After the bell --- Lori (fast)
Metal stock --- Bob (fast)
NYSE --- Deb (fast)
-- oil at a two-month high, gold hitting $600 an ounce and all of this ahead of tomorrow’s merch march jobs report. the oil rally continued, prices rose to a two-month highs on concern about gasoline supplies as we approach the summer driving season. many refineries in the gulf of mexico have been shut down for maintenance so a lot of production has been off line. analysts are concerned that once refineries are back up and run being, they will not keep up with demand. crude oil futures for may delivery rose more than 1%, $67.94 a barrel. gasoline up 2.71%, the highest price since october 4, 2005. metals took their due from -- cue from energy today, gold, copper, even zinc. bob bowden has more.
>> even a huge game in a borilium stock. metal stocks rallying today. some of the gold stocks lifted in this thursday session. golden star up 6% on the day, barrick gold almost 3% and newmont mining, 1.5%. copper prices, that up 2.3%, rising to a record as global inventories dwindled in copper. and a mine closure curbed publication. • curbed production. many copper stocks rallied like southern peru. phelps dodge was down 1% but this is a stock up 9% in the three preers sessions -- previous sessions before today. the stock is up 20% year to date, phelps dodge. look at zinc futures, up 1% on the day and so really a number of metals, this is to a record level in zinc prices, as well. while i’m talking about that, let’s look at steel stocks, rallying today. checking on those prices on the day, pulling those up now, steel stocks in a moment for you -- u.s. steel up 3.65%, carpenter up 3.34% and a.k. steel up 2.26%. the supercomposite index, with the borilium stock up 12%. if i can sort under year-to-date performance, wanted to show you these stocks. chaparral steel up, better than doubling, 128%. allegheny, century aluminum and nucor up 66%. steel dynamics, 65%. turning to the second page, these are the worst -- 23 members in the index. one stock, steel technologies down 11% year to date. all the rest are rallying, even alcoa up almost 9% on the day and notably, u.s. steel up 35%. just to show you it’s not just today, although today a big steel rally, it’s just a continuation of the 2006 metals rally. lori?
>> bob bowden, thanks so much for that. breaking news from constellation brands, the beer and winemaker, with fourth-quarter earnings per share 36 cents, in line with analysts’ estimates. revenue, $1.3 billion, ahead of forecasts, and unchanged from the same quarter last year. guidance might be light here which may be why we’re seeing a decline in the shares. down 2.75% in the extended trading session. thomson financial’s first-quarter estimate, 33 cents a share. but the company saying they are looking for their first-quarter earnings per share to come in a range of 30 to 33 cents a share. we will keep you posted as for the developments occur. tomorrow, we want to remind you, we will take apart these numbers from constellation brands and look ahead to the company’s future with the chief executive who will join us to talk about that and the issues surrounding the company’s balance sheet. debt has swelled following a string of acquisitions so that interview friday morning 7:54 a.m. on “morning call.” and today a jury in atlantic city is deciding on punitive damages in the merck vioxx case. connell mcshane has the latest.
>> the former c.e.o. of merck on the stand today, ray gilmartin. he’s retired but back in the hot seat taking a stand in an attempt to defend merck’s practices in researching and marking vioxx. there’s gilmartin on the way into the courtroom today. the man in the wheelchair, 77-year-old john mcdarby. yesterday, a jury awarded him $4.5 million based on claims vioxx led to his heart attack. they could award him up to five times that amount in punitive damages, an additional $22.5 million maximum on the line. gilmartin today spent most of the day defending studies merck had done over the years regarding vioxxment he was questioned by the lawyer mark lanier. here’s an example of how things went today, the questioning between lanier and gilmartin.
>> it’s more than some data because you look at these drugs through extensive studies and you have to look at all the studies taken together. it isn’t just one study.
>> but you should always err on the side of safety, shouldn’t you?
>> we do.
>> defending a lot of the studies merck has done in the past. we’ll see if we get a ruling late in the day or it may not come until tomorrow.
>> thank you for that. in spite of merck and the surge in oil and metals prices today, the stock market held up fairly well. straight to deborah kostroun standing by at the northork stock exchange.
>> and of course bob bowden was talking about gold. that was a big story and has been with all the metals. jack ablin, managing $48 billion with harris private bank in chicago. he says gold is creating a psychological dark cloud over the market . he said with gold on the upside, inflation fears, the numbers we have tomorrow, in the jobs report, says it may clarify some of those concerns but at least for today the market retreating as gold rising to $600 an ounce. we also saw treasuries falling on concern that the fed will continue to raise interest rates. another thing we saw, the 10-year yield back near a four-year high in today’s session. the thing we’ll be watching tomorrow―some traders telling me they’re waiting on the jobs report tomorrow. we’re expecting 190,000 jobs to be added but that just tells us that the job market is robust right now and also gives the fed more fuel to the fire to continue to raise rates. laggards in today’s session, utilities, of course, interest-rate-sensitive and we’ve been seeing the utilities going down mainly as the yield on the 10-year neither that four-iary high. telecom, healthcare also lower. we saw records in today’s session. picking up near the close, you saw the midcap, the russell 2000, transports and the morgan stanley cyclical index. the market hitting its low about 12:30 today and moving higher then taking some dips and turns. also, oil service stocks coming in at records through part of the session. however, schlumberger and weatherford closing lower but all of these did hit records today. in addition to that, with all of this talk about gold surpassing $600 an ounce, silver doing well. some of the copper stocks were mixed and some of the gold stocks―gold stocks performing quite well and other metals stocks doing well along with the materials. you did see some of the oil service stocks doing well as oil is at that two-month high.
>> thank you very much. we want to remain everyone, we’re still waiting for the latest earnings report from research in motion. fourth-quarter earnings should be out very soon. want to remind everybody, research in motion lowered its fiscal fourth-quarter outlook for earnings per share, revenue and subscriber growth back in early march after announcing their decision to settle the n.t.p. patent litigation for $612 million. those numbers as soon as they cross the bloomberg terminal. first, retailers out with march sales figures. many of them let investors down. we’ll tell you the extent of it on the other side of this break.
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Listen Interview: Chief Investment Officer of First Asset Management
>> u.s. retailers posted the worst sales gain in more than a year last month as cold weather, higher gasoline sales and a late easter limited consumer spending. another hit to retailers, easter falling in april this year so retailers lost the opportunity to push spring merchandise last month. piper jaffray analyst mitchell kaiser estimated that cut 2% off of sales for march. wal-mart, the world’s largest retailer, said comparable sales rose 1.4%, less than analysts’ estimates and the smallest gain in almost a year. wal-mart had forecast a march gain of 1% to 3%.
>> they’re struggling with their merchandizing. i don’t think the stores look very good and they’re not appealing and on top of that, their core consumer is really struggling. the low-end consumer is hit very hard by higher energy prices here and rising interest rates, as well, as that’s starting to roll over into mortgages, credit card rates, et cetera.
>> federated department stores, j.c. penney and gap, the largest u.s. clothing chain, fell short of estimates. even though today’s session finished a little lower, 2006, as we all know, is off to a solid start with more gains likely to follow. that latter statement is according to our next guest, joseph keating, chief investment officer of first asset management. joe joins us from birmingham. welcome. with oil pushing $68 a barrel and gold hitting levels not seen since 1981, do you think inflation concerns are weaving their way back into the market ?
>> i don’t. i think you really need to understand where the increase in commodity prices is coming from. it’s basically coming from china in particular. there are two sides to the china story. one, they’re taking in commodities at as fast a pace as they can in terms of the demand for the products they’re manufacturing but on the other hand they’re turning around and selling goods on the world market where the prices are falling. so if you look at inflation in terms of what’s going on with commodity prices, over the past couple of years, you’d be totally wrong because increase in commodity prices have not led to increases in final good prices.
>> a lot of the argument behind gold hitting $600 an ounce today is that it is a safe haven hedge against inflation.
>> that traditionally has been true, however, i think at the margin right now the demand from gold is coming extra the wealth creation going on in china and india and as their standard of living rises, there’s a demand for gold. at the margin, are some investors potentially concerned about geopolitical threats around the globe and maybe at the margin, threats about inflation? sure, and people could be moving in that direction but i think if you’re investing in gold as an inflation hedge right now, i think you might be disappointed.
>> we have breaking news, hold with us one moment. we want to bring our viewers up to date with research in motion’s latest earnings report. fiscal fourth-quarter earnings per share coming in at 65 cents a share. thomson financial analysts expecting 66 cents a share. revenue, $561.2 million. that is ahead of forecasts and the stock is down on the news about $4. we’ll bring you more detail on the research in motion earnings call later in the program. joe, i want to pick back up with our conversation. excuse the interruption. we have the jobs report coming out tomorrow. average hourly earnings, this has been a component, many economists and investors have been focused on as an inflation indicator, expected to rise .3% if it comes in higher, does it add to the case for the fed to raise interest rates?
>> most certainly it would, lori, in the short run. and really that is the biggest fear that we have for the economy and the outlook for the stock market . if the fed continues to raise rates above, say, 5%, which is pretty clear they’re going to go to on may 10, if they raise rates above that, you run the risk, when, with higher interest rates combined with higher energy costs, that we could just see a market slowdown in the economy and if that occurs, then you have a marked slowdown in the outlook for earnings and the stock market so it’s a dicey game in here right now relative to what the fed will actually do.
>> investors have proof that stocks can continue to rise under rising interest rates and higher oil prices. do you suppose today’s losses, albeit small, according to some assessments, might be a sign of an inflection point to the market or are you fairly confident the market can continue on these trends and resist those factors?
>> we think the market can go higher, lori. if you go back to the recent low in the market , which was back on october 13, we’ve had four interest rate hikes by the federal reserve since that point and the general market indices are up between 10% and 20% since that time. the reason, earnings have continued to grow nicely because the economy continues to grow. and that feeds back to my prior book. • prior point. if you see stock prices continue to grow, we need to see earnings continue to grow and that’s why what the fed does now over the next couple of meetings is so terribly important because if the fed goes too far, that will hurt the economy, earnings and the stock market . we don’t think the fed will go too far and earnings will continue to grow.
>> we’re running out of time. joseph keating, thank you very much for your analysis.
