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US Stocks Tumble In Giveback Of Wednesday’s Rally January 25, 2007

Posted by notapundit in Economic News.

NEW YORK (Dow Jones)–A day after marking their best session of the year, major averages turned tail, as Beazer Homes USA, Peabody Energy and Ikon Office Solutions declined, while eBay managed to continue its 2007 turnaround.

The Dow Jones Industrial Average lost 119.21, or 0.94%, to 12502.56 – its worst decline of the year – in a giveback of Wednesday’s 87.97 rise that put the average at a record high.

The Nasdaq Composite fell 32.04, or 1.3%, to 2434.24, its second worst session of 2007 in a virtual return of the prior day’s 34.87 advance.

The Standard & Poor’s 500 Index declined 16.23, or 1.13%, to 1423.90, its worst showing since late November and more than returning Wednesday’s 12.14 upward move.

Investors started pulling back after word that sales of existing homes fell 0.8% in December, capping off the grisliest year for housing in about a quarter century. The report contributed to a lift in bond yields, with the 10-year Treasury finishing at 4.87%, its highest level since last summer.

“People are seriously concerned about the housing market,” said Kevin Beadles, managing director of institutional equity trading at Wedbush Morgan Securities. “And rising bond yields spur a flight out of stocks and into bonds.

Beazer Homes USA dropped 2.64, or 5.6%, to 44.37, now having lost 40% over the past 12 months. The home builder swung to a loss in its fiscal first quarter as revenue dropped to $806.4 million from nearly $1.11 billion a year earlier. The company said it isn’t seeing evidence of a sustainable recovery in the housing market.

Beazer was also a victim of the poor housing sales report, which also hurt KB Home, down 1.69, or 3.1%, to 52.12; Lennar, which fell 1.74, or 3.2%, to 51.89; and Pulte Homes, dropping 1.13, or 3.3%, to 33.07.

EBay (Nasdaq) advanced 2.45, or 8.2%, to 32.45, now up 7.9% for the year, after falling 30% in 2006. The Internet auctioneer reported a 24% increase in fourth-quarter net income and offered a confident full-year profit outlook, amid a solid pick-up in selling activity in its core Marketplaces business and strength across other divisions.

Peabody Energy lost 1.24, or 3%, to 39.67. Fourth-quarter earnings rose 7.9% to $175 million, or 65 cents a share, but the coal producer put its first-quarter earnings forecast in the range of 25 cents to 45 cents a share, while analysts were looking for 70 cents. For the full year, Peabody expects to earn between $2.10 and $2.75 a share, well below analysts’ estimate for $3.02.

Another commodity producer, Nucor, advanced 3.45, or 5.8%, to 62.65. The steelmaker outperformed its own and analyst expectations in the fourth quarter, indicating a steel glut is being worked down in the U.S.

Ikon Office Solutions lost 2.10, or 12%, to 14.78, the Big Board’s biggest percentage decliner. The document-management services provider said net income for the first quarter eased to $27.3 million, or 21 cents a share, from $27.6 million, or 21 cents a share, in the year-ago period, while revenue fell to $1 billion from $1.04 billion.

Volume on the New York Stock Exchange was about 1.8 billion shares. Down volume beat up by 1.29 billion to 464 million, and stocks that fell in value exceeded those that rose, 2,590 to 796.

The final Dow Jones Industrial Average close was 12502.56, down 119.21. On the New York Stock Exchange, there were 796 issues advancing, 2,590 declining and 116 unchanged.

NYSE volume totaled 1,829,620,850 shares, compared with 1,645,988,330 Wednesday.

The NYSE Composite Index was 9154.66, down 113.83. The average price per share fell by 66 cents.

Sherwin-Williams gained 2.29, or 3.5%, to 67.70. The producer of consumer and industrial coatings and paints posted fourth-quarter earnings that topped analysts’ expectations as sales rose 4.9% to $1.79 billion.

Microsoft (Nasdaq) dropped 64 cents, or 2.1%, to 30.45 ahead of the closely watched tech bellwether posting results after the closing bell. Shares advanced in after-hours trading after the world’s largest software maker reported fiscal second-quarter earnings that fell 28% but per-share earnings that topped analysts’ estimates.

Ford Motor threw it into reverse, as shares closed with a gain of just 2 cents to 8.22, after advancing as much as 32 cents, or 3.9%, during the session. The auto maker suffered a staggering net loss of $5.8 billion during the fourth quarter, dragging its shortfall for all of 2006 to $12.7 billion, its bleakest annual financial performance ever. But the numbers were largely expected because of guidance Ford gave in October.

Equity Office Properties Trust rose 2.20, or 4.2%, to 54.90. A unit of Blackstone Group sweetened its bid to buy the office real estate investment trust to $54 a share from its previous offer of $48.50.

MBIA lost 2.07, or 2.8%, to 70.95. The bond insurer delayed reporting its fourth-quarter results for five days, giving no reason. There was some speculation the move was tied to final negotiations for the company’s long-awaited Securities and Exchange Commission settlement.

Varian Medical Systems tumbled 4.37, or 8.7%, to 45.77. The maker of radiation cancer treatments reported a 20% rise in fiscal first-quarter earnings, but said it suffered from a difficult quarter internationally.

Lyondell Chemical gained 2.17, or 8%, to 29.31. The petrochemical producer saw its fourth-quarter net income rise to $228 million, or 87 cents a share, from $141 million, or 54 cents, a year earlier, with sales leaping to $6.25 billion from $5 billion.

Dow Jones rose 35 cents, or 0.9%, to 38.92. The publisher of The Wall Street Journal and this newswire posted a sharp earnings gain amid the sale of some local newspapers and forecast revenue and earnings for this year in line with analysts’ expectations.

Lear added 74 cents, or 2.2%, to 33.92. Fourth-quarter operating results, though down, exceeded the auto supplier’s guidance and some analysts’ expectations.

Dow industrial AT&T advanced 16 cents to 36.79. The nation’s largest phone company posted a 17% increase in fourth-quarter net income, and sees continued growth in 2007 as operations have expanded to include BellSouth and complete control of Cingular Wireless. Shares leapt 3.6% on Wednesday after Cingular more than tripled its fourth-quarter net income.

Netflix (Nasdaq) advanced 50 cents, or 2.2%, to 23.25. Although the online DVD rental pioneer reported a weaker fourth-quarter profit, the results exceeded Wall Street’s targets amid surges in revenue and subscription rates.

Nokia’s American depositary shares gained 90 cents, or 4.5%, to 21.11. The world’s largest mobile phone maker said fourth-quarter net profit rose 19% and overall sales increased, but average handset selling prices slipped.

Avnet rose 3.49, or 13%, to 29.60, the third best percentage advance on the NYSE. Second-quarter earnings almost doubled to $99.1 million, or 67 cents a share, from $49.6 million, or 34 cents a share, a year ago, as sales rose to $3.89 billion, from $3.76 billion last year. The electronic component and computer products distributor also forecast third-quarter earnings of 67 cents to 71 cents a share, when Wall Street’s projection was 60 cents.

Agere Systems lost 1.58, or 7.1%, to 20.72. The company posted first-quarter earnings of $16 million, or 9 cents a share, compared with a year-ago loss of $19 million, or 11 cents a share. However, revenue slipped 7.7% to $372 million, and the provider of communications semiconductors and software expects earnings and revenue for the March quarter to come in roughly flat with its performance in the December quarter.

Respironics (Nasdaq) rose 4.33, or 11%, to 42.45. The maker of products for the sleep and respiration markets said fiscal second-quarter net income rose to $29.6 million, or 40 cents a share, from $25.05 million, or 33 cents a share, a year earlier, while net sales increased 12% to $288.7 million.

ITT Educational Services gained 5.43, or 7.7%, to 76.01. The technical post-secondary education provider’s fourth-quarter net income rose to $40.9 million, or 97 cents a share, from $37.9 million, or 81 cents a share, a year ago, as revenue increased 13% to $206.2 million from $182.3 million, boosted by student enrollment.

Siemens AG’s American depositary shares rose 4.90, or 4.9%, to 105.09. Germany’s largest conglomerate posted a strong rise in quarterly operating profit and said it would acquire software maker UGS Corp. of Texas and sell a minority stake in its automotive-electronics unit.

Bristol-Myers Squibb lost 71 cents, or 2.6%, to 26.28. The drug maker posted a fourth-quarter loss of $134 million, or 7 cents a share. In the year-ago period the company earned $499 million, or 26 cents a share.

Bemis lost 2.86, or 8%, to 33.02. Fourth-quarter earnings and revenue fell short of analysts’ projections, and the flexible packaging supplier said it expects first-quarter earnings that would also be shy of Wall Street expectations.

First Data dropped 1.19, or 4.6%, to 24.91. Fourth-quarter earnings fell to $278.5 million, or 36 cents a share, from $419.6 million, or 54 cents a share, a year earlier, and the provider of electronic commerce and payment systems said it expects first-quarter earnings of 21 cents to 23 cents a share, below Wall Street’s average projection of 25 cents a share.

Cardinal Health rose 2.39, or 3.4%, to 72.42. Fiscal second-quarter net income jumped, and the health-care products and services provider agreed to sell its pharmaceutical-technologies and services unit to Blackstone for $3.3 billion in cash.

Textron lost 3.43, or 3.6%, to 93.15. The maker of helicopters, Cessna aircraft and armor-piercing weapons said better sales and pricing for its Citation business jets gave a lift to fourth-quarter earnings, but its earnings outlook fell shy of expectations.

Louisiana-Pacific shed 66 cents, or 2.8%, to 22.67. Prudential Equity Group downgraded shares of the building products distributor to neutral weight from overweight, due primarily to concerns over a continued decline in oriented strand board pricing.

By Karen Talley, Dow Jones Newswires


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