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Today's WrapUp by Jim Puplava 02.11.2004 Mon Tue Wed Thu Fri Archive |
"Appropriate"
Greenspan’s description of U.S. interest rates was in stark contrast with the theme made just two weeks ago. Today’s remarks boosted speculation U.S. yields will remain lower than in the euro region and other major economies such as the U.K., driving the U.S. Dollar to within a cent of a record low versus the euro. The testimony today before the House Financial Services Committee indicated that the dollar’s decline should eventually help contain our current account deficit and noted, “Looking forward, the prospects are good for the sustained expansion of the U.S. economy, however risks remain.” Plenty of sound bites for the market watchers to trade debt, dollars and commodities, and trade they did.
In the day’s biggest corporate development, cable leader Comcast made an unsolicited bid to buy Walt Disney for $54 billion plus the assumption of debt after failing to engage Disney chief Michael Eisner in private discussions of a potential merger, sending shares of the media giant up 14.6 percent. The bid by Comcast overshadowed Disney’s release of its first quarter earnings. The company said it earned 33 cents a share, up from 2 cents a share in the same quarter a year ago. The Thomson First Call average estimate was for earnings of 23 cents a share. Revenue climbed 19 percent to $8.549 billion from $7.170 billion. The bid from Comcast essentially rained on Michael Eisner and the board’s hopes of showing a turnaround in Disney’s financial performance.
In other earnings news, Dow component Coca-Cola reported its fourth quarter net income of 38 cents a share, with revenues of $5.18 billion, ahead of analyst forecasts of $5.03 billion. Corporate earnings continue to impress investors, however, one must be careful as many of the companies showing strong numbers are multination companies that have benefited greatly from the precipitous drop in the US Dollar versus foreign currencies, Coca-Cola included. Looking to tomorrow Dell reports their much anticipated and talked about earnings report.
Financial Markets
The Dow Jones Industrial Average ended the day up 123.85 points, or 1.2 percent, at 10,737.70 while the Nasdaq Composite Index lifted 14.33 points, or 0.7 percent to 2,089.66, their highest closes since June 2001. The S&P 500 lifted 12.22 points, or 1.1 percent to finish at 1,157.76. Advancing stocks outnumbered decliners 1,939 to 1,249 on the New York Stock Exchange and 1,647 to 1,443 on the Nasdaq. About 952 million shares had changed hands on the Big Board while volume stood at nearly 1.3 billion shares on the Nasdaq.
In the commodities market, gold futures gained more ground following Greenspan's comments. The April contract closed up $3.70 at $410.70 an ounce on the New York Mercantile Exchange. Crude for March delivery added 13 cents to close at $34 per barrel and the euro jumped more than 1 percent to 1.2811 in afternoon U.S. trading, while the greenback dropped 0.2 percent vs. the yen, changing hands at 105.36 yen.
Treasuries
U.S. Treasury prices turned higher after the Fed chief told lawmakers the central bank could be patient because inflation remains low. The benchmark 10-year Treasury note closed up 23/32 at 101 26/32 to yield 4.02 percent vs. 4.13 percent at the previous U.S. close.
European Markets
European stocks rose as the Dow Jones Stoxx 50 Index added 0.1 percent to 2730.24 after gaining as much as 0.5 percent and falling 0.4 percent. The Euro Stoxx 50, a measure for the 12 euro countries, advanced 0.3 percent. The Stoxx 600 increased 0.2 percent. Benchmark indexes rose in 13 of the 17 Western European markets. Germany's DAX Index and France's CAC 40 Index gained 0.3 percent, while the U.K.'s FTSE 100 Index lost 0.2 percent. March futures on the Euro Stoxx 50 advanced 0.1 percent.
Asian Markets
Asian stocks such as Samsung Electronics Co. may gain on optimism U.S. Federal Reserve Chairman Alan Greenspan will affirm expectations of stronger economic growth in Asia's biggest export market later today. Japan's stock market is closed today for a holiday. The Morgan Stanley Capital International Asia-Pacific Index yesterday added 0.1 percent to 89.05.
Scott Middleton
© 2004 Scott Middleton
February 11, 2004
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