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Markets Close Lower After Release of Fed Minutes

August 21, 2013 by

Stocks wavered and closed lower today as investors weighed the minutes from the Federal Reserve’s July policy-setting meeting.

By the end of trading, the Standard Poor’s 500-stock index, which fell following the 2 p.m. release, closed 0.6 percent lower, the Dow Jones industrial average was 0.7 percent lower and the Nasdaq composite lost 0.4 percent.

The minutes showed that Federal Reserve policy makers were considering tapering off their huge economic stimulus efforts, according to the official summary, but they did not yet have a clear consensus about the timing of their actions.

The S. P. 500 rose on Tuesday to end a four-day losing streak, but remained under technical pressure as it closed below its 50-day moving average for a third consecutive session.

Investors have been grappling over the last several weeks with uncertainty over when the Fed will begin to wind down its $85 billion-a-month stimulus program.

Target warned that its annual profit might be near the low end of its forecast as consumer spending remained cautious; its shares fell 3.6 percent.

Shares of the home improvement chain Lowe’s rose 3.9 percent after it reported a bigger-than-expected rise in profit and revenue as the housing market’s recovery encouraged people to spend more on their homes.

Staples reported weaker-than-expected quarterly results on dismal sales in international markets and cut its outlook for the year. Its shares slumped 15.3 percent.

In Japan, the Nikkei ended 0.2 percent higher as investors drew support from a declaration by the Bank of Japan’s governor, Haruhiko Kuroda, that he would not hesitate to expand the bank’s huge asset-buying campaign if the economic outlook darkened.

Among the major currencies — where safe-haven flows ahead of the Fed minutes have favored the yen and Swiss franc — the dollar had recovered some lost ground, gaining 0.4 percent against a basket of currencies to move off a two-month low.

The euro eased 0.4 percent against the dollar, to $1.3367, having touched a six-month high of $1.3452 on Tuesday, and sterling briefly hit a two-month high of $1.5697 against the dollar when a business survey showed an improvement in British factory orders.

In the fixed income markets, benchmark 10-year Treasury yields edged back to 2.83 percent, though rates remained close to 2013 highs as many investor have already positioned for the potential Fed tapering.

Commodity markets were generally softer. Spot gold was down 0.2 percent, at $1,350.50 an ounce.

Benchmark New York crude oil for October delivery lost $1.14, to $103.97 a barrel.

Large current account deficits make all three countries particularly vulnerable to capital outflows at times of monetary tightening.

Emerging stock markets have shared in the sell-off, victims of a growing conviction among investors that an end to Fed bond buying because of the stronger American economic outlook makes developed countries’ debt and equity markets a sounder bet.

Article source: http://www.nytimes.com/2013/08/22/business/daily-stock-market-activity.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

Awaiting Word From Fed, Markets Slip

August 21, 2013 by

Stocks were lower on Wednesday as investors weighed the minutes from the Federal Reserve’s July policy-setting meeting.

In afternoon trading, the Standard Poor’s 500-stock index was 0.4 percent lower, the Dow Jones industrial average was 0.5 percent lower and the Nasdaq composite fell by 0.3 percent.

The minutes showed that Federal Reserve policy makers were considering tapering off their huge economic stimulus efforts, according to the official summary, but they did not yet have a clear consensus about the timing of their actions.

The S. P. 500 rose on Tuesday to end a four-day losing streak, but remained under technical pressure as it closed below its 50-day moving average for a third consecutive session. It closed roughly five points below that level, now at 1,657.65 points, which is becoming technical resistance.

Retailers led gains in the Tuesday session and will continue to be in focus in early trading as results from companies including Lowe’s and Target take center stage.

Investors have been grappling over the last several weeks with uncertainty over when the Fed will begin to wind down its $85 billion-a-month stimulus program.

Shares of Toll Brothers, the home-building company, gained 0.5 percent after it reported a jump in revenue as the recovery in the American housing market gathered pace.

Target warned that its annual profit might be near the low end of its forecast as consumer spending remained cautious; its shares fell 3.9 percent.

Shares of the home improvement chain Lowe’s rose 5.1 percent after it reported a bigger-than-expected rise in profit and revenue as the housing market’s recovery encouraged people to spend more on their homes.

Staples reported weaker-than-expected quarterly results on dismal sales in international markets and cut its outlook for the year. Its shares slumped 13.5 percent.

In Japan, the Nikkei ended 0.2 percent higher as investors drew support from a declaration by the Bank of Japan’s governor, Haruhiko Kuroda, that he would not hesitate to expand the bank’s huge asset-buying campaign if the economic outlook darkened.

Among the major currencies — where safe-haven flows ahead of the Fed minutes have favored the yen and Swiss franc — the dollar had recovered some lost ground, gaining 0.4 percent against a basket of currencies to move off a two-month low.

The euro eased 0.4 percent against the dollar, to $1.3367, having touched a six-month high of $1.3452 on Tuesday, and sterling briefly hit a two-month high of $1.5697 against the dollar when a business survey showed an improvement in British factory orders.

In the fixed income markets, benchmark 10-year Treasury yields edged back to 2.83 percent, though rates remained close to 2013 highs as many investor have already positioned for the potential Fed tapering.

Commodity markets were generally softer. Spot gold was down 0.4 percent, at around $1,368 an ounce.

Benchmark New York crude oil for October delivery lost 47 cents, to $104.64 a barrel.

The widely held conviction that the minutes of the Fed’s July meeting will hint at a policy shift next month hit the Indian rupee, Indonesian rupiah and Turkish lira, despite supportive words and actions from those countries’ central banks.

“I don’t think we’re going to get that clear signal as to whether September is when they pull the trigger on tapering, but that is what the markets are hoping for,” said Daragh Maher, foreign exchange strategist at HSBC.

Large current account deficits make all three countries particularly vulnerable to capital outflows at times of monetary tightening.

Emerging stock markets have shared in the sell-off, victims of a growing conviction among investors that an end to Fed bond buying because of the stronger American economic outlook makes developed countries’ debt and equity markets a sounder bet.

Article source: http://www.nytimes.com/2013/08/22/business/daily-stock-market-activity.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

Shell Bets Big on Natural Gas

May 1, 2013 by Leave a Comment

More than any of its rivals, Royal Dutch Shell, which will report its quarterly results on Thursday, is betting its future on the business of bringing natural gas from remote locations like Qatar to energy-hungry destinations like China and Japan.

And while analysts expect the results to show a sharp decline from last year’s first quarter, in part because of disruptions in its Nigerian gas operations, many experts say Shell may eventually show big benefits from its natural gas emphasis.

Increasingly, to make gas a global commodity, companies supercool it into a liquid form for transport on specialized ships. Shell has already invested about $40 billion in liquefied natural gas, or L.N.G., production plants, storage terminals and related systems, and plans to continue pumping money into that business.

Shell now has about 7 percent of the world L.N.G. business, with ambitions to more than double that share through new projects and acquisitions. Last year, L.N.G. and related businesses earned Shell $9.4 billion of its $25.1 billion in profit.

“We are in the lead, and we want to stay in the lead,” Andrew Brown, Shell’s head of international exploration and production, said in a mid-April interview. Mr. Brown said Shell expected global demand for L.N.G. to grow rapidly in the coming years, doubling by 2025 to about 500 million tons a year, the equivalent of about 4.5 billion barrels of oil, making it by far the fastest-growing fuel.

The main reason for the anticipated growth is that natural gas is abundant. And because of the U.S shale gas boom, it has become relatively cheap — especially in North America, where prices lately have been in the range of $4 per million British thermal units, compared with highs of $13 as recently as 2005. The European spot price is around $10 per million B.T.U.’s, and the Asian price around $15; contract prices, often linked to oil, may be higher.

And because it burns much cleaner than either coal or oil, it will very likely stay in favor because its use can help lower the greenhouse gas emissions that are blamed for causing global warming.

To Mr. Brown’s frustration, not everyone gets the message. That is one reason Shell’s big L.N.G. bet is no sure thing.

The United States has wholeheartedly embraced gas. But Europe, mired in economic doldrums, has turned to coal, which is less expensive. This has driven down demand for gas in the region, which in recent decades had been one of the world’s biggest markets for natural gas via pipelines and L.N.G.

Europe does not have “the right balance” in terms of promoting gas, Mr. Brown said. About 75 percent of Shell’s L.N.G. goes to Asia.

As much as anyone, Mr. Brown is responsible for making Shell a gas broker to the world. Before taking his current job, Mr. Brown presided over more than $20 billion in investments in gargantuan installations for turning the extensive gas deposits in Qatar’s North Field into exports in the form of L.N.G. and liquid fuels like diesel.

To build on its lead, Shell agreed in February to buy the L.N.G. business of the Spanish company Repsol for about $6.7 billion. Some industry analysts considered the price too high. But according to Repsol, Shell had to outbid more than dozen competing offers.

The impact of Shell’s L.N.G. investments on the company’s financial performance will, of course, fluctuate from quarter to quarter. The first-quarter results on Thursday are expected to be hurt by a shutdown at a Nigerian L.N.G. plant caused by sabotage. And yet, Shell’s quarter was probably helped by high L.N.G. prices in Japan, which continues to import large quantities of gas since the Fukushima nuclear meltdown in 2011.

Analysts’ consensus forecast anticipates that Shell will report adjusted net profit of $6 billion for the quarter, an 8 percent gain over the preceding quarter, but an 18 percent decline from a year earlier, according to Peter Hutton of RBC Capital Markets in London.

On Tuesday, one of Shell’s main rivals, BP, reported a first-quarter profit of $4.2 billion after adjusting for inventory changes and one-time items, which handily beat analysts’ forecasts. BP, though, continues to emphasize its oil business.

Over the longer run, being a big player in L.N.G. is likely to help Shell outearn its peers, predicted Martijn Rats, an analyst at Morgan Stanley in London. The huge upfront investments of several billion dollars per gas liquefaction plant might seem prohibitive, Mr. Rats said, but those projects “generate large amounts of operating cash flow over two or three decades.”

Article source: http://www.nytimes.com/2013/05/02/business/energy-environment/02iht-shell02.html?partner=rss&emc=rss

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Dow Ends Above 14,000 For Year’s Highest Close

February 12, 2013 by Leave a Comment

The Dow Jones industrial average rose to its highest close of the year Tuesday, putting it within 1 percent of its record. Stocks gained after two big consumer brands posted impressive quarterly results.

The Dow closed up 47.46 points, or 0.34 percent, to 14,018.70 Tuesday. That is 146 points from its record close of 14,164.53 set in October 2007. The Standard Poor’s 500-stock index gained 2.42 points, or 0.16 percent, to 1,519.43, also close to its record.

In a day of quiet trading, stocks were driven higher by the beauty products maker Avon and the luxury clothing and accessories company Michael Kors, whose results impressed investors. Consumer spending accounts for 70 percent of economic activity in the United States.

Financial and home-building stocks, led by the Bank of America and the Masco Corporation, which reported some of the day’s biggest gains, also lifted the averages.

The Dow has logged its best January in almost two decades after lawmakers reached a last-minute deal to avoid sweeping tax increases and spending cuts. Investors are also becoming more optimistic that the housing market is recovering and that hiring is picking up.

The Dow has advanced 7 percent this year and the S. P. 500 is up 6.6 percent.

The 30-member Dow has closed above 14,000 twice this month. Before February, the index closed above that level just nine times in its history. The first time was in July 2007; the rest were in October of that year.

Shares of Avon rose $3.51, or 20 percent, to $20.79 after the company posted a fourth-quarter loss that was not as bad as analysts expected. The company also hopes to save $400 million by slashing costs. Michael Kors rose $5, or 9 percent, to $62 after reporting earnings that beat analysts’ predictions.

Bank of America was the biggest gainer on the Dow, adding 38 cents, or 3.25 percent, to $12.24. Stocks gaining in the index outnumbered those falling by a ratio of more than four to one.

About 70 percent of companies in the S. P. 500 have reported earnings for the fourth quarter. Analysts are projecting that earnings will rise 6.4 percent for the period, an improvement from the 2.4 percent growth reported in the third quarter, according to S. P. Capital IQ.

Investors may have become too optimistic about the outlook for stocks, said Uri Landesman, president of the hedge fund Platinum Partners.

“The market is priced for perfection,” Mr. Landesman said. “The odds of a disappointment are very, very high.”

Mr. Landesman predicts that the S. P. 500 will climb past its record and rise as high as 1,600 by April before then slumping as low as 1,300 as company earnings start to disappoint investors. The record close for the S. P. 500 is 1,565, reached in October 2007.

Investors were expected to be watching closely Tuesday night when President Obama delivered his annual State of the Union address. Mr. Obama was expected to focus on the economy, including job creation.

A decline in bond prices since the beginning of the year has also slowed. The Treasury’s 10-year note fell 4/32 to 96 28/32 on Tuesday and the yield rose to 1.98 percent from 1.96 percent late Monday. The yield was 1.71 percent at the beginning of the year.

In other trading Tuesday, the Nasdaq composite index was down 5.51 points, or 0.17 percent, to 3,186.49.

Among other stocks making big moves:

Coca-Cola, the beverage company, fell $1.05, or 2.7 percent, to $37.56 after reporting fourth-quarter revenue that fell short of analysts’ forecasts.

Masco, a home improvement and building product company, rose $2.22, or nearly 13 percent, to $20.01 after reporting earnings that beat analysts’ expectations, helped by strong demand in North America.

Dun Bradstreet, a provider of credit and business data, fell $6.60, or 7.7 percent, to $78.68 after the company reported a fourth-quarter profit that was below market expectations.

Article source: http://www.nytimes.com/2013/02/13/business/daily-stock-market-activity.html?partner=rss&emc=rss

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Canon Forecast Falls Short of Expectations

January 30, 2013 by Leave a Comment

TOKYO — Canon expects a 26.6 percent increase in operating profit this year as it cuts costs and increases revenue — but the projection Wednesday still fell short of analysts’ expectations.

Canon, a camera and printer maker considered a leader in profitability in corporate Japan with its aggressive cost-cutting, is angling for a foothold in the growing market for mirrorless cameras with interchangeable lenses, where it faces stiff competition from Sony, Olympus and Nikon.

Canon’s operating profit for the three months that ended Dec. 31 fell 17.9 percent, to ¥77.7 billion, or $853 million, below the average estimate of ¥100.9 billion among seven analysts surveyed by Thomson Reuters I/B/E/S.

“Both its full-year earnings and forecast are below market consensus, so the results were seen as negative,” said Makoto Kikuchi, the chief executive of Myojo Asset Management. “Investors have bought Canon on overly high expectations that a weaker yen will lift its bottom line, but such excitement should recede.”

Demand for compact cameras is shrinking as consumers shift to smartphones, while stretched budgets among customers in Europe have eroded sales of Canon’s office printers. And the company, which derives 80 percent of its revenue from overseas, was badly hit by the firmness of the Japanese currency last year. Canon officials said Wednesday that economic recovery in India and China, as well as aggressive economic stimulus policies in Japan, were likely to support the company’s earnings.

The company set its exchange rate assumptions for the business year ending in December at ¥85 to the dollar and ¥115 to the euro, weaker than the average last year of ¥79.96 per dollar and ¥102.8 per euro.

As one of the first blue-chip Japanese companies to report quarterly results, Canon is often seen as a barometer for technology sector earnings.

The company forecast a full-year operating profit of ¥410 billion for the current year through December, compared with the average expectation of a ¥443.3 billion profit among 21 analysts, according to Thomson Reuters StarMine.

Canon’s shares have fallen about 1 percent since the start of last year, underperforming the Nikkei average’s gain of 31 percent. The shares slipped to a three-year low in July, when Canon cut its outlook on fears of shrinking demand in China.

The stock ended nearly 3 percent higher Wednesday before the earnings announcement.

Xerox, with which Canon competes for a share of the global printer market, overshot expectations with its quarterly earnings and maintained its full-year targets as it restructures parts of its business and commits to further cost cuts.

Nikon is due to report its results next Wednesday, with Sony following the next day.

 

 

Article source: http://www.nytimes.com/2013/01/31/technology/canon-forecast-falls-short-of-expectations.html?partner=rss&emc=rss

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Tiffany Reports 30% Drop in Third-Quarter Income

November 30, 2012 by Leave a Comment

The jewelry company’s results missed Wall Street’s expectations, and it cut its full-year earnings forecast. Its shares dropped 6.2 percent.

For the quarter ended Oct. 31, Tiffany earned $63.2 million, or 49 cents a share, compared with $89.7 million, or 70 cents a share, a year earlier. Analysts polled by FactSet had forecast earnings of 63 cents a share.

Tiffany’s chairman and chief executive, Michael J. Kowalski, said in a statement that the company had expected its quarterly results would be affected by continuing economic softness and comparisons with the year-earlier quarter. But he added that the retailer’s gross margin rate of 54.4 percent — down from 57.9 percent in the prior-year period — was weaker than expected and its tax rate was higher than expected. Gross margin, a key performance metric, is the amount of each dollar in revenue a company actually keeps.

While cautious about worldwide economic conditions, Mr. Kowalski said the company anticipated that its results would improve during the holiday season, partly because of easier year-over-year sales comparisons but also because of new stores and new products.

The holiday season is critical for retailers, as it can make up to 40 percent of stores’ annual revenue.

Tiffany’s revenue increased 4 percent, to $852.7 million, in the third quarter, from $821.8 million a year earlier. Wall Street had expected revenue of $858.8 million in the latest period.

Tiffany now expects 2012 earnings of $3.20 to $3.40 a share. Its prior outlook was for earnings of $3.55 to $3.70 a share. Analysts are predicting earnings of $3.59 a share.

Tiffany shares dropped $3.93, or 6 percent, to close at $59.80.

Article source: http://www.nytimes.com/2012/11/30/business/tiffany-reports-30-drop-in-third-quarter-income.html?partner=rss&emc=rss

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Citing Weak Global Growth, FedEx Cuts Its Profit Outlook

September 23, 2011 by Leave a Comment

Frederick W. Smith, the chief executive, said he did not expect economic conditions to improve much any time soon, although he did not expect the United States to dip back into recession.

“We expect sluggish economic growth will continue, largely due to a lack of confidence that U.S. and European policy makers will effectively address current economic challenges,” Mr. Smith said in a conference call to discuss quarterly results.

With inventories low, FedEx expects to benefit if there is an uptick in demand in the run-up to the holiday shopping season and retailers need fast delivery. Much is also riding on robust online orders. But for now, things remain subdued.

The sheer volume of goods moved by FedEx makes its shipment trends a bellwether for consumer demand and economic growth. The value of packages handled by FedEx’s trucks and planes every year is equivalent to about 4 percent of United States gross domestic product and 1.5 percent of global G.D.P.

The company so far has had little resistance to rate increases, the latest of which went into effect this month.

FedEx reiterated its $4.2 billion capital expenditure plan for the year ending next May. The company is considering buying about 50 wide-body freighters from Boeing and Airbus to update its fleet to more fuel-efficient models.

FedEx said fiscal first-quarter profit, which slightly beat forecasts, rose to $464 million, or $1.46 a share, from $380 million, or $1.20 a share, in the period a year ago. Analysts, on average, had expected a profit of $1.45 a share, according to Thomson Reuters.

The company cut its forecast for earnings for the year to May 2012 to $6.25 to $6.75 a share from its June estimate of $6.35 to $6.85.

Revenue rose 11 percent, to $10.52 billion, from $9.46 billion a year earlier. That was above the average forecast of $10.32 billion.

Shares of FedEx fell $5.92, or 8.2 percent, to $66.58..

With the stock down about 30 percent this year, FedEx said it planned to buy back 5.7 million shares under its existing repurchase authorization.

Article source: http://feeds.nytimes.com/click.phdo?i=1ff0b6af1ac5ab0e1d075bb795e9d3e4

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