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Stock Prices Jump in Early Trading

Posted on: Wednesday, 31 May 2006, 09:00 CDT

NEW YORK - Stock prices are jumping in early trading. The Dow Jones industrial average is up 43.38, the Nasdaq Composite has climbed 11.14 to 2,175.88 and the S&P 500 index has gained 5.08 to 1,264.92.

U.S. stocks tumbled Tuesday, with the Dow industrials losing 184 points, pressured by declining consumer sentiment and a disappointing May sales update from Wal-Mart Stores.

One of Wal-Mart's rivals, Costco Wholesale, released results early Wednesday, saying third-quarter ending May 7 net income rose 12 percent to $235.6 million, or 49 cents a share, with revenue up 11 percent to $13.27 billion. Analysts polled by Thomson First Call were looking for earnings of 50 cents a share on revenue of $13.13 billion.

The Issaquah, Wash.-based retailer also said May comparable-store sales rose 10 percent, with international comparable-store sales up 17 percent and U.S. comparable-store sales up 9 percent.

But Wednesday's focus will be as much on inflation as the state of the U.S. consumer, with the release of the minutes from the last Federal Reserve meeting.

Markets around the world have been in a tailspin since the last Fed interest-rate hike, in which the Fed lifted rates to 5 percent and left markets in the dark as to whether it would go for 17 rate hikes in a row. The minutes are due at 2 p.m. EDT.

On the data front, a survey of Chicago-area manufacturing is expected to show slowing economic growth.

The dollar edged lower, notably against the Japanese yen. Gold futures also were slightly weaker, though Goldman Sachs raised its coverage view on gold to attractive from neutral, citing strong gold fundamentals and its belief that the performance gap between gold price and equities should close as companies address supply challenges.

Crude-oil futures weakened in electronic trade, with July crude falling to the low $71-a-barrel level, a day ahead of weekly inventory data figures.

On the mergers-and-acquisitions front, Mirant Corp. said its $8 billion buyout offer for NRG, a fellow formerly-bankrupt electrical power generator, was turned down.

ADC Telecommunications agreed to buy Andrew Corp., with each Andrew holder entitled to swap each share they own for 0.57 an ADC share. The deal would value Andrew at $1.5 billion, based on Tuesday's closing prices. ADC will also assume Andrew's debt.

Falconbridge said it continues to support the buyout bid of fellow Canadian miner Inco, and not that of 20 percent holder Xstrata.

French-Belgian bank Dexia said it's agreed to buy 75 percent of Turkish bank DenizBank AS for $2.4 billion.

The pharmaceutical and biotech sector could see activity following the Food and Drug Administration approving Omnitrope, a hormone used to treat growth disorders. Novartis' Sandoz, the maker of Omnitrope, said the case establishes a precedent to allow generic biotechnology drugs. The FDA issued a statement, however, specifically denying that Omnitrope is a generic biologic. Pfizer Inc. is the maker of a similar hormone to Omnitrope.

Overseas, the Nikkei 225 skidded to a three-month low, while European equity markets shook off early losses to break a two-session decline.

Source: Associated Press/AP Online

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