Record energy prices weigh on market
By Rick Paler
Oil prices hit record levels this week causing traders to take profits after a four week run-up in stock prices. Additional fears of a world wide economic slowdown did not help. Earnings reports were on the light side and mergers mania continued.
Oil prices continued their climb this week hitting a record high, closing on Friday at $59.84 per barrel. Concerns about refining capacity for the summer driving season, reports of Nigerian oil workers being held hostage and a possible strike in Norway drove prices higher.
Wall Street also is concerned that a world-wide economic slowdown might be starting. Since recent data both in the United States and other countries indicates some weakness. Analysts are keeping a watchful eye on second quarter earnings reports. The street now expects the second quarter to show a 7% growth year-over-year for the S&P 500 compared with 21% earnings growth in the fourth quarter and 13% growth in the first quarter this year.
Bed Bath & Beyond (BBBY) had a nice earnings report. The retailer reported that their first quarter profit rose 21% and same store sales jumped 4.4%. Earnings came in at $98.9 million or $0.33 per share, a penny ahead of estimates. Sales rose 13% to $1.24 billion.
FedEx (FDX) disappointed the street when they posted earnings of $1.46 per share when analyst had been looking for $1.48 per share. Revenues also missed estimates. The company reported revenues of $7.72 billion. The company also gave future guidance below that the street was looking for citing higher energy cost as the cause.
General Electric (GE) reaffirmed their second quarter guidance of $0.43 to $0.45 per share and a full year outlook of $1.78 to $1.83 per share. The company also announced that they would reduce the number of operating units from eleven to six in an effort to reduce cost.
Guidant (GDT) shares fell on news that the company informed physicians to stop using certain cardiac defibrillators that it manufactures. This announcement might affect the company’s purchase by Johnson & Johnson (JNJ).
Housing continues to be hot. Lennar (LEN) posted earnings of $1.55 surpassing Wall Streets estimates of $1.31 per share. Revenues also exceeded estimates coming in at $2.93 billion. The homebuilder now sees full year earnings of $7.15 to $7.80 per share, citing their $7.3 billion order backlog.
China’s state-run energy company CNOOC (CEO) put in a bid for Unocal (UCL) offing $18.5 billion or $67 per share. The offer surpassed Chevron’s (CVX) bid of $16.4 billion for the company.
In economic news May durable good orders were up 5.5%. Additionally existing and new home sales data came in strong.
In bond news, the 5 year Treasury note closed at 3.68%. The 10 year note ended yielding 3.91 and the 30 year bond closed with a 4.21% yield.
Next week traders will be watching oil prices and second quarter earnings warnings to give the market direction. Companies releasing earning are the following companies; Nike (NKE), Paychex (PAYX), Walgreen (WAG), and Oracle (ORCL).
Subscribe To Morning Coffee
Posts
All Comments
Friday, June 24, 2005
Friday, June 17, 2005
Weekly Market Report 06-17-2005
Markets have good week
By Rick Paler
It was a good week for the stock market with all the major indices posting gains for the week. Corporate news and earnings releases of any significance were none existent. Economic news this week helped to support stock prices.
Volume remained light and should stay that way for some time as traders and investors focus more on their summer vacations than the market. Despite the low volume, sediment remains positive for the market. This is due to the speculation that the Federal Reserve has inflation under control.
In corporate news this week, Adobe Systems (ADBE) posted nice numbers. The maker of the popular acrobat software which makes PDF files reported earnings of $0.29 per share which was a penny above estimates. Revenues surged 21% to $496 million. Giving guidance the company expects earnings of between $0.25 and $0.27 per share for quarter three.
KB Homes (KBH) reported a 36% rise in revenues and a 72% jump in earnings. The home builder reported earnings of $2.06 per share on revenues of $2.1 billion. Wall Streets estimates had been for the company to earn only $1.78 per share. Giving guidance the home builder stated that their backlog increased 52% and that they now expect their full year earnings to come in at $9.00 per share.
Pfizer Inc. (PFE) announced that it would acquire Vicuron Pharmaceuticals (MICU) for $1.9 billion or $29.10 per share. Shares of Vicuron soared on the news.
Both Target (TGT) and Wal-Mart (WMT) reported their same store sales estimates for June. Target said that they see sales coming in at the high end of their prior range of 4% to 6%. Wal-Mart said they see sales growth for June coming in at 2% to 4%.
In economic news traders watched closely for the release of the May PPI and CPI numbers. The May Producers Price Index reported a drop of 0.6% and the core rate was up just 0.1%. The Consumer Price Index was also bullish for the market. The CPI for May fell 0.1% economist had expected a 0.1% rise. The core rate which excludes food and energy rose only 0.1% versus the estimate of a 0.2% rise. This signaled that the Federal Reserve does have inflation under control and might be at the end of their policy of raising interest rates. Traders will be watching the next FOMC meeting very closely to see if the Federal Reserve changes its language in its policy statement.
Next week expect traders to react quickly to earnings warnings. We are now in the period where companies will warn if they are not going to be able to meet their earnings estimates. Companies that announce warnings have the ability to move those sectors of the market.
Companies releasing earnings next week are the following; FastSet Research Systems (FDS), Lennar Corporation (LEN), Bed Bath & Beyond (BBBY) and FedEx (FDX).
By Rick Paler
It was a good week for the stock market with all the major indices posting gains for the week. Corporate news and earnings releases of any significance were none existent. Economic news this week helped to support stock prices.
Volume remained light and should stay that way for some time as traders and investors focus more on their summer vacations than the market. Despite the low volume, sediment remains positive for the market. This is due to the speculation that the Federal Reserve has inflation under control.
In corporate news this week, Adobe Systems (ADBE) posted nice numbers. The maker of the popular acrobat software which makes PDF files reported earnings of $0.29 per share which was a penny above estimates. Revenues surged 21% to $496 million. Giving guidance the company expects earnings of between $0.25 and $0.27 per share for quarter three.
KB Homes (KBH) reported a 36% rise in revenues and a 72% jump in earnings. The home builder reported earnings of $2.06 per share on revenues of $2.1 billion. Wall Streets estimates had been for the company to earn only $1.78 per share. Giving guidance the home builder stated that their backlog increased 52% and that they now expect their full year earnings to come in at $9.00 per share.
Pfizer Inc. (PFE) announced that it would acquire Vicuron Pharmaceuticals (MICU) for $1.9 billion or $29.10 per share. Shares of Vicuron soared on the news.
Both Target (TGT) and Wal-Mart (WMT) reported their same store sales estimates for June. Target said that they see sales coming in at the high end of their prior range of 4% to 6%. Wal-Mart said they see sales growth for June coming in at 2% to 4%.
In economic news traders watched closely for the release of the May PPI and CPI numbers. The May Producers Price Index reported a drop of 0.6% and the core rate was up just 0.1%. The Consumer Price Index was also bullish for the market. The CPI for May fell 0.1% economist had expected a 0.1% rise. The core rate which excludes food and energy rose only 0.1% versus the estimate of a 0.2% rise. This signaled that the Federal Reserve does have inflation under control and might be at the end of their policy of raising interest rates. Traders will be watching the next FOMC meeting very closely to see if the Federal Reserve changes its language in its policy statement.
Next week expect traders to react quickly to earnings warnings. We are now in the period where companies will warn if they are not going to be able to meet their earnings estimates. Companies that announce warnings have the ability to move those sectors of the market.
Companies releasing earnings next week are the following; FastSet Research Systems (FDS), Lennar Corporation (LEN), Bed Bath & Beyond (BBBY) and FedEx (FDX).
Friday, June 10, 2005
Weekly Market Report 06-10-2005
Alan Greenspan sees housing bubble
By Rick Paler
It was another slow week for the market. No market moving earnings reports were released and traders looked at both Texas Instruments and Intel’s mid-quarter reports for guidance in the technology sector. Alan Greenspan was in the spotlight giving his insight into the economy, home prices and interest rates, which caused the market to take notice.
It was a very light week for the market new wise. The main story of the week was the release of Texas Instruments and Intel’s mid-quarter reports. First came Texas Instruments (TXN) on Tuesday. The company raised their profit guidance citing rising demand for its microchips. The company now expects to earn $0.27 per share to $0.30 per share. Prior guidance had been $0.25 to $0.29 per share. Revenue projections were also raised to the $3.12 billion to $3.24 billion range.
Then Intel (INTC) also raised their outlook. The chip company now sees revenues coming in at $9.1 billion to $9.3 billion and gross margins of 57%. Analyst had expected revenues to come in at $9.0 billion.
In general news IBM (IBM) shares fell on news that Apple Computer (AAPL) plans to switch to Intel (INTC) chips to power their Macintosh PC’s. The switch could offer the company more flexibility and a likely price savings that could be passed on to consumers.
Troubled General Motors (GM) announced that the company would cut 25,000 jobs in the next three years in an effort to reduce cost. Additionally the company is talking to UAW officials in an effort to reduce their health care cost.
E*Trade (ET) renewed its effort to purchase Ameritrade (AMTD) this week by upping its bid for the company. The new offer stands at $2.0 billion and a 49.5% stake in the new company. The offer might cause problems for Ameritrade’s offer to buy TD Waterhouse from Toronto-Dominion Bank (TD).
Washington Mutual (WM) announced that they will purchase Providian Financial (PVN) for $6.45 billion in cash and stock.
ITT Industries Inc. (ITT) announced that they have “increased confidence” their earnings will come in at the high range of their $1.28 to $1.32 per share guidance. The company cited growth in their water, wastewater and defense business units.
In Economic news, Alan Greenspan had all eyes watching him as he appeared twice this week. Overall he said that “the US economy seems to be on a reasonably firm footing, and underlying inflations remains contained.” He also said that the flat yield curve “is clearly without recent precedent” during a period when the Federal Reserve is raising short term interest rates. Addressing the possibility of a housing bubble Mr. Greenspan said that he does not see a nationwide bubble in housing prices. Adding to that he did state that he does see “signs of froth in some local markets where home prices seem to have risen to unsustainable levels.” He had given similar statements prior to the end of the technology bubble.
Bond yield rose slightly across the yield curve this week as traders digested Mr. Greenspan’s comments and look to the next FOMC meeting that will occur at the end of this month. The 5 year Treasury closed yielding 3.83%, the 10 year ended at 4.04% and the 30 year bond closed yielding 4.32%.
Earnings due to be released next week are from the following companies: Best Buy Co. (BBY), Adobe Systems (ADBE), Goldman Sachs (GS), KB Homes (KBH), and Circuit City Stores (CC). Trades will also anticipate the release of both the PPI and CPI numbers for signs of inflation.
By Rick Paler
It was another slow week for the market. No market moving earnings reports were released and traders looked at both Texas Instruments and Intel’s mid-quarter reports for guidance in the technology sector. Alan Greenspan was in the spotlight giving his insight into the economy, home prices and interest rates, which caused the market to take notice.
It was a very light week for the market new wise. The main story of the week was the release of Texas Instruments and Intel’s mid-quarter reports. First came Texas Instruments (TXN) on Tuesday. The company raised their profit guidance citing rising demand for its microchips. The company now expects to earn $0.27 per share to $0.30 per share. Prior guidance had been $0.25 to $0.29 per share. Revenue projections were also raised to the $3.12 billion to $3.24 billion range.
Then Intel (INTC) also raised their outlook. The chip company now sees revenues coming in at $9.1 billion to $9.3 billion and gross margins of 57%. Analyst had expected revenues to come in at $9.0 billion.
In general news IBM (IBM) shares fell on news that Apple Computer (AAPL) plans to switch to Intel (INTC) chips to power their Macintosh PC’s. The switch could offer the company more flexibility and a likely price savings that could be passed on to consumers.
Troubled General Motors (GM) announced that the company would cut 25,000 jobs in the next three years in an effort to reduce cost. Additionally the company is talking to UAW officials in an effort to reduce their health care cost.
E*Trade (ET) renewed its effort to purchase Ameritrade (AMTD) this week by upping its bid for the company. The new offer stands at $2.0 billion and a 49.5% stake in the new company. The offer might cause problems for Ameritrade’s offer to buy TD Waterhouse from Toronto-Dominion Bank (TD).
Washington Mutual (WM) announced that they will purchase Providian Financial (PVN) for $6.45 billion in cash and stock.
ITT Industries Inc. (ITT) announced that they have “increased confidence” their earnings will come in at the high range of their $1.28 to $1.32 per share guidance. The company cited growth in their water, wastewater and defense business units.
In Economic news, Alan Greenspan had all eyes watching him as he appeared twice this week. Overall he said that “the US economy seems to be on a reasonably firm footing, and underlying inflations remains contained.” He also said that the flat yield curve “is clearly without recent precedent” during a period when the Federal Reserve is raising short term interest rates. Addressing the possibility of a housing bubble Mr. Greenspan said that he does not see a nationwide bubble in housing prices. Adding to that he did state that he does see “signs of froth in some local markets where home prices seem to have risen to unsustainable levels.” He had given similar statements prior to the end of the technology bubble.
Bond yield rose slightly across the yield curve this week as traders digested Mr. Greenspan’s comments and look to the next FOMC meeting that will occur at the end of this month. The 5 year Treasury closed yielding 3.83%, the 10 year ended at 4.04% and the 30 year bond closed yielding 4.32%.
Earnings due to be released next week are from the following companies: Best Buy Co. (BBY), Adobe Systems (ADBE), Goldman Sachs (GS), KB Homes (KBH), and Circuit City Stores (CC). Trades will also anticipate the release of both the PPI and CPI numbers for signs of inflation.
Friday, June 03, 2005
Weekly Market Report 06-03-2005
Economic data highlights week
By Rick Paler
This week was shortened by the Memorial Day Holiday on Monday and the rest of the week was non-eventful. The highlights of the week were retail same-store sales reports, interest rates, and economic data.
May same-store sales were released this week and Wal-Mart (WMT) missed their target once again. The behemoth retailer reported that their same-store May sales grew by 2.5% which was below the streets estimate of 2.7%. Looking ahead the company said that they see June sales coming in at 2% to 4% growth.
Competitor Target (TGT) continued to outpace its rival Wal-Mart by posting a 5.1% increase in same-store sales for May. Wall Street analyst had expected growth of only 4.8%.
In the hot teen clothing market both Abercrombie & Fitch Co. (ANF) and American Eagle Outfitters Inc. (ASEOS) posted excellent numbers. Abercrombie’s May same-store sales rocketed 29% blowing away analyst estimates of 13.9% growth. Total sales at the company grew 43% to $159 million from $111.5 million. At American Eagle, May same-store sales jumped 17.1% and total sales increased 25.8% to $140.9 million. American Eagle also reiterated their guidance, stating that they expect to earn $0.32 to $0.33 per share compared to $0.22 a year ago.
In general corporate news merger mania continues. This week Ameritrade Holding Corp. (AMTD) and Toronto Dominion Bank Financial Group (TD) confirmed that they are in discussions about the sale of discount broker TD Waterhouse to Ameritrade. Share of both firms were higher on the news.
Sun Microsystems (SUNW) announced that the company will purchase Storage Technology (STK) for $4.1 billion in cash or $37.00 per share.
L-3 Communications Holdings (LLL) reported that they will buy Titan Corp (TTN) for $2.7 billion or $23.10 per share. The deal included the assumption of $680 million in debt and is contingent on the settlement of class-action suits.
Biogen Idec (BIIB) shares were lower after a fourth case of a deadly rare brain disease was reported in a patient taking the multiple sclerosis drug Tysabri.
In economic news real estate continues to be red hot. Existing home sales in April increased more than expected to 7.18 million units. Economists were looking for 6.89 million units.
Reports continue to show that manufacturing continues to slow. The May Chicago PMI dropped to 54.1 its lowest level since June 2003. Economist had estimated a number of 62.0. This was the second month indicating declines in manufacturing in the Chicago region.
The May ISM index also missed economist estimates of 52.1, coming in at 51.4. Both reports do show that the economy is still growing but not as quickly as before. Any number greater than 50 indicates a growing economy, while a number below 50 indicates the opposite.
The biggest news of the week was comments made by Dallas Federal Reserve President Richard Fisher. In a television interview he said that the Federal Reserve is in the “8th inning” of its cycle of interest rate hikes. The next FOMC meeting is scheduled on June 30 and the street expects the Fed to raise interest rates another .25 basis points. This would bring the Fed Funds rate to 3.25%. Wall Street interrupted the his comments to mean the Federal Reserve might hold off on continuing is policy of “measured” interest rate hikes after the meeting.
The bond market rallied on the news causing rates to drop across the yield curve for the week. The 5 year Treasury yield ended at 3.72%. The 10 year note closed at 3.97% and the 30 year Treasury bond closed the week yielding 4.27%.
Companies reporting earnings next week that are of interest are the following. CMGI (CMGI), Sears Holdings Co (SHLD), and H&R Block (HRB).
By Rick Paler
This week was shortened by the Memorial Day Holiday on Monday and the rest of the week was non-eventful. The highlights of the week were retail same-store sales reports, interest rates, and economic data.
May same-store sales were released this week and Wal-Mart (WMT) missed their target once again. The behemoth retailer reported that their same-store May sales grew by 2.5% which was below the streets estimate of 2.7%. Looking ahead the company said that they see June sales coming in at 2% to 4% growth.
Competitor Target (TGT) continued to outpace its rival Wal-Mart by posting a 5.1% increase in same-store sales for May. Wall Street analyst had expected growth of only 4.8%.
In the hot teen clothing market both Abercrombie & Fitch Co. (ANF) and American Eagle Outfitters Inc. (ASEOS) posted excellent numbers. Abercrombie’s May same-store sales rocketed 29% blowing away analyst estimates of 13.9% growth. Total sales at the company grew 43% to $159 million from $111.5 million. At American Eagle, May same-store sales jumped 17.1% and total sales increased 25.8% to $140.9 million. American Eagle also reiterated their guidance, stating that they expect to earn $0.32 to $0.33 per share compared to $0.22 a year ago.
In general corporate news merger mania continues. This week Ameritrade Holding Corp. (AMTD) and Toronto Dominion Bank Financial Group (TD) confirmed that they are in discussions about the sale of discount broker TD Waterhouse to Ameritrade. Share of both firms were higher on the news.
Sun Microsystems (SUNW) announced that the company will purchase Storage Technology (STK) for $4.1 billion in cash or $37.00 per share.
L-3 Communications Holdings (LLL) reported that they will buy Titan Corp (TTN) for $2.7 billion or $23.10 per share. The deal included the assumption of $680 million in debt and is contingent on the settlement of class-action suits.
Biogen Idec (BIIB) shares were lower after a fourth case of a deadly rare brain disease was reported in a patient taking the multiple sclerosis drug Tysabri.
In economic news real estate continues to be red hot. Existing home sales in April increased more than expected to 7.18 million units. Economists were looking for 6.89 million units.
Reports continue to show that manufacturing continues to slow. The May Chicago PMI dropped to 54.1 its lowest level since June 2003. Economist had estimated a number of 62.0. This was the second month indicating declines in manufacturing in the Chicago region.
The May ISM index also missed economist estimates of 52.1, coming in at 51.4. Both reports do show that the economy is still growing but not as quickly as before. Any number greater than 50 indicates a growing economy, while a number below 50 indicates the opposite.
The biggest news of the week was comments made by Dallas Federal Reserve President Richard Fisher. In a television interview he said that the Federal Reserve is in the “8th inning” of its cycle of interest rate hikes. The next FOMC meeting is scheduled on June 30 and the street expects the Fed to raise interest rates another .25 basis points. This would bring the Fed Funds rate to 3.25%. Wall Street interrupted the his comments to mean the Federal Reserve might hold off on continuing is policy of “measured” interest rate hikes after the meeting.
The bond market rallied on the news causing rates to drop across the yield curve for the week. The 5 year Treasury yield ended at 3.72%. The 10 year note closed at 3.97% and the 30 year Treasury bond closed the week yielding 4.27%.
Companies reporting earnings next week that are of interest are the following. CMGI (CMGI), Sears Holdings Co (SHLD), and H&R Block (HRB).
Subscribe to:
Posts (Atom)