Oil price going to $120, US stock decline overshadowed by earning decline
Global Market
ECB are raising the prospect of interest-rate increases to keep inflation in check. Their comments are forcing investors and economists to change forecast after predicted the bank would follow in cutting rates to shore up growth. The ECB are reacting to a surge in oil and food prices. They're concerned that inflation will feed to wage demands and prompt companies to pass on higher costs. This condition helped push the euro to $1.60.
The ECB said current policy will help the bank achieve price stability, but still they don’t sure rates are high enough to contain inflation. Growth in Europe's manufacturing and services industries may drop in April.
The International Monetary Fund estimates growth in euro region will slow to 1.4 percent from 2.6 percent in 2007.
Germany's union negotiated a settlement for 2.1 million staff that it said was worth 8.9 percent. They settled a new contract that raises wages 4.4 percent this year and 3.3 percent in 2009.
Stock Market
U.S. stocks posted loss as record oil prices and disappointing earnings from technology, health-care and consumer companies make concern of profit slowdown will spread.
Texas Instruments Inc. tumbled on slowing orders from phone companies. UnitedHealth Group Inc. dropped as sales to employers slumped. Coach Inc. fell as discounts cut the profitability. Target Corp. led declines in Retailing Index as oil rose above $119 a barrel.
The S&P 500 declined 12.23 points to 1,375.94. The Dow Jones Industrial Average slid 104.79 to 12,720.23. The Nasdaq Composite Index decreased 31.1 to 2,376.94.
S&P 500 has dropped 6.3 percent as analysts reduced their projections for first-quarter profits. They predict a 13.7 percent decrease in earnings, compared with an increase of 4.7 percent at January 2008. About 31 percent of S&P 500 companies have reported first-quarter results so far have trailed expectations.
Texas Instruments predicted second-quarter profit of 42 to 48 cents a share, missing the 49 cents estimated by analysts, after orders for mobile-phone chips slowed. Earnings and sales for the first quarter also miss analysts projections.
UnitedHealth tumbled $3.66 to $34.15. First-quarter earnings missed analysts' estimates as sales and investment income fell. They also forecast less full-year profit than previous year. WellPoint Inc. slipped $1.78 to $46.55. Aetna Inc. lost $1.76 to $40.38.
Coach declined 80 cents to $31.70. Gross margin narrowed as the Japanese yen gained and retailers discounted products to lure shoppers.
Apple Inc. retreated $7.96 to $160.20 after American Technology Research downgraded the shares to neutral.
McDonald's Corp. lost 32 cents to $58.35 even after first-quarter profit rose more than estimated. Their sales fell last month as consumers pinched by rising fuel costs and sinking home values cut spending.
Target Corp. dropped $1.92 to $52.63. Macy's Inc. lost 68 cents to $23.33.
DuPont Co. declined $2.09 to $50.16. They said weak U.S. demand for home insulation and automotive paint may overshadow their earnings gains.
CME Group Inc. fell $40 to $483.50. Their profit missed analysts' estimates.
CIT Group Inc. lost $1.99 to $10.75. They trying to avoid a cash shortage with sold $1 billion of shares of common stock.
BJ Services Co. retreated $4.82 to $27.98. They reported a bigger drop in fiscal second-quarter profit than analysts estimated.
UAL Corp. tumbled after their first-quarter loss far from estimates. The stock lost $7.88 to $13.55 on concern that UAL might have too little cash on hand to meet the loan covenants terms.
Parker Hannifin Corp. climbed $4.09 to $81.06. Their full-year profit will be higher than it forecast as they expands in Europe, Asia and Latin America.
Intrepid Potash Inc. jumped 18.40 to $50.40. They sold 30 million shares for $32 each and plans to repay debt and expand production at facilities in Utah and New Mexico.
The National Association of Realtors said sales of previously owned homes fell less than economists forecast. Purchases dropped 2 percent. Resale were forecast to fall 2.3 percent.
Commodities
Oil
Crude oil was little changed as investors purchased on expectations rising demand in China and India. China, India, Russia and the Middle East will consume more oil than the U.S. Oil surged to $119.90 a barrel.
Crude oil for June delivery was at $117.92 a barrel. The May contract is up $1.89 to $119.37 a barrel. U.S. gasoline inventories probably declined from last week. Distillate- fuel supplies probably may have dropped 50,000 barrels from the prior week.
Oil companies in Russia need tax breaks to develop new fields and boost output. Russia first-quarter production fell 1 percent. Brent crude for June settlement was at $115.75 a barrel. The future gained $1.52 to $115.95 a barrel.
Oil also gained because of disruption in Nigeria supply. Royal Dutch Shell Plc closed supply after attacks on a pipeline. Then they declare a force majeure on oil exports after daily output in Nigeria was suspended.
U.S. oil supplies probably advanced 1.5 million barrels from 313.7 million barrels. The report on inventories will release today.
Gold
Gold rose as the dollar traded low against the euro. The dollar fell below $1.60 per euro on speculation the U.S. Federal Reserve will cut borrowing costs, while ECB keeps rates on hold.
Bullion was at $920.13 an ounce. Silver was $17.75 an ounce. The dollar traded at $1.5993 per euro.
The euro strengthened against the dollar after ECB said they will act to restrain consumer prices if inflation doesn't slow, fueling speculation that they may keep its rate unchanged while the U.S. cuts further. But still bullion has limited upside potential as investors look to divert into equities or commodities for higher yields.
Investors remained cautious because price failed to hold above $950 increased bearish sentiment.
Gold for June delivery was $921.50 an ounce. Gold for February 2009 delivery in Tokyo was $927 an ounce. Gold for June delivery traded in Shanghai was $912 an ounce.
ECB are raising the prospect of interest-rate increases to keep inflation in check. Their comments are forcing investors and economists to change forecast after predicted the bank would follow in cutting rates to shore up growth. The ECB are reacting to a surge in oil and food prices. They're concerned that inflation will feed to wage demands and prompt companies to pass on higher costs. This condition helped push the euro to $1.60.
The ECB said current policy will help the bank achieve price stability, but still they don’t sure rates are high enough to contain inflation. Growth in Europe's manufacturing and services industries may drop in April.
The International Monetary Fund estimates growth in euro region will slow to 1.4 percent from 2.6 percent in 2007.
Germany's union negotiated a settlement for 2.1 million staff that it said was worth 8.9 percent. They settled a new contract that raises wages 4.4 percent this year and 3.3 percent in 2009.
Stock Market
U.S. stocks posted loss as record oil prices and disappointing earnings from technology, health-care and consumer companies make concern of profit slowdown will spread.
Texas Instruments Inc. tumbled on slowing orders from phone companies. UnitedHealth Group Inc. dropped as sales to employers slumped. Coach Inc. fell as discounts cut the profitability. Target Corp. led declines in Retailing Index as oil rose above $119 a barrel.
The S&P 500 declined 12.23 points to 1,375.94. The Dow Jones Industrial Average slid 104.79 to 12,720.23. The Nasdaq Composite Index decreased 31.1 to 2,376.94.
S&P 500 has dropped 6.3 percent as analysts reduced their projections for first-quarter profits. They predict a 13.7 percent decrease in earnings, compared with an increase of 4.7 percent at January 2008. About 31 percent of S&P 500 companies have reported first-quarter results so far have trailed expectations.
Texas Instruments predicted second-quarter profit of 42 to 48 cents a share, missing the 49 cents estimated by analysts, after orders for mobile-phone chips slowed. Earnings and sales for the first quarter also miss analysts projections.
UnitedHealth tumbled $3.66 to $34.15. First-quarter earnings missed analysts' estimates as sales and investment income fell. They also forecast less full-year profit than previous year. WellPoint Inc. slipped $1.78 to $46.55. Aetna Inc. lost $1.76 to $40.38.
Coach declined 80 cents to $31.70. Gross margin narrowed as the Japanese yen gained and retailers discounted products to lure shoppers.
Apple Inc. retreated $7.96 to $160.20 after American Technology Research downgraded the shares to neutral.
McDonald's Corp. lost 32 cents to $58.35 even after first-quarter profit rose more than estimated. Their sales fell last month as consumers pinched by rising fuel costs and sinking home values cut spending.
Target Corp. dropped $1.92 to $52.63. Macy's Inc. lost 68 cents to $23.33.
DuPont Co. declined $2.09 to $50.16. They said weak U.S. demand for home insulation and automotive paint may overshadow their earnings gains.
CME Group Inc. fell $40 to $483.50. Their profit missed analysts' estimates.
CIT Group Inc. lost $1.99 to $10.75. They trying to avoid a cash shortage with sold $1 billion of shares of common stock.
BJ Services Co. retreated $4.82 to $27.98. They reported a bigger drop in fiscal second-quarter profit than analysts estimated.
UAL Corp. tumbled after their first-quarter loss far from estimates. The stock lost $7.88 to $13.55 on concern that UAL might have too little cash on hand to meet the loan covenants terms.
Parker Hannifin Corp. climbed $4.09 to $81.06. Their full-year profit will be higher than it forecast as they expands in Europe, Asia and Latin America.
Intrepid Potash Inc. jumped 18.40 to $50.40. They sold 30 million shares for $32 each and plans to repay debt and expand production at facilities in Utah and New Mexico.
The National Association of Realtors said sales of previously owned homes fell less than economists forecast. Purchases dropped 2 percent. Resale were forecast to fall 2.3 percent.
Commodities
Oil
Crude oil was little changed as investors purchased on expectations rising demand in China and India. China, India, Russia and the Middle East will consume more oil than the U.S. Oil surged to $119.90 a barrel.
Crude oil for June delivery was at $117.92 a barrel. The May contract is up $1.89 to $119.37 a barrel. U.S. gasoline inventories probably declined from last week. Distillate- fuel supplies probably may have dropped 50,000 barrels from the prior week.
Oil companies in Russia need tax breaks to develop new fields and boost output. Russia first-quarter production fell 1 percent. Brent crude for June settlement was at $115.75 a barrel. The future gained $1.52 to $115.95 a barrel.
Oil also gained because of disruption in Nigeria supply. Royal Dutch Shell Plc closed supply after attacks on a pipeline. Then they declare a force majeure on oil exports after daily output in Nigeria was suspended.
U.S. oil supplies probably advanced 1.5 million barrels from 313.7 million barrels. The report on inventories will release today.
Gold
Gold rose as the dollar traded low against the euro. The dollar fell below $1.60 per euro on speculation the U.S. Federal Reserve will cut borrowing costs, while ECB keeps rates on hold.
Bullion was at $920.13 an ounce. Silver was $17.75 an ounce. The dollar traded at $1.5993 per euro.
The euro strengthened against the dollar after ECB said they will act to restrain consumer prices if inflation doesn't slow, fueling speculation that they may keep its rate unchanged while the U.S. cuts further. But still bullion has limited upside potential as investors look to divert into equities or commodities for higher yields.
Investors remained cautious because price failed to hold above $950 increased bearish sentiment.
Gold for June delivery was $921.50 an ounce. Gold for February 2009 delivery in Tokyo was $927 an ounce. Gold for June delivery traded in Shanghai was $912 an ounce.
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