U.S. MARKET AVERAGES
The U.S. stock averages have been trading close to intraday lows with each of the three major indexes down by more than 0.6%.
The market was driven downward by renewed oil prices surge and disappointing earnings report from Best Buy. Crude-oil prices which have been slipping for the last two days swung to the upward direction again to rise 45 cents to $63.79 a barrel ahead of U.S. inventory report Wednesday, expected to show low levels of gasoline supplies. Best Buy, electronics retailer, posted disappointing quarterly report and caused fears of slowdown in consumer spending.
The economic data released was largely ignored by investors as it does not reflect Katrina’s impact.
Retailer sector was sent down 1.8% by the disappointing report from Best Buy. Other notably declining sectors were the gold , HMO and gaming sectors.
The trading session has been deprived of outstanding gainers and even some early gainers have fallen into the negative territory, including semiconductor and insurance sectors.
Natural gas and software stocks gained some ground.
Among the rising stocks were Charles Schwab (SCH
), SanDisk (SNDK
), and Corning (GLW
Fannie Mae (FNM
), Movie Gallery (MOVI
), and Jo-Ann Stores (JAS
) were among the losers.
MOVERS AND SHAKERS
Ford Motor Co.
) gained 1.7% after the company offered buyouts for 5,000 United Auto Workers union members. Ford and Visteon
), a parts maker, agreed to move 17 auto parts plants and six other offices to the new entity managed by Ford.
) jumped 3.4% after the company increased third-quarter earnings and sales guidance, pointing strong volume of sales and a low decline in selling prices.
) is expected to be under pressure due to the announcement from the company that its third-quarter earnings from continuing operations will be about 20% lower than the previous year, noting a disappointing August, newsprint hikes and unfavorable comparisons with 2004.
The U.S. trade deficit narrowed unexpectedly in the month of July, according to a report from the Department of Commerce. However, the decline is expected to be short-lived due to the impact of Hurricane Katrina.
The Commerce Dept. said that the U.S. trade deficit narrowed to $57.9 billion in July from an upwardly revised $59.5 billion in June. The decrease came as a surprise to economists, who had expected the trade deficit to widen to $60.0 billion from the $58.8 billion originally reported for June.
Tuesday morning, the Department of Labor released its report on wholesale inflation in the month of August, showing an increase in prices that came in slightly below expectations. However, the report did not include the impact of Hurricane Katrina.
The Labor Dept. report showed that the producer price index, a closely watched indicator of wholesale inflation, rose 0.6 percent in August following a 1.0 percent increase in July. The increase came in slightly below economist expectations of an increase of 0.7 percent.
While the data shows that inflation was well contained before the hurricane hit, the fact that the report does not include the impact of the hurricane may limit its significance. Traders may subsequently express some continued uncertainty about the Federal Reserve's interest rate decision at its meeting next week.
INTERNATIONAL MARKET NEWS
finished the trading session mixed, recovering from early losses with the Nikkei flat at 0.04% after recent gains. Hong Kong’s Hang Seng declined 0.9% on oil and property stocks. China’s Shanghai Composite gained 1.6%, the highest level in 5 months on optimism over nontradable share reform. South Korea’s Kospi was steady at 0.02%. In currency markets the dollar bought 110.35 yen.