Traders-Blog.com

Today the Dow fell 75.37 points to close at 10,766.23. Besides, both the Nasdaq and the S&P did bad today. The Nasdaq fell 13.68 points to close at 2,051.72, while the S&P closed at 1,203.60 after falling 7.77 points. Indexes ended lower today because of political upheaval in Lebanon, and investor’s fear of inflation.

Investors were concerned about the news that the government of Lebanese Prime Minister Omar Karami had decided to resign due to massive street protests. The murder of Hariri in Beirut set off popular protests against Karame’s government. The U.S. has also said that Syria is not securing its borders, nor stopping infiltration by Islamit fighters into neighboring Irak. Karame announced his resignation during a parliamentary debate over Hariri’s death.

Shares in Biogen Idec and its partner Elan plunged after they suspended sales of their multiple sclerosis drug Tysabri. Despite the revelation about a drug that Standard & Poor’s presented as “one of the top 10 drugs to watch this year”, Kelly Martin, CEO of Elan, said that the drug may return to the marketplace late summer or fall of 2005 assuming the Food and Drug Administration agrees. Tysabri is the first biotech drug to be withdrawn for the market. Biogen Idec fell $30 or 44.6 percent, to $37.29. However, Elan did worse because it fell $17.74 or 66 percent to $9.16.

U.S. spending is decreasing but inflation is going up. Nominal income fell 2.3 percent, marking the largest decline in 11 years in a reversal of December’s record 3.7 percent. This gain was tied to Microsoft payment of a special dividend to shareholders. Excluding effects of the one-time Microsoft payment, income rose 0.5 percent in January after a 0.6 percent gain in December. Since inflation is heating up and spending is faltering, then there is a possibility of stagflation in the U.S. economy.

Continental Airlines, the Houston-based airline, reaches agreement with its pilots, flight attendants, mechanics, and other unions that, when implemented, would bring $500 million in annual cost savings. The airline said that wage and benefit cuts agreed to with the unions would take effect at the end of March. Besides, the cost cuts are also crucial to refinancing $642 million in debt that will come due this year. Continental shares were up 4.6 percent in after-hours trading.

All the best,
Manuel Jesus-Backus
The Portfolio Crafter

Today was a third day of gains for the market. The Dow rose 92.81 points to close at 10,841.60. Besides, both the Nasdaq and the S&P rose today. The Nasdaq rose 13.70 points closing at 2,065.40, while the S&P closed at 1,211.37 after rising 11.17 points. Nevertheless, the dollar was down 0.4 percent against the euro at $1.3243 and down 0.3 percent against the Japanese yen at 105.20.

Oil stocks, such as Exxon Mobil Corp., Anadarko Petroleum and Varco International closed higher today because April crude-oil futures settled at $51.49 a barrel. The Amex Oil Index was up 1.8 percent closing at 863.09 points with Exxon Mobil Corp. closing at a 52-week high of $63.26. Furthermore, Prudential Equity Group upgraded Exxon Mobil from “neutral” to “overweight” to make an advantageous call to the sector. Still, Prudential expects a significant oil price correction which could lead to a better buying opportunity.

MCI, the second long-distance phone company, posted a $32 million loss in the fourth quarter as revenue slipped from last year and the company reported an unusually high tax expense. After the bid on Thursday’s night, Qwest increased the offer to $24.60 an MCI share, compared with $20.75 from Verizon. MCI reported that it expects its 2005 revenue to fall 10 percent to 14 percent from 2004 to $19 billion. Still, this amount matches of beats Wall Street consensus expectations. MCI expects to generate operating income before depreciation and amortization of $1.8 billion to $2 billion in the year 2005.

The U.S economy grew at a 3.8 percent annual rate in the fourth quarter of 2004. This increase was faster than initially reported since businesses spent more on equipment and software, and the trade deficit was smaller than expected. This growth in the fourth quarter suggests that the economy continued to perform strongly through the year-end. A 3.8 percent annual rate from October through December also supports Federal Reserve Chairman Alan Greenspan’s testimony, who asserted that “the economy entered 2005 expanding at a reasonable good pace”.

In early Friday trading, shares of H&R Block, the world’s biggest tax preparer, climbed 7 percent to $50.36. Nevertheless, H&R Block said that its third-quarter profit fell 14 percent due to weak earnings at its mortgage division. H&R Block’s mortgage business generated income of $112 million in this period, which shows a decrease of 28 percent from a year ago. This decrease may be the result of aggressive pricing and competition in the mortgage market.

All the best,
Manuel Jesus-Backus
The Portfolio Crafter

Today was a good day for the market. The Dow rose 75 points closing at 10,748.79. Besides, both the S&P and the Nasdaq rose today. The S&P rose 9.40 points closing at 1,200.20, while the Nasdaq closed at 2,051.70 after rising 20.45 points. After the blue chip gauge overturned 174 points on Tuesday to suffer its one-day loss since May 2003, the Dow has now recovered 137 points of that big decline.

Among some Dow components that had a good day on Thursday were Exxon Mobil, Caterpillar, and Altria Group. Furthermore, Boeing Co. was among the blue-chip gainers, raising 2.3 percent after Ryanair Holdings, an Irish low-cost airline, confirmed that it placed an order for 140 new 737-800 aircraft worth more than 4 billion. Ryanair said that after this order is delivered, it will carry in excess of 70 million passengers per year, which will make it Europe’s largest airline. In its current fiscal year to March 2006, the fast-growing airline expects to carry 34 million passengers.

Viacom, the New York-based media conglomerate, posted a quarterly loss of $18.44 billion, or $10.99 a share, compared with a net loss of $385.4 million, or 22 cents a share a year earlier. This record loss took place after cutting the value of its Infinity Broadcasting unit, realizing that the radio business may not recapture the audience and advertisers lost to the Internet and Satellite radio. According to Chief Executive Sumner Redstone, Infinity, the second U.S radio company, has failed to generate the sales growth promised five years ago when Viacom took full ownership of Infinity.

Quest Communications International Inc. is trying to outbid Verizon Communications Inc with an $8 billion in cash-and-stock offer by saying that it will pay cash sooner and giving MCI investors a hedge against a share drop. This means that MCI investors would receive a cash payment when the deal wins investors’ approval rather than when it closes. However, MCI, the second long-distance phone company rejected Qwest’s earlier proposal and accepted a $6.75 billion bid from Verizon. This new offer puts pressure on MCI Chief Executive Officer Michael Capellas to visit the deal again.

Crude hits new 4-month high after inventory reports showed stock fell last week. Crude oil delivery for April delivery fell 22 cents to $50.95 a barrel after peaking at $52.05 during the open call session. This price reflects the highest level since November 1st of last year. However, prices are now about $4 below the record high of $55.67 in October.
The OPEC cartel said that if prices rose further, it might raise the output to cool the market. In March 16, the cartel will meet in Iran.

All the best,
Manuel Jesus-Backus
The Portfolio Crafter

Today was a day of recovery for the market because U.S. consumer prices increased 0.1 percent, easing concerns about inflation. The Dow rose 62.59 points to close at 10,673.79. Besides, both the Nasdaq and the S&P rose today. The Nasdaq rose 0.92 points to close at 2,031.25, while the S&P closed at 1,190.80 after rising 6.64 points.

The stocks are rising primarily because of a new report on consumer price indexes. The positive report on consumer inflation helped U.S. stocks to recover today. However, technology stocks lagged due to a decline of 1.9 percent for Intel Corp.

Martha Stewart Living posted fourth quarter loss of $7.3 million or 15 cents a share compared with earnings of $2.4 million, or 5 cents a share last year. Nevertheless, the company reported positive trends in its publishing division, such as with its highly popular Everyday Food magazine. This magazine saw its base rate circulation rise to 800,000 for the January issue from 500,000 issues at its September 2003 inception. Besides, after Martha Stewart is released from prison on March 6, she will start working on two television shows, such as her syndicated, daytime program and NBC’s Martha Stewart-version of Donald Trump’s “The Apprentice”.

Today, Apple introduced two new Ipod models and dropped the price of its two older models. The new models are a six-gigabyte Ipod mini and a 30-gigabyte Ipod photo. Apple is offering the two models for about $250 and $350, respectively. These two new models and discount of prices reflect Apple’s attempt to maintain its lead in the market, since the Ipod has become the most important product of Apple. Its shares had almost quadrupled in the last year. Today they rose $1.56 or 1.8 percent to $86.95.

Shares of Big Lots Inc. surged about 15 percent today. Big Lots sees the Fiscal first quarter of 2005 earnings in a range of 4 cents a share to 7 cents a share, compared with the 6 cents average forecast. Also, it is projecting sales growth ranging from 2 percent to 4 percent. Although Big Lots’ sales improved this year, the current economic situation still challenges its core customers. According to analysts, better sales in January have also carried over into February.

All the best,
Manuel Jesus-Backus
The Portfolio Crafter

The Dow hit its lowest point in since May 2003, 21 months ago, today due to a spike in crude prices. After plummeting 174.02 points, the Dow finally closed this afternoon at 10,611.20. The Nasdaq also lost 28.30 points today to close at 2,030.32, while the S&P lost 17.43 points and closed at 1,184.16.

All but one of the Dow components fell into the red today as stocks tumbled. Only Verizon Communications made small gains within the Dow today. Crude futures for March gained $2.14 to reach $51.15 per barrel, while the April crude futures reached $51.42 after rising $2.41 on the New York Mercantile Exchange. According to Robert Pavlik, a portfolio manager at Oaktree Asset Management, the market just gave up after watching crude rise above $51 and decided not to wait for tomorrow’s CPI numbers but get out while there were still profits to be had.

In addition to concerns over the price of crude, investors struggled with concern over the value of the dollar. The dollar slid 1.5 percent against the euro to $1.3255 and fell 1.3 percent against the Japanese yen at 104.09 yen after South Korea’s central bank announced that they would sell a portion of its dollar reserves in order to receive higher returns. Additionally, there was talk that some oil revenue might be switched from dollars to euros.

Home Depot, the Atlanta-based home improvement retailer, announced today that earnings had increased by 10% in the last quarter. Many of their earnings came from modernizing older stores and building new stores. Last quarter, sales rose 11% to reach $16.81 billion from last year’s $15.13 billion. Although the company’s earnings met analyst expectations, the shares lost 4.1%, trading $1.74 less and closed at $40.28.

Besides Home Depot, the other major loser of the day was Merck. After last week’s news that Vioxx might be able to go back on shelves, the company saw an increase in the price of stocks. However, today the stock lost over 4% this afternoon as the stock closed at $40.28. Investors hope that tomorrow will be a new day for Merck and the rest of the market.

All the best,
Manuel Jesus-Backus
The Portfolio Crafter

For the most part, stocks remained flat today, but the Dow rose after the Food and Drug Administration (FDA) announced new possibilities for Merck to bring back Vioxx. The Dow rose 30.96 points to close at 10,785.22. However, the Nasdaq fell 2.72 points, closing at 2,058.62, while the S&P remained flat, gaining only 0.84 points to close at 1,201.59.

Stocks stayed flat most of the day due to the announcement made by the Labor Department that core inflation for wholesale goods had increased in January at the fastest rate in the past six years. The core PPI was supposed to rise only 0.2 percent; however, it rose 0.8 percent by the end of January. Greenspan announced earlier this week that he believes inflation is well-contained, but today’s reports shook up investors.

3M had good news today as the company announced that increased productivity and new lines would help boost sales and keep the company’s earnings growth between 12% and 14% through 2006. The company expects sales upwards of $5.5 billion from new products over the next three years. The company’s stock rose 3 cents late in the day to close at $85.74.

The Food and Drug Administration (FDA) helped to close up the day on a high note when they announced their plans to allow Merck’s controversial drug, Vioxx, to sell on the market again. The drug was stripped from shelves in September when studies showed that the drug could increase heart risk in patients. The panel said that they agreed that the drug, as well as similar drugs such as Pfizer’s Celebrex and Bextra, could cause heart risk in patients, and they also said they were in favor of adding warning labels to the drugs. Despite the good news for Pfizer, analysts agree Merck will find difficulty in returning Vioxx to the shelves and regaining the previous popularity of the drug.

All the best,
Manuel Jesus-Backus
The Portfolio Crafter

The market took a dive today as investors became increasingly concerned over the possibility of rising interest rates and potential problems with Iran and Syria combining in the Middle East to begin making trouble. The Dow fell 80.62 points to close at 10,754.26, while the Nasdaq dropped 26.09 points closing at 2,061.34. The S&P also lost 9.59 points to close at 1,200.75.

Wal-Mart, the world’s largest retailer, announced that they had earnings of $10 billion for the year for the first time. The company’s profits rose 16.2% for the fourth quarter to reach $3.16 billion, which beat analyst expectations. During the Thanksgiving, however, the company’s profits remained flat, but then they turned to advertising markdowns on specific items, a move that greatly boosted sales.

New York Times Co. released their newest purchase today. Primemedia, Inc., the owner of the popular About.com, has agreed to sell their highly lucrative site to the Times. About.com has around 22 million members, and the discussions and information is led and posted by experts known as “guides.” The New York Times will now be able to have an online advertising base as well as a pay-per-click option for advertising by other businesses.

Starbucks and Jim Beam (owned by Fortune Brands) will be combining to produce a new coffee liqueur that was launched today. Currently, Kahlua is the dominant leader in the market and has been for decades. The liqueur will not be available in Starbucks stores and will cost around $23 for a 750 milliliter bottle, but after seeing the amazingly high numbers for the test product neither company has any concerns about being able to sell their product. The announcement didn’t help the stocks with Starbucks dropping 59 cents and Fortune Brands dropping 68 cents, but customers may be singing a different song after tasting the new liqueur.

All the best,
Manuel Jesus-Backus
The Portfolio Crafter

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The market remained fairly stable today even after Greenspan did not refute the statements by analysts that interest rates may be rising soon. The Dow fell 2.44 points and closed at 10,834.88, while the Nasdaq lost 1.78 points closing at 2,087.43. On the other hand, the S&P rose 0.22 points to close at 1,210.34.

On Wednesday, the Commerce Department announced that new housing starts had reached a 21-year high. Rates have risen 4.7% to reach 2.159 million, which is a seasonally-adjusted number. However, most analysts expected a small decline during January, but the number of housing permits sought raised 1.7% during the month.

Federal Reserve chairman Alan Greenspan stated today that “The U.S. economic expansion has firmed, overall inflation has subsided and core inflation has remained low.” In the discussions, he said that Social Security and Medicare changes should be implemented by 2008, and he encouraged Americans to increase their levels of savings. However, he did not say anything to reassure investors that interest rates would not be rising in the near future, which caused little change in the market.

Qwest International, the rebuffed suitor of MCI, announced today that their offer was better than the offer made by Verizon earlier this week. The company was disappointed and frustrated that they lost the bid, but MCI likely went with the Verizon bid in order to align the company with a stronger player in the industry.

Hewlett Packard gave their first quarter report today after ousting CEO Carly Fiorina just a week ago. However, the company announced that they struggled to raise their bottom line even though sales rose 10% last quarter. Net income rose to $943 million slightly rising from last year’s $936 million. Although HP’s stocks fell a little today after the announcement, hopes are high that the company can turn itself around with new leadership.

All the best,
Manuel Jesus-Backus
The Portfolio Crafter

Today was a good day for the market. Stocks held their own as Circuit City’s stocks rose based on the news of a possible buyout. The Dow rose 46.19 points today closing at 10,837.32. The S&P rose 3.93 points to close at 1,210.07, while the Nasdaq closed at 2,089.23 after rising 6.32 points throughout the day.

S&P reported that dividend payouts are being made at a record pace and rate. However, the yields are still low compared to other years. The major difference is the decrease in the tax rate on qualified dividends made by the government; tax rates were lowered to 15% in 2003.

Circuit City was big in the news today as they reported the possibility of a buyout in the near future. The company received an unsolicited offer from Highfields Capital Management, a major shareholder for the past two years. Highfields has offered $3.25 billion for a stock buyout taking the company private, which values each share at $17. Making the company private would help rid them of public-company transparency, which, according to Highfields’ proposal letter, “is uniquely damaging in a highly competitive industry where Circuit City is going head-to-head with a tough and entrenched rival.” Shares jumped 21% during the day ending up around 17% when they closed at $16.17.

Microsoft Corp. announced today that it would be offering consumers who use the popular Windows software free spyware-combating programs. Costs of software to get rid of spyware have been rising over the past few years, and Microsoft’s plan will put some of the companies who are selling those products at risk. Corporate customers who will need more intensive services will be offered a version to buy for their companies.

The CEO of ChevronTexaco made news today as he demanded that the United States revise its energy policy. CEO David O’Reilly says that he did not see a need for a new policy until recently, but with the increasing demands for energy, he considers a new policy a major priority. O’Reilly believes that the administration should support policies and companies seeking to focus on energy types other than oil, such as coal and nuclear power. Additionally, he recommends that renewable sources of fuel, such as wind and solar energy be made a first priority; he also stated that making products and usage more energy efficient is key.

All the best,
Manuel Jesus-Backus
The Portfolio Crafter