U.S. MARKET AVERAGES

On a day with little news on the economic and corporate front, the tracking of Hurricane Katrina dominated trading. Energy sectors rise and fall of the day reflected oil traders willingness to let oil price slip for the day. The nervous traders not looking to add week end risk to their positions decided to sell as oil declined.

During the session oil slipped close to 4%, gasoline and heating oil settled at $2 per gallon and gold declined by $3.10 per ounce. Copper fell for the day, but metals and mineral stocks jumped during the days.

Stocks advancing by better than one percent are as follows. Phelps Dodge (PD: chart), Boyd Gaming (BYD: chart), American Eagle (AEOS: chart), Coach (COH: chart), Advanced Micro Devices (AMD: chart), and Cia. Vale. Doce Rio (RIO: chart), Apple Computer (AAPL: chart), SanDisk (SNDK: chart) and Netflix (NFLX: chart).

Stocks dropping by more than one percent are as follows. Fording Canadian trust (FDG: chart), EOG Resources (EOG: chart), Nabor Industries (NBR: chart), Valero (VLO: chart), and Exxon Mobil (XOM: chart).

The government agency monitoring the Gulf of Mexico exploration activity, Mineral and Management Services reported that as of mid-day 77% of 819 manned platforms in the Gulf of Mexico and 67% of 134 rigs have been evacuated. About 99% of the daily oil production has been shut down, which is currently approximately 1.5 million BOPD. Approximately 72% of the daily gas production in the Gulf of Mexico has been shut down, which is currently approximately 10 BCFPD.

Among the gaining stocks American International Group (AIG: chart) is posting a notable gain of 1.67%, boosting the whole insurance sector. Honeywell (HON: chart) has risen by 2.13%, United Technologies (UTX: chart) has gained 1.10%, and Caterpillar (CAT: chart) has added 0.90%.

The following stocks stand out among the biggest decliners of the day. Valero Energy (VLO: chart) lost 1.86%, Tesoro Corp. (TSO: chart) dropped 3.26%, Murphy Oil (MUR: chart) slid 2.33%, Exxon Mobil (XOM: chart) declined 1.18%, and Rowan Cos. (RDC: chart) fell 1.92%.

Two major companies influenced the stock markets, releasing disappointing reports. Oracles, software supplier, met 1Q earnings expectations but posted 2Q revenue below analysts’ estimates. Alcoa, aluminum maker, projected 3Q profit 39% below expectations.

MOVERS AND SHAKERS

Alcoa Inc. (AA: chart) dropped 7% due to the company forecasting lower third-quarter profit. The lower margins are resulting from Hurricane Rita, lower aluminum prices and higher raw-material costs. The brokers Prudential and Goldman Sachs downgraded the company citing its profit warning.

Software company Oracle Corp (ORCL: chart) announced gloomy sales outlook that confused investors. The company reported a 2% rise in fiscal first-quarter profit, but its shares declined 5.1% due to its sales outlook.

Palm Inc. (PALM: chart) fell 20% before the bell after the computer maker posted discouraging fiscal first-quarter earnings and revenue, and announced a lower-than-expected earnings.

Tire manufacturer Goodyear Tire & Rubber Co. (GT: chart) forecasted $150-$250 million restructuring charges over the next three years. The company intends to cut down its manufacturing capacity by 8%-12% in that time. Goodyear is expecting to lower expenses by $750 million-$1 billion by 2008. The company’s stock was down 0.2% yesterday.

ECONOMIC NEWS
No major economic news release is due Friday.

INTERNATIONAL MARKET NEWS

Asian-Pacific benchmarks closed mostly down on profit-taking. The Japanese exchanges were closed for a public holiday. Across the region, South Korea’s Kospi dropped 2% with Samsung Electronics, SK Telecom and Hyundai Motor being the leading decliners. Shanghai Composite lost 0.2% after the central bank of China widened the yuan’s trading range against non-U.S. dollar currencies. Australia’s All Ordinaries was one of the few gainers, rising 0.6%.

European markets closed in the positive territory on the back of declining oil prices as Hurricane Rita weakened to category 4. Support to the stocks was also provided by some deal news, led by the Swedish insurer Skandia which rejected an offer for $6 billion from Old Mutual. The German DAX 30 gained 0.7%, the French CAC 40 added 0.7%, and London’s FTSE 100 rose 0.6%.

ENERGY, METALS, CURRENCIES

Oil prices further declined as Hurricane Rita weakened to category 4, suggesting that the damage to the refinery capacity will be less than feared. Light sweet crude November delivery slipped $2.31 to $64.19 a barrel in late morning trading on the Nymex. Heating oil lost 8 cents to $1.96 a gallon, while gasoline slid 5 cents to $1.99. At close, London Brent declined $1.28 to trade at $63.32.