U.S. MARKET AVERAGES
It is Hurricane Rita on the Wall Street, inconclusive election in Germany, and Fed watchers inflation worries all conspired to drift the market lower in the final hour of trading.
Hurricane Rita is expected to reach South Florida and strike as category one but then strengthen as category three storms as it travels to Gulf of Mexico. The commodity traders did not waste time in driving the prices of oil, natural gas, copper, gold and silver higher this morning. Gold reached seventeen-year-high at $467.30 up $7 per ounce. Silver was up eleven cents to $7.39 per ounce and copper was up six cents to $1.6545. Oil at close was up 7%.
Overnight election in Germany led no clear victor and now the country will have to endure days of political limbo. Financial markets in Germany were down 1.2%. Dollar was up one Euro cent against Euro on the news.
General weakness in techs led decline in Nasdaq and broader averages. Cisco, IBM, Dell, Intel, AMD, Texas Instruments, QUALCOMM traded lower.
Homebuilders were trading down for the sixth session in a row as yields in the bond market rose ahead of Fed’s action tomorrow. Casinos, retailers, restaurants stocks were down.
Energy stocks were up as oil and natural gas continued their climb with Hurricane Rita ruling the thoughts of traders. ExxonMobil, Murphy Oil, and refiners Valero and Tessoro traded higher. Shares of natural gas companies, EOG resources and South Western Energy, jumped up by more than 4%.
MOVERS AND SHAKERS
Spinnaker Exploration Co. (
SKE: chart) rose 32.5%to $64.57 after Norwegian
Norsk Hydro (
NHY: chart), energy and aluminum group agreed to buy the U.S. oil exploration company for $2.45 billion in cash.
Blockbuster Inc. dropped 8.4% to $4.36 after the company's CEO told the Wall Street Journal that the entire video rental industry ‘is in the tank’.
Carnival Corp (
CCL: chart) shares were up 4% on earnings release. The company reported earnings of $1.36 vs. $1.22 per share a year ago on revenue growth of 11% to $3.61 billion. Fuel prices for the quarter rose 20% but still cost only 5.8% of total revenue.
Nike (
NKE: chart) was up 7.4% after announcing its first-quarter earnings of $432.3 million, well above analysts' expectations. Revenue soars 8% to $3.9 billion from $3.6 billion a year earlier.
EBay Inc. (
EBAY: chart) fell 0.5% after Bear Sterns downgraded the company to peer perform from outperform after the analyst returned from trip to visit the company in China.
E.W. Scripps Co. (
SSP: chart) was upgraded at JP Morgan to overweight from neutral. The broker stressed the strength in cable networks business.
Dominion Resources (
D: chart) was upgraded to buy at Citigroup. The broker cited big rise in commodity prices.
ECONOMIC NEWS
Tuesday morning market is expecting housing starts and building permits for the month of August and Fed’s decision on interest rates in the afternoon.
INTERNATIONAL MARKET NEWS
Asian-Pacific benchmarks ended generally higher, lifted by special treatment shares of companies which have reported losses for two successive years. The Japanese and Hong Kong stock markets were closed for holidays. Among the regional markets, Shanghai’s Composite rose 0.6%, South Korea’s Kospi gained 0.4%, and India’s BSE 30 added 0.5%. In currency markets the dollar bought 111.42 yen.
European markets closed higher but the German DAX 30 sharply dropped 1.2% after the general election brought uncertainty and caused concerns over the pace of economic reforms. Markets across the region gained on broker upgrades and strong energy sector. The French CAC 40 fell 0.1%, while London’s FTSE 100 added 0.4% on deals, restructuring talk and energy stocks. The euro lost 0.7% to $1.2154.
