US & World Daily Markets Financial Briefing 24-08-2010

DO YOU OWN THE RIGHT STOCKS?

Analyze Your Stocks FREE! – Click Here

Stocks Under Pressure After Dismal Existing Home Sales Number

Stocks are down by substantial margins in mid-morning trading on Tuesday, as traders are reacting to a much worse than expected reading on July's existing home sales rate. The major averages are all firmly lower, with tech stocks once again seeing the heaviest losses.

The Dow is down 120.33 points or 1.2 percent at 10,054.08, the Nasdaq is down 32.28 points or 1.5 percent at 2,127.35 and the S&P 500 is down 13.72 points or 1.3 percent at 1,053.64.

Existing home sales in the month of July fell by even more than economists had been anticipating, according to a report released by the National Association of Realtors, with the steep drop reflecting the expiration of the home buyer tax credit.

NAR said existing home sales fell by 27.2 percent to an annual rate of 3.83 million units in July from a downwardly revised 5.26 million unit rate in June. Economists had expected existing home sales to fall by about 12.1 percent to 4.72 million from the 5.37 million originally reported for the previous month.

Among individual stocks, shares of Big Lots (BIG) are seeing notable weakness as the discount retailer reported slightly better than expected second quarter earnings but on weaker than expected sales. The company also raised its full year earnings guidance.

Meanwhile, Burger King (BKC) is seeing moderate strength after reporting fourth quarter earnings that beat analyst estimates but on sales that fell short of expectations.

In other corporate news, Dell (DELL) is reportedly preparing to boost its offer for 3PAR (PAR) after its $18 per share offer was topped by Hewlett-Packard (HPQ), which offered $24 per share.

Canadian based fertilizer firm Potash (POT) has also garnered market attention as a takeover target after rejecting BHP Billiton's offer, with Australia's Rio Tinto (RTP) and China's Sinochem International also said to be preparing bids.

Sector News

Airline stocks are among the morning's worst performers, with the NYSE Arca Airline Index posting a loss of 2.4 percent. The drop has taken the index down to its lowest intraday level in five weeks.

Electronic storage stocks are also notably lower, dragging the NYSE Arca Disk Drive Index down by 2.1 percent. With the decline, the index has fallen to its lowest intraday level in nearly ten months.

Weakness is also visible among railroad, housing, steel and defense stocks, along with the vast majority of market segments, indicative of today's broad-based selling pressure.

Stocks Driven By Analyst Comments

Computer Sciences (CSC) is posting a notable loss after receiving a new Underperform rating from Bank of America based on weaker growth prospects compared to its competition. The stock is down by 1.8 percent, setting a fourteen-month intraday low.

OpenTable (OPEN) is also under pressure after being downgraded at Stifel Nicolaus from Buy to Hold based on valuation. Shares are currently down by 5.6 percent, pulling back off of an all-time closing high set in the previous session.

Pepco (POM) is also lower after Wells Fargo downgraded the stock from Outperform to Market Perform on valuation. The stock is posting a loss of 0.4 percent, backing further off of last week's eighteen-month closing high.

Other Markets

Overseas, stock markets in the Asia-Pacific region closed sharply lower on Tuesday. Japan's benchmark Nikkei 225 Index fell by 1.3 percent and Hong Kong's Hang Seng Index declined by 1.1 percent.

The major European markets are also notably lower. The U.K.'s FTSE 100 Index and the German DAX Index are down by 1.7 percent and 1.5 percent, respectively, while the French CAC 40 Index is down by 2.7 percent.

In the bond markets, treasuries are markedly higher. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is trading at 2.477 percent, posting a loss of 13 basis points.

Open an account with CMS Forex with at least $500 and you will receive a 100% deposit bonus.  Every time you trade 10 lots you will get $50 until you have received all 100% of your deposit.  There is no maximum - deposit $100,000 and you can earn up to $100,000. Already have a CMS account?  You can still get the 100% bonus on your next deposit. Click Here

TSX Set For Rough Open Amid Flight From Risk

Toronto stocks are poised for an ugly open on Tuesday amid falling commodities and weak cues from the global equity markets.

Discouraging June retail sales data and Bank of Montreal's third quarter results, which came in below market expectations, may dent trader sentiment.

On Monday, the S&P/TSX Composite Index edged down 3.44 points or 0.03% to 11,718.63.The price of crude oil slipped near its 3-month low amid falling equities. Meanwhile, China said its crude oil imports were down over 3% year-on-year in July. Crude for October was down $1.27 to $71.83 a barrel

The price of gold retreated from its 7-week high, with gold for December falling $12.40 to $1,216.10 an ounce.

In corporate news from Canada, BMO Financial Group reported improved third quarter net earnings of C$1.13 per share, compared to C$0.97 per share in the same quarter last year, helped by lower provisions for credit losses. However, net earnings missed consensus estimates for $1.21 per share this quarter. The bank declared a quarterly dividend of C$0.70 per share.

Construction and infrastructure development company Aecon Group said its Construction and Materials Division has received a $15.6 million contract to redevelopment the Peterborough Municipal Airport.

Potash remains in focus amid speculation that Rio Tinto and a Chinese partner may be a "white knight" to help the company fend off BHP's hostile takeover bid.

Rival fertilizer maker Agrium Inc. said the board of AWB Ltd has recommended its A$1.50 per share acquisition offer.

Petroleum and natural gas focused trust Penn West Energy Trust said it entered into a 50-50 joint venture with a wholly owned unit of Mitsubishi Corp., to develop its shale gas and conventional gas assets.

Mineral properties explorer International Tower Hill Mines said it received necessary approvals to spin-out its Alaska and Nevada projects to Corvus Gold. ITH will retain all assets related to Livengood gold project, along with nearly C$41 million in working capital.

Gold miners Kirkland Lake Gold and Queenston Mining announced strategic additions to ongoing joint venture exploration programs. Kirkland will expend $400,000 in exploration expenses whilst Queenston will contribute seven claims from its 100% owned Amalgamated Kirkland property and eight claims from its Kirkland Hudson property.

Forest products company Western Forest Products said said it has reached a new four year labor agreement with the United Steelworkers union.

Mobile security technology and services provider Absolute Software slipped in to the red in fourth quarter, reporting GAAP net loss of $3.8 million or $0.08 per share compared to a net income of $16.5 million or $0.35 per share in the same quarter last year.

Oil and gas exploration company Coastal Energy reported improved second quarter net income $0.08 per share, compared to $0.01 per share for the year-ago quarter.

In economic news, Statistics Canada said retail sales edged up 0.1% in current dollars to C$35.9 billion in June, helped by higher sales of cars and electronics. Economists were expecting sales to increase by 0.4%, after falling 0.2% in May. On a year-over-year basis, retail sales were up 3.8% in June compared to the same month in 2009.

Elsewhere, China's crude oil imports were down 3.21% year-over year in July at 19 million tons or 4.50 million barrels per day, registering its first fall in 16 months, data from the General Administration of Customs of China revealed. In the first seven months of 2010, the nation imported 139.6 million tons of crude oil, 24.21% more than in the same period last year that resulted in excess inventories.

Trade Forex, Stock Indices and More - Open a Demo account now

Click here

Asian Markets Decline On Global Economic Concerns

Asian markets open for trading on Tuesday ended in negative territory on concerns about global economy. Weak closing on Wall Street in the previous session despite positive M&A related news impacted market sentiment in Asian markets. The prolonged uncertainty in Australia in connection with Government formation, the strengthening of the yen against the dollar below the psychological 85-yen mark and the onset of bear market, in technical terms, in Japan also impacted market sentiment.

In Japan, the benchmark Nikkei 225 Index fell 121.55 points, or 1.3%, to 8995.14, while the broader Topix index of all First Section issues slid 7.06 points, or 0.9%, to 818.

The benchmark Nikkei index fell below the psychological 9000-mark on stronger yen against the US dollar and the euro and is down more than 20% from the peak achieved in April, thus signaling the start of a technical bear market in the world's third largest economy. As many as 30 sectors among the 33 sectors witnessed declines in a trading session, where most traders shun exporters, as the local currency Yen, surged past the 84-yen mark.

Exporters were the major losers. Sony Corp. plunged 3.72%, Sharp Corp. slipped 1.08%, Panasonic Corp. fell 1.69% and Canon Inc. was down 0.85%.

In Australia, the benchmark S&P/ASX200 Index ost 47.70 points, or 1.08%, and closed at 4,381 points, while the All-Ordinaries Index ended at 4,418, representing a loss of 42.10 points, or 0.94%.

The deadlock from the election results has not yet been resolved and the same had its impact on the market. Weak closing on Wall Street in the previous session on increasing concerns about double-dip recession also weighed on market sentiment.

Resource stocks led the declines. BHP Billiton slipped 1.50%, Rio Tinto shed 1.57%, Fortescue Metals lost 3.02% and Gindalbie Metals fell 3.19%.

Banks also ended in negative territory. ANZ Bank shed 1.37%, Commonwealth Bank slipped 0.50%, National Australia Bank fell 1.86% and Westpac Banking plunged 2.90%.

A lack of positive triggers and profit taking in almost all sectors barring defensive FMCG and healthcare stocks amid weak global cues dragged the Indian market notably lower on Tuesday. Trading was a little bit volatile as traders rolled over their positions ahead of the expiry of near-month derivatives contracts on Thursday. The BSE Sensex ended down 98 points or 0.53% at 18,312 and the 50-share Nifty eased 38 points or 0.69% to 5,505.

Among the other major markets open for trading, China's Shanghai Composite Index ended in positive territory with a gain of 10.94 points, or 0.41% at 2,650. However, Singapore's Strait Times Index declined 3.14 points, or 0.11%, and closed at 2,923, Taiwan's Weighted Index fell 35.29 points, or 0.44%, to 7,941, and Jakarta Composite Index in Indonesia slipped 13.80 points, or 0.44%, to close at 3,115.

DO YOU OWN THE RIGHT STOCKS?

Analyze Your Stocks FREE! – Click Here

The major European averages, which broke a 3-session slide yesterday, are trading sharply lower on Tuesday. The French CAC 40 Index and the German DAX Index are slipping 1.78% and 1.51%, respectively, while the U.K.’s FTSE 100 Index is declining 1.74%.

In economic news, a report released by Eurostat showed that the pace of growth in new industrial orders received by euro area manufacturers slowed down in June from May but was stronger than expected. New orders rose by 2.5% compared with the previous month, slower than the 4.1% growth in May. Economists had forecast a 1.5% increase.

The revised second quarter GDP report released by the German Federal Statistical Office showed that German GDP rose at an unrevised 2.2% rate sequentially following a 0.5% increase in the second quarter. Foreign trade and capital formation contributed most to GDP growth during the second the quarter.

U.S. Economic Reports

The National Association of Realtors is scheduled to release its report on existing home sales for July at 10 AM ET. Economists estimate existing home sales of 4.72 million for the month.

In June, existing home sales came in at a seasonally adjusted annual rate of 5.37 million units compared to a 5.66 million units in May. Economists had expected a steeper decline to 5.1 million units. Inventories measured in months of supply rose to 8.9 months from 8.3 months in May, rising to the highest level since August 2009, while inventories in absolute numbers rose by 99,000 to 3.992 million units. Distressed sales made up 32% of total sales. Meanwhile, the median price of an existing home rose 1% year-over-year.

Stocks in Focus

RadioShack (RSH) could be in focus after it announced that its board has increased its share buyback authorization to $500 million from the earlier $290 million. The board has also directed the company to commence a significant portion of the repurchase program as soon as practicable.

Pfizer (PFE) may see some activity after it said trial results of its drug candidate suitinib in combination with erlotinib versus erlotinib alone demonstrated a statistically significant improvement in progression-free but not in overall survival in patients with previously treated advanced non-small cell lung cancer. The company noted that overall survival was the primary endpoint and progression-free survival was the secondary endpoint.

Borders Group (BGP) may also be in focus after it announced the resignation of its CFO Mark Bierley. The company also announced the appointment of VP Glen Tomaszewski as interim CFO.

Medtronic (MDT) is expected to move in reaction to its announcement that its first quarter non-GAAP earnings declined 2% to 80 cents per share. Revenues fell to $3.77 billion from the year-ago’s $3.93 billion. The consensus estimates had called for earnings of 81 cents per share on revenues of $3.95 billion. The company reduced its 2011 earnings guidance, now expecting earnings of $3.40-$3.48 per share on revenue growth of 2%-5%. Analysts estimate earnings of $3.48 per share on revenues of $16.33 billion.

Big Lots (BLI) could see some activity after it reported that its second quarter net income from continuing operations declined to 48 cents per share from 34 cents per share last year. Net sales rose 5.1% to $1.14 billion. Analysts estimated earnings of 47 cents per share on revenues of $1.15 billion. The company raised its 2010 income from continuing operations guidance to $2.82-$2.90 per share, while the Street expects earnings of $2.85 per share.

Burger King Holdings (BKC) is also expected to be in focus after it said its adjusted earnings per share declined to 36 cents from 43 cents. Worldwide revenues fell 1% to $623 million. While earnings beat the consensus estimate of 34 cents per share, revenues trailed the mean analysts’ estimate of $635.19 million.

Trade Forex, Stock Indices and More - Open a Demo account now

Click here

Dollar At Lowest Since '95 Versus Yen, Hammers Euro

The dollar plunged to a new 15-year low against the yen but powered higher versus its European counterparts Tuesday morning amid growing chatter about a global double-dip recession.

Stocks pulled back in Europe and Asia overnight, and futures on Wall Street are indicating a soft open. Risk aversion has given the dollar a boost versus the euro and sterling over the past week, but with the dollar seen as a riskier bet than the yen, it has plummeted versus the Japanese currency.

Even with analysts saying Japanese officials will intervene to halt the yen's rapid rise, the dollar slumped to Y84.25, its lowest since 1995.

On the flip side, the buck soared to a new monthly high of 1.5372 versus the sterling.

Britain faces a genuine risk of slipping back into recession and the Bank of England's growth forecasts for the next two years could be too optimistic, a member of the central bank was quoted as saying on Tuesday.

Martin Weale, the newest member of the Bank of England's Monetary Policy Committee, reportedly told the Times newspaper that rising unemployment, falling house prices and a banking crisis could push the U.K. economy into a double-dip.

The dollar also rose versus the euro, touching a month and a half high of $1.2602.

Euro zone industrial new orders rose by 2.5% month-on-month in June, slower than the revised 4.1% growth in the prior month, the European Union's statistical agency Eurostat said on Tuesday


The German economy logged its biggest expansion since its 1991 reunification' in the second quarter. The economy grew by a seasonally adjusted 2.2% sequentially in the second quarter, up sharply from the 0.5% expansion in the first three months of months of the year.

The European Central Bank reported on Monday it had stepped up purchases of euro zone government bonds last week.

With commodity prices tailing off, the dollar jumped to a nearly two-month high of C$1.0602 versus its resource-linked Canadian counterpart.

The price of oil dropped $0.77 to $72.40 a barrel in early dealing Tuesday.

The US housing market will be in focus over the next few days. This morning, the National Association of Realtors will release its report on existing home sales for July at 10.00 a.m. ET.

Economists expect that existing home sales come in at a seasonally adjusted annual rate of 4.75 million for the month, sharply lower than 5.16 million reported in the previous month.

Later in the week, the markets will be treated to consumer confidence data and the government's weekly jobless claims report.

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

Click Here To Find Out More

Investors Hub Services