DAILY WRAP-UP
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U.S. equities markets were broadly higher on the first day of the second
quarter as upbeat news from the tech group and a better-than-anticipated
reading on key economic metrics bolstered positive market sentiment.
However, some late day selling could be attributed to caution ahead of the
March jobs report.
The Dow Jones Industrial Average added 15.63 points or 0.15% to 10373.33.
The Nasdaq composite jumped 20.78 points or 1.04% to 2015.00. The broader
S&P 500 tacked on 5.96 points or 0.53% to 1132.17. Volume at the NYSE
amounted to 1.535 billion shares. At the Nasdaq, some 1.812 billion shares
traded hands.
The Institute for Supply Management's manufacturing index rose for the
tenth consecutive month. The reading on nationwide factory activity rose to
62.5 in March from 61.4 in the prior month. Economists had anticipated the
measure would dip to 59.5.
Initial claims fell to 342,000 from the prior week's revised number of
345,000. Unemployment claims are at the lowest level since January 2001.
That news has helped boost optimism that the March payrolls report will
finally show job growth. Payrolls have missed expectations for three
consecutive months.
The Dow Jones Industrial index was shuffled for the first time in four
years. Effective on April 8 International Paper (NYSE: IP), AT&T (NYSE: T)
and Eastman Kodak (NYSE: EK) are out of the set of thirty stocks. Insurance
giant American International Group (NYSE: AIG), baby Bell Verizon (NYSE:
VZ), and the maker of the world's most prescribed drug, Pfizer (NYSE: PFE),
are in the blue chip index.
The stocks set to leave the Dow were down, and the new additions rose on
the news.
U.S. Energy Secretary Spencer Abraham was apparently considering a request
by states including California, Connecticut and New York to relax
regulations requiring cleaner burning gasoline. If the rules were loosened,
companies would be able to refine more gasoline more quickly. Gas explorer,
producer and refiner Amerada Hess (NYSE: AHC) shed 3.26% to $63.15. Oil
services company Schlumberger (NYSE: SLB) dropped 3.05% to $61.90.
ChevronTexaco (NYSE: CVX) said it would buy back up to $5 billion in stock.
The company's shares nosed ahead 0.21% to $87.96.
The stock rally was sparked in the technology sector Thursday. Finnish
mobile phone giant Ericson (NASDAQ: ERICY) said its first quarter gross
margins are likely to be above its fourth quarter margin of 41.6%. The
company's ADRs jumped 7.6% to $29.87.
Software companies also helped lift the tech-laced Nasdaq. Microsoft
(NASDAQ: MSFT) advanced 0.6% to $25.08. Oracle (NASDAQ: ORCL) rallied 2.42%
to $12.29. Adobe Systems (NASDAQ: ADBE) was up 2.49% to $40.28.
Retailers were under pressure after Merrill Lynch (NYSE: MER) unveiled a
negative note about the sector. The securities firm said that the group
would face tougher conditions in the second half of the year as the result
of the expected rise in interest rates, and more difficult comparisons at
the holiday shopping season.
Wal-Mart (NYSE: WMT) slid 2.24% to $58.35 after its rating was sliced to
"neutral" from "buy." Dillards (NYSE: DDS), which was added to Merrill's
sell list, tumbled 6.11% to $17.99. Zale Corp (NYSE: ZLC) was rated
"neutral" instead of "buy" and fell 2.53% to $59.99.
Jack in the Box (NYSE: JBX) jumped 15.46% to $28.83 after it boosted its
quarterly forecast. The hamburger chain said sales topped targets, and it
expects to post earnings between 42 and 44 cents a share. That's well above
its prior target of 28 cents a share. Wendy's (NSEY: WEN), the number three
fast food chain, said comparable store sales grew for the sixth consecutive
month in March. Wendy's shares were up 0.93% to $41.07.
Manugistics (NASDAQ: MANU) fell 17.69% to $5.63. The company, which makes
software for manufacturing companies, reported quarterly results that
missed Street estimates. The company said it earned $273,000 or nil per
share, excluding items. Analysts had expected earnings of three cents a share.
In small cap trading, the Russell 2000 gained 5.01 points or 0.85% to
595.32, while the S&P600 index added 1.92 points or 0.67% to 288.58.
Some of the small cap stocks making big moves included Supergen (NASDAQ:
SUPG), which slumped 33.13% to $8.56 on volume of 19,617,109. The company
announced late Wednesday that its drug to treat the Myelodysplastic blood
disorders slowed the onset of leukemia. However, some analysts were
confused about the statistical significance of the company's results.
Laserscope (NASDAQ: LSCP) surged 29.37% to $25.59 on volume of 2,525,527.
The company said it would be reimbursed at the twice the rate for one of
its procedures than it was previously.
In commodities trading on the New York Mercantile Exchange, May contracts
for light, sweet crude fell $1.49 to $34.27. May natural gas contracts slid
16.8 cents to $5.765. June gold futures edged 50 cents higher to $428.80.
Canadian markets notched solid gains on the first day of the quarter with
support from every sector. Technology and health care stocks led the
advance with greater than 2% gains.
The TSX composite gained 66.15 points or 0.77% to 8652.08, and the small
cap Venture index climbed 11.20 points or 0.6% to 1884.78. Volume at the
TSX composite amounted to 300 million shares.
The upbeat news from Ericsson helped lift the tech group on Bay Street.
Telecom equipment maker Nortel Networks (TSX: T.NT) put on 3.76% to $8.00.
IT services company CGI Group (TSX: T.GIB.A) rallied 1.52% to $8.68 and
graphics chipmaker ATI Technologies (TSX: T.ATY) put on 2.86% to $21.94.
Energy stocks dipped into negative territory amid rumours that the U.S. may
relax regulations requiring the refining of cleaner burning gasoline for
the summer months. By the close, some of the declines were shaken out of
the market. EnCana (TSX: T.ECA) dropped 0.71% to $56.29 and Suncor Energy
(TSX: T.SU) gained 0.72% to $36.23.
On the upside, base metal and mining issues climbed 1.29%. LionOre Mining
(TSX: T.LIM) surged 3.37% to $6.45 in volume that doubled its average daily
trading. The company, which mines nickel and gold in Botswana and
Australia, did not release news on Thursday. Uranium giant Cameco (TSX:
T.CCO) said it would partner with the National Atomic Co of Kazakhstan to
build a uranium mine in that country its first outside of North America.
The $38 million project at Inkai contains 91.5 million pounds of proven and
provable resources, and is expected to have a life of 30 years. Cameco
shares added 1.03% to $65.90.
Almost every component in the gold producer index was positive. Kinross
Gold (TSX: T.K), which is the third largest producer in Canada, added 2.09%
to $9.78, and Cambior (TSX: T.CBJ) put on 2.91%to $4.24. Iamgold (TSX:
T.IMG) shed 2.33% to $8.38 as investors continued to back out of the stock
on news of its plan to merge with Wheaton River (TSX: T.WRM).
Enbridge (TSX: T.ENB) shares dipped 0.6% to $52.98. The company, which is
the second largest pipeline operator in the country said it would ask to
negotiate with the state of Alaska regarding the construction of a pipeline
that would ferry natural gas to southern markets. Enbridge said it was also
interested in developing the Canadian portion of the pipeline.
Air Canada (TSX: T.AC) shares fell 6.82% to $1.23, after rising 20% on
Wednesday. The company had announced it signed a pension agreement with its
machinists union, but the national head of the union disputed agreement on
the deal.
Published reports said that Jean Coutu (TSX: T.PJC.A) is near to a deal to
buy Eckerd drug stores from J.C. Penny (NYSE: JCP). The Wall Street Journal
said that the Canadian drugstore would team with U.S. giant CVS (NYSE: CVS)
in a US$4 billion bid for Eckerd's 2800 outlets. Shares of Jean Coutu
jumped 3.8% to $17.75.
In the telecom group Manitoba Telecom (TSX: T.MBT) eased 0.31% to $48.60
after the TSX ruled it would not force a shareholder vote on the company's
$1.7 billion acquisition of Allstream (TSX: T.ALR.B). Shares of the former
AT&T Canada were up 1.74% to $74.71.
Shares of CAE Inc (TSX: T.CAE) advanced 4.03% to $5.94 after the company
announced it had been selected to provide shipboard control systems for the
Republic of Korea Navy. CAE noted that the contract is repeat business and
similar arrangements garnered approximately $6 million.
The Canadian dollar was worth US$0.7652.
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