Market briefing --- Mate (slow)
Exxon Mobil --- Su (fast)
NYSE --- Deb (fast)
welcome to “world financial report.” i’m matt nesto, getting right into it with breaking news here. the bank of new zealand raises its key interest rate a quarter point to 6%, that, of course, coming just seconds ago. earlier today, crude oil futures in new york trades rose to a record high on concerns about supplies. yukos, the largest russian oil company, says the government there ordered a halt to production from its main siberian unit. a russian court is seeking to recover $3.4 billion in back taxes and fines from the oil company. the order forbids it from production units or forbids its prux units from selling any property. oil is still flowing, however, at a rate of 1.6 million barrels a day. the chief executive says rail shipments to china may stop next week because the company can’t access its bank accounts. shares have fallen now for three straight days. the stock has given back 65% this month as investors speculate that the company could be―could soon be bankrupt and see its assets sole. russia is the world’s largest oil exporter after saudi arabia. economists say high oil prices are a negative drag on growth. every $10 of price or every $10 price move in a barrel of oil can reduce g.d.p. by about half a percent. that’s according to the american petroleum institute. interestingly, we’re talking about the american petroleum institute and we did get their weekly supply data out today, along with that from the department of energy. i’ve got a chart here. it is going back to 1999. and what we had was actually a mixed data from the two―the two entities, the department of energy reporting that oil inventories actually rose. if you look closely, you can see that tiny little uptick in the white line in the d.o.e. data up 1.2 million to 300 million. a.p.i., the orange line, said their supply data showed a three million barrel decrease. the net result there leaving them at 298 million. now the big picture is we see both at 298 and 300 million. both if you go from a year ago back to here, middle of july, both would indicate supply levels up about 8.5% to 9% year on year. but clearly down since the recent peek that we hit in june. also on the energy beat today, the record prices, of course, are pushing profits higher. conoco phillips saying second quarter net income was up 75%. chevron texaco announcing a two-for-one stock split and increasing its dividend. and many are expecting that exxon mobil will do the same when it reports and su keenan is here with details. the same as in split or the same as in profits?
>> yeah. in the dividend. we shall see. with crude oil futures trading in prices never seen before on the new york mercantile exchange, investors are preparing for what may be exxon’s profitable three months on record. the company is clearly benefiting from the pass quarter’s increase in oil futures, up one third compared to a year ago. there’s also been the growing demand for fuel. the expanding u.s. economy has seen trucking companies, railroadses, airlines and motorists all spend more on gas and fuel. the numbers, exxon mobil’s profit expected to surge by one-third to almost $5.8 billion or 88 cents a share. chevron texaco is expected to post a profit of $2.72 when it reports on friday. deutsche bank’s paul fanke says while there’s been little growth in production at these companies, the boost in oil price is having an impact.
>> also because of very strong demand for oil, very, very high refining margins and you are seeing record profits yesterday from b.p., a very big number again from conoco and the other oils going forward.
>> let’s take a closer look at conoco. today they reported a 75% increase in second quarter profit. the nation’s largest oil refiner says it’s using the extra money to pay down debt and fund the exploration products in countries such as vietnam. conoco phillips earned $2.97 per share, as you can see, that’s four cents above the average analyst estimate. sales rose to almost $32 million billion. and while shares traded lower today, they have gained 16% year-to-date. exxon mobil shares have gained almost 12% so far this year. investors expect the company to follow the lead of its rivals in offering a dividend and buying back stock. yesterday after reporting its second highest profit on record, british petroleum did both, boosted the dividend, announced plan for a buyback. daryl hodges of hodges capital management, sees the energy stocks continuing to move higher.
>> in a market where there are not too many stocks going up and there seems to be a general melees in the market , i think just a good place to be is in oil stocks. and i think the likelihood of them finishing the year higher than they are right now is very good.
>> and while higher profits are expected this quarter and for the full year, many analysts and investors tell us earnings for energy companies are expected to be lower next year. matt?
>> i think exxon, it has been three years since they last split.
>> we’ll have that tomorrow.
>> good stuff. thank you, su. appreciate it. let’s give you if closing numbers on wall street today. what’s going to stand out in the mind of traders that lived through it is a comeback. 100 points in two hours brought the dow up .3%. the final two hours. so, you see the s&p little changed on the day. the nasdaq, though, struggling down .6%. volume at the big board a little on the light side, 1.5 billion down there or the nasdaq, similar story, a little bit higher, 1.8 billion shares. on to bonds we go, they were up today. weaker than expected durable goods pushing those prices higher. yields down 4.58% for a 10-year at five, 3.8% and the two-year will yields you 2.73%. that turnaround was done on above average volume today. deborah kostroun at the big board with details. an interesting day.
>> it certainly was. even though we started out the day a little bit negative and that, of course, on the durable goods orders came in less than expected. crude oil at record-high prices and even though crude oil was higher, transports also performing quite well f. you take a look at the transports and what led the transports higher, it was really the railroad stocks. norfolk southern, they reported earnings, had higher second quarter profit really aided by rising shipments. also, their main rival in the u.s., crfments s.x., they reported lower earnings because of delays and also a drop in income from their property sales. but actually both companies hauled more freight. if you want to take a look at an expanding economy, take a look at the railroadses to see how many things are transported. so, it looks like for the second quarter, the railroadses performing quite well. also, this leadses us into the cyclical stocks. the railroadses considered cyclical stocks and they performed quite well today and the railroadses part of that picture. and also u.s. steel. they got an upgrades today from prudential and prudential saying that u.s. steel is benefiting from steel prices this year. in fact, the s&p steel index coming in at a five-year high. also, media stocks on the losing end and that on time warner’s -- that’s the cyclical index. taking a look at the media index, time warner’s revenue actually rose on higher sales of its cable tv channels and film studios. helped by sales of the “lord of the rings” d.v.d.s and also their box office revenue from “harry potter and the prisoner of azkaban.” however, their second quarter net income fell 27% from a year ago. so, some of the media stocks, those were the second worst performers in the s&p 500 on the day. now the worst performer in the s&p, that was the s&p commercial services index and that was really led lower by allied waste industries. the allied waste is the second largest trash hauler. that stock falling, as you can see, almost 21% to their lowest level in more than a year. the company reported earnings and also a loss of $15.2 million for the second quarter. also four analysts cut their ratings on that stock. semiconductors, also we’ve been focusing in on semiconductors for quite some time. semis actually ended up the day, seeing the markets . the market trended upwards, so did semiconductors. l.s.i. actually fell, though, after the company said they will have a third quarter profit. however, that was less than some analyst estimates. but all in all, matt, many traders feel like it was a positive day. really coming on the heels of a very positive move yesterday. so, two days in a row in gains for the dow and the s&p. back to you.
>> thank you very much. i’ve got more headlines for you here, folks. we have s.b.c. communications is going to sell its stake in the illinois-indiana phonebook directory partnership to its partner, r.h. donnelley for $1.45 billion in cash. s.b.c. says it depm expects to net $850 million profit on that deal. how much of an impact is that oil price going to have on the economy? that’s what we’ll take up next with kurt carl.
