By Steve Goldstein, MarketWatch
Dec 13, 2005
Traders largely kept to the sidelines on Tuesday ahead of a crucial
interest-rate decision in the U.S., with ConocoPhillips' $35.6 billion
acquisition of Burlington Resources mostly priced into the market after
word of the deal leaked over the weekend.
S&P 500 futures were up a half point at 1,269.70 and Nasdaq 100 futures
were up a half point at 1,717.5.
On Monday, the Dow industrials closed 10.8 points lower at 10,767,
pressured by losses for Merck after a mistrial of a Vioxx case, while the
Nasdaq Composite rose 4.2 points at 2,260 and the S&P 500 rose 1.1 points
at 1,260.
Trading is expected to be in a tight range until 2:15 p.m. Eastern, when
the Federal Reserve unveils what's expected to be another quarter-point
rise in interest rates to bring the federal funds target to 4.25%.
But markets will be focused on the accompanying statement, on whether the
rate is still called "accommodative" and whether the Fed will signify that
its rate hikes will continue at a "measured" pace.
Also on the economic front, retail sales are seen rising 0.5% in November
from a 0.1% fall in October, with data on inventories also due.
The dollar advanced on both the euro and the yen in European trade.
Front month crude oil futures were holding over $61 a barrel. The
International Energy Agency upped its forecast for 2006 demand and also
said demand in the medium term was "robust."
Of companies in focus, ConocoPhillips said late Monday it is buying
Burlington Resources for $35.6 billion to create the nation's largest
natural gas producer. The deal will help it move closer to challenging
Chevron Corp. for the No. 2 position among global integrated oil companies
based in the U.S.
Also in big oil, Royal Dutch Shell upped its 2006 capital expenditure
guidance to $19 billion from $15 billion.
Elsewhere, investment bank Lehman Brothers is expected to post earnings of
$2.64 a share on revenue of $3.64 billion, according to Thomson First
Call.
The Procter & Gamble Co. updated previously announced sales and earnings
per share outlook for the second quarter, seeing earnings and sales at the
high end of forecasts.
Cendant Corp. warned that fourth-quarter earnings from continuing
operations are expected to be 23 cents a share, at the low end of a 23
cent to 26 cents a share range, due to "continuing challenges" at its
travel distribution services business. In addition, Samuel L. Katz will no
longer serve as Chairman and CEO of Cendant's Travel Distribution Services
division, effective immediately, with Ronald L. Nelson taking over an
interim basis, and Henry R. Silverman will become CEO of the new Real
Estate Services division instead. If Cendant had remained together, it
estimates revenue and EBITDA growth, excluding the company's former
mortgage business, of approximately 10-12%.
Overseas, the Nikkei 225 ended slightly higher in Tokyo, while European
markets were edging higher as the U.S. open neared.
Broker calls
Citigroup said it is adopting a more conservative stance on the domestic
steel industry as it cut Nucor and United States Steel Corp to hold from
buy. The broker told clients that the market remains preoccupied with
runaway Chinese production, wide domestic price premiums over
international benchmarks and import threats. Citigroup said that while the
long-term outlook for the industry remains positive, it finds it difficult
to recommend that investors put new money to work at this time.
Deutsche Bank upgraded German conglomerate Siemens to buy from hold,
saying it is becoming more confident that Chief Executive Klaus Kleinfeld
is serious about improving the company's financial performance. The broker
raised its price target to 85 euros from 65 euros. Deutsche Bank also told
clients it estimates there's a 75% chance that Siemens will exit its
business services and communications divisions within six to 12 months.
This MarketWatch news update is provided to you courtesy of Thomson
Financial.
This is Thomson Financial's Market Commentary, which is issued three times
daily; Pre-Open ( 9:00 a.m.), Post-Open (10:15 a.m.), and Close (5:00
p.m.). The information herein is believed to be true and accurate. We
take no responsibility for inaccurate information and reserve the right to
update our reports. If you have any questions please e-mail James Sang at
james.sang@tfn.com or call 646.822.6233. For more information about
Thomson Financial visit us on-line at http://www.thomsonfinancial.com. For
more financial information at your fingertips, please visit
http://www.irchannel.com.
SOURCE Thomson Financial Corporate Group
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