.

Among the other major markets open for trading, China's Shanghai Composite Index declined 18.83 points, or 0.73%, and closed at 2,570, Indonesia's Jakarta Composite Index shed 9.80 points, or 0.33% to close at 2,25, Taiwan's Weighted Index slipped 30.53 points, or 0.40% to close at 7,582, and Singapore's Strait Times Index lost 6.43 points, or 0.22% to close at 2,866.

DO YOU OWN THE RIGHT STOCKS?

Analyze Your Stocks FREE! – Click Here

The major European markets are declining on Wednesday, with the French CAC 40 Index and the German DAX Index are moving down 0.53% and 0.21%, respectively, while the U.K.’s FTSE 100 Index is receding 0.28%.

On the economic front, German GfK Institute reported that German consumer sentiment index-a forward - looking indicator, stood unchanged at 3.5 in July. Economists had expected the index to decline to 3.3. The income expectations index recorded a significant drop for the second month in a row in June, falling to 8.2, 15.5 points lower than in May. After four consecutive declines, the index measuring propensity to buy climbed 12.3 points to 30.4 points, marking the highest value since September 2009.

Meanwhile, French statistical office INSEE said its indicator measuring sentiment among manufacturers declined to 95 in June from 97 in May. Economists had expected the index to decline to 96.

The manufacturing purchasing managers’ indexes released from the euro area showed a slackening in the pace of expansion in the manufacturing sector. The French manufacturing PMI fell to 54.9 in June from 55.8 in March, while the German manufacturing PMI dropped to a 4 month-low of 58.1.

U.S. Economic Reports

The Commerce Department is due to release its new home sales report for May at 10 AM ET. The consensus estimate calls for a decline in new homes sales to an annual rate of 430,000.

New home sales rose 14.8% month-over-month to a seasonally adjusted annual rate of 504,000 in April, marking their highest level since May 2008. Inventories measured in terms of months of supply fell to 5 months from the month-ago's 6.2 months. However, the median price of a new house fell 9.7% month-over-month and was down 9.5% year-over-year to $198,400, its lowest level since December 2003.

The Energy Information Administration is scheduled to release its weekly petroleum inventory report for the week ended June 18th at 10:30 AM ET.

The oil inventory report for the week ended June 11th showed that crude oil inventories rose by 1.7 million barrels to 363.1 million. Inventories were above the upper limit of the average range.

Distillate stockpiles increased by 1.8 million barrels, remaining above the upper boundary of the average range of the year. On the other hand, gasoline stockpiles slipped by 0.6 million barrels and were above the upper limit of the average range. Refinery capacity utilization averaged 87.9% over the four-weeks ended June 11th compared to 89.1% in the previous week.

Our integrated pattern recognition technology identifies patterns in real-time. 

Download the free demo - Click Here

Adobe (ADBE) saw some weakness in Tuesday’s after hours session despite reporting second quarter revenue growth of 34% to $943 million. The company’s adjusted earnings of 44 cents per share exceeded estimates by 2 cents. For the third quarter, the company estimates adjusted earnings of 46-50 cents per share compared to the 48 cents per share consensus estimate. Revenues are estimated at $950 million to $1 billion, while the Street estimates revenues of $958.7 million.

Apogee (APOG) could be in focus after it reported first quarter revenues of $143 million, down 21% year-over-year. The company reported a loss from continuing operations of 13 cents per share compared to a year-ago profit of 27 cents per share. Analysts expected a loss of 5 cents per share on revenues of $141.92 million. The company also said it expects to report a loss for the year on a 10%-15%drop in worldwide revenues. The consensus estimates call for a profit of 6 cents per share on revenues of $595.53 million, an estimated decline of 14.5%.

CarMax (KMX) could gain ground after Standard & Poor’s said the company would replace XTO Energy (XTO) in the S&P 500 Index. Meanwhile, Acuity Brands (AYI) will replace CarMax in the S&P MidCap 400 Index, while Medifast (MED) will replace Acuity Brands in the S&P SmallCap 600 Index.

McKesson (MCK) is likely to see some activity after it reaffirmed its fiscal year 2011 earnings guidance of $4.72-$4.92 per share. Analysts estimate earnings of $4.83 per share.

H.B. Fuller (FUL) is expected to move in reaction to its announcement that its second quarter net revenues rose 16% year-over-year to $347.9 million. The company’s adjusted earnings rose more than 8% year-over-year to 39 cents per share. The results were ahead of expectations. The company expects net revenue growth of 10%-12% for 2010 compared to the 9.60% growth forecast by economists.

CKE Restaurants (CKR) may also be in focus after it said its first quarter revenues fell to $435.2 million from the year-ago’s $446.8 million. The company reversed to a loss of 6 cents per share from a profit of 26 cents per share in the same quarter last year. Analysts’ estimates, which typically exclude one-time items, called for a profit of 19 cents per share on revenues of $435.70 million.

Progressive Software (PRGS) rose in Tuesday’s after hours session after it reported that its second quarter revenues rose 9% to $127.7 million. On a non-GAAP basis, the company reported earnings of 59 cents per share, higher than 39 cents per share last year. Analysts estimated earnings of 54 cents per share on revenues of $130 million. For the full year, the company expects non-GAAP revenues of $510 million and non-GAAP earnings of $2.28-$2.35 per share. The consensus estimates call for earnings of $2.30 per share on revenues of $538.22 million.

RealNetworks (RNWK) could see some activity after it announced a reorganization plan that envisages the elimination of about 85 positions and also a reduction in its office space in Europe, Asia and at its Seattle headquarters. The company said it expects to record restructuring charges of $10 million in its June quarter.

Jabil Circuit (JBL) may move in reaction to its announcement that its third quarter net revenues rose to $3.5 billion from the year-ago’s $2.6 billion. The company’s core earnings climbed to 40 cents per share from 4 cents per share last year. Analysts estimated earnings of 33 cents per share on revenues of $3.21 billion. For the fourth quarter, the company expects core earnings of 28-34 cents per share, while the Street estimates earnings of 38 cents per share.

Red Hat (RHT) may also be in focus after it said its first quarter revenues rose 20% year-over-year to $209.1 million, ahead of the $202.89 million consensus estimate. The company reported non-GAAP net income of 18 cents per share compared to the year-ago’s 15 cents per share and analysts’ estimate of 18 cents per share.

Our "Value Packed" online trading seminar will show you how you can.

Click Here To Find Out More

Investors Hub Services