11:30AM Stock markets traded down.
Stock markets continued to post weakness on bargain hunting and concerns about increasing geopolitical tensions. Escalating violence in the Middle East, the stand-off over Iran's nuclear program, and North Korea’s unwillingness to agree to disarmament talks weighed on sentiment. The news contributed to a significant increase by the price of oil to the record $76.30 a barrel. As a result, airline stocks moved to the downside on worries about the impact of higher fuel costs. Gold stocks came under pressure on Thursday, with the Amex Gold Bugs Index down 2.4%. The brokerage sector moved notably to the downside, sending the Amex Securities Broker/Dealer Index down 1.6%.

At the same time, the utilities sector showed some strength, with Duke Energy (DUK: chart), Exelon (EXC: chart), and PSEG (PEG: chart) turning in some of the sector's best performances. In late morning trading, the Dow slumped 105.01, or 0.95%. The Standard & Poor''s 500 index was down 9.34, or 0.74%; the Nasdaq composite index dropped 19.95, or 0.95%. Bonds continued gaining, with the yield on the 10-year Treasury note sliding to 5.09% from 5.1% late Wednesday.


10:30AM Indian benchmark Sensex dips in weak trading.
The Sensex in India lost 71.59 points, or 0.65%, to close at 10,858.50. The turnover on BSE was $550 million or Rs 2,512 crore, down from Wednesday’s $600 million or Rs 3,130 crore. The market-breadth was positive as 1,294 shares advanced, 1,085 declined and 78 shares were unchanged. Advancers were led by Hidustan Lever which advanced 2.72% at Rs 243.95, Grasim rose 2.05% at Rs 2,038.00, ICICI Bank gained 1.73% at Rs 497.00, Cipla advanced 1.62% at Rs 226.00 and Hindalco climbed 1.25% at Rs 181.90.

The decliners were led by Infosys, Bharti Airtel, Wipro, HDFC Bank and Reliance. Reliance Industries lost 2.4%, to Rs 1,071 following reports that the petroleum ministry has rejected the company’s request for reimbursement of Rs 2,570 crore due to losses suffered in export sensitive petroleum products. Bharti Airtel was off 2% to Rs 375.

IT shares aslo declined in sympathy with declines ADR trading in New York. Wipro declined 2.6%, to Rs 503, TCS sank 1.2%, to Rs 1,870 and Satyam Computer down 0.8%, to Rs 744. Infosys closed at Rs 1,675 down from Wednesday’s closing price of Rs 3,386.45. The stock traded on a split adjusted basis..

High oil prices pulled auto shares down. Hero Honda lost 2.2%, to Rs 707, M&M declined 2.9% to Rs 593, Tata Motors sank 0.5% to Rs 766.85, and Bajaj Auto shed 2% to Rs 2,692. Car maker Maruti Udyog was down 1.4%, to Rs 802.

Oil and gas giant, ONGC lost 0.5%, to Rs 1,115 even as oil prices rose. The stock came off a session’s high of Rs 1,152. ONGC is reported to be considering bidding for more than $ 500 million for a stake in a block in Gabon. HDFC Bank shed 2.4% to Rs 746. UTI Bank aslo declined 1.8% to Rs 271 even as the company posted strong Q1 June 2006 results.

The gainers included ICICI Bank which rose 1.5% to Rs 496 and Tata Power gaining nearly 3% to Rs 492.30 on 1.2 lakh shares traded on BSE. Tata Coffee advanced 6% to Rs 381 after the company revised the terms of its earlier announced rights issue.

Second tier IT shares were actively traded. Polaris Software surged 10% to Rs 82.90, VisualSoft Tech gained 9% to Rs 88.50, Blue Star Infotech advanced 5.5% to Rs 79, Sonata Software climbed 3.3% to Rs 24.50, Geometric Software added 2.9% to Rs 91.45, Infotech Enterprises was up 2.3% to Rs 547, Cranes Software rose 1.9% to Rs 99.40, Tulip IT Services advanced 1.8% to Rs 257, Rolta India gained 1.6% to Rs 165, Ramco Systems climbed 1.5% to Rs 177.50, and KPIT Cummins Infosystems rose 1% to Rs 420.


9:45AM Stocks opened in the negative, despite Pepsi’s earnings.
Stocks opened lower as surging oil prices and brokerage downgrade on Wal-Mart Stores raised fears that higher lending rates and gasoline prices would hurt consumer spending. Worries about inflation and economic growth overshadowed a slight rise in weekly unemployment claims and positive earnings news from PepsiCo Inc. (PEP: chart). Transportation stocks, and airline stocks in particular, came under pressure due to the surging oil price of nearly $76. The Dow Jones Transportation Index fell about 2.2%, moving to a multi-week low. The broker/dealer sector also posted weakness in the early going, led by Jefferies (JEF: chart), the worst performer in the group, falling by 3.4%. E*TRADE (ET: chart), and TD Ameritrade (AMTD: chart) were each down 2.4%. Retail and technology stocks also moved to the downside. In the first hour of trading, the Dow Jones industrial average slumped 47.54, or 0.43%. The Standard & Poor''s 500 index was down 4.51, or 0.36%, and the Nasdaq composite index dropped 18.97, or 0.91%. Bonds continued gaining, with the yield on the 10-year Treasury note sliding to 5.09% from 5.1% late Wednesday.

Initial jobless claims increased more than expected.
The Department of Labor released its report on initial jobless claims in the week ended July 8 on Friday. The report showed that jobless claims increased by more than economists had been expecting. The Labor Department said that jobless claims rose to 332,000 from the previous week''s unrevised figure of 313,000. Economists had expected a more modest increase in jobless claims to about 320,000. The report also showed that the four-week moving average rose to 317,250 from the previous week''s unrevised average of 308,500. With the increase, the less volatile moving average rose to the second consecutive week. The Labor Department also said that continuing claims for the week ended July fell to 2.429 million from the preceding week''s revised level of 2.447 million.


9:00AM Stock futures pointed to a lower opening on oil and Wal-Mart downgrade.
U.S. stock futures dropped Thursday, dragged by record-high oil prices and a brokerage downgrade of Wal-Mart Stores Inc.

Oil surged to a record high near $76 a barrel, increasing the risk of inflation. Energy prices rose amid worries over supply from major exporter Nigeria after suspected explosions at a pipeline. Shares of retailers moved to the downside in pre-market trading after Merrill Lynch lowered its rating on Wal-Mart Stores (WMT: chart) to ‘neutral’ from ‘buy’ amid suspicion the rate of revenue growth could not be sustained. The Dow
component, slid 1.7% to $44.38 on the Inet.

A couple of higher-than-expected profit reports did little to help futures. PepsiCo Inc. (PEP: chart) posted a rise in Q2 profit to $1.36 billion, or 80 cents a share, exceeding expectations of 77 cents a share. PepsiCo shares rose 1.4 percent to $61.94 on Inet. In other earnings news, Marriott International Inc. (MAR: chart), hotel operator, reported a 35% rise in quarterly profit, exceeding analyst expectations, reflecting higher room rates and collected higher fees. Media company Tribune Co. (TRB: chart) announced a Q2 decline in profit due to falling newspaper circulation and weaker advertising sales. In other news, Warner Music (WMG: chart) dropped 23% after a European court annulled the European Union''s approval of a 2004 merger between Sony Music and BMG. Standard & Poor''s 500 futures were down 5 points, below fair value. Dow Jones industrial average futures were down 51 points, and Nasdaq 100 futures were down 10.25 points.

Tribune Co., (TRB: chart), media and entertainment company, reported Q2 net income declined 62% to 28 cents a share, hurt by losses at Atlanta and Albany television stations it is planning to sell. Earnings from continuing operations also fell to 53 cents a share from 72 cents a share, including a penny a share gain from a tax adjustment and a 3 cents a share non-operating loss. Revenue sank 1.4% on a decline in circulation revenue and flat advertising revenue from its newspapers. The company missed analysts’ estimates for earnings of 55 cents a share.

Marriott International Inc., (MAR: chart), hotels operator, reported Q2 net income of 43 cents a share, up from 29 cents in the same period last year. Quarterly revenue advanced 7%. On an adjusted basis, earnings were 42 cents a share for Q2, the company said. The company topped analysts’ views for earnings of 40 cents a share. Revenue per available room, the widely used benchmark for measuring performance in the hotel industry, advanced 10.7% for Marriott''s North American properties on a comparable systemwide basis from the 2005 second quarter, the company said.

PepsiCo Inc., (PEP: chart), soda producer, reported Q2 earnings of 80 cents a share, up from a profit of 70 cents a share a year-ago on 12% revenue growth, beating analyst estimate for a profit of 77 cents a share. The company said it saw continued strong top-line growth across all of its businesses in Q2 with global servings volume up 9%. PepsiCo forecast earnings of at least $2.95 a share for 2006. The company anticipates share repurchases of about $3 billion in 2006.