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Market Update : 
Record Trade Deficit
Author: Elena Todorova
123jump.com
Last Update: 1:57 PM EST November 10 2005


 
U.S. MARKET AVERAGES

Mixed economic data, weak energy sector on falling oil and drop in General Motors exerted strong pressure on stocks which started trading in a lackluster fashion, keeping the trend throughout the whole morning session. They have recently come off their intraday lows and keep steady with the Nasdaq down about 0.4%, while the Dow is posting only a slight loss.

In a heavily loaded day with economic news, investors had a lot of data to digest. Economic news was mixed. The University of Michigan's mid-month report on consumer sentiment for November increased from October's levels, according to news accounts. But the Commerce Department said September's trade deficit soared 11.4% to $66.1 billion, pushed higher by increased oil imports following the Gulf Coast hurricanes and a record deficit with China. Investors were trying to decide whether the surging trade deficit was an anomaly caused by higher oil imports after the devastating hurricanes or a sign of increasing trade imbalance.

Wall Street is also considering a continuing stream of unemployment filings from the hurricanes. The number of Americans who lost their jobs in the hurricanes'' aftermath rose by 2,000 to 542,000 last week.

Another drop in crude oil , recently traded at $58.10 a barrel, sent oil companies like Exxon Mobil Corp., BP PLC, ConocoPhillips sharply lower.

Energy stocks are posting losses of more than 3.3% in the oil, oil service and natural gas sectors. The utility space is also weak, as the Dow Jones Utilities Index has fallen steadily through the morning and is now showing a loss of 1.8%. The gold sector reversed a course to the downside and is now lower by 1.6%.

After a considerable climb the airline sector has been holding steady lately, with a gain of about 2.3%. HMO, insurance and bank stocks are posting modest gains.

General Motors (GM) is the worst performing Dow component for a third straight session. The stock is down by more than 6%, extending its multi-year low on news that it will restate its 2001 financial results. Shares of Exxon Mobil (XOM)) are falling nearly 2.3%, hurt by weaker energy sector.

Intel (INTC) announced a 25% increase in its dividend and a $25 billion stock repurchase plan, and now is the best performing blue chip, climbing by 1.1%. Citigroup (©), Boeing (BA), Merck (MRK) and Wal-Mart (WMT) are each showing gains of just under 1%.

AMR (AMR) is extending an uptrend that began in early October, moving to a new 52-week high. Hospira (HSP) is breaking to a fresh peak on quarterly results. Netflix (NFLX) has climbed on merger speculations.

Movie Gallery (MOVI) has dropped to a new 52-week low after reporting a third-quarter loss. GM (GM) has extended its low on a planned restatement, news that has also dragged competitor Ford (F) to a fresh nadir. Auto parts maker Lear (LEA) has set a new low as well.

In morning trading, the Dow Jones industrial average fell 9.82, or 0.09%. The Standard & Poor''s 500 index fell 3.15, or 0.26%, and the Nasdaq composite index fell 7.46, or 0.34%.

Bonds rose, with the yield on the 10-year Treasury note falling to 4.61% from 4.65% late Wednesday.

MOVERS AND SHAKERS

The auto maker General Motors (GM) announced it will review its earnings for 2001 due to an accounting error led it to overstate its 2001 profit by up to $400 million. Yesterday the company’s stock was under pressure after Deutsche Bank warned that the company would be negatively impacted if auto parts maker Delphi suffers a strike. General Motors’ stock dropped 3.8%.

Cisco Systems (CSCO) said yesterday its first-quarter earnings decreased as the company spent stock options for the first time, but profit excluding those costs rose 8%. The company’s stock lost 2.8%.

ECONOMIC NEWS

The U.S. trade deficit widened to a record high in September, according to a report from the Department of Commerce, with higher oil prices contributing to an increase in the value of imports.

The report showed that the trade deficit widened to a record high of $66.1 billion in September from a revised $59.3 billion in August. Economists had been expecting a more modest increase to $62.0 billion in September from the $59.0 billion originally reported for August.

The increase in the trade deficit came as the value of imports rose while the value of exports fell, with the rise in the value of imports partly due to higher oil prices.




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Sources: Data collected by 123jump.com and Ticker.com from company press releases, filings and corporate websites.
Market data: BATS Exchange. Inc.

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