The Dow Industrials kept climbing into new territory
during our session ended April 30, 2007, boosted by earnings news and only
slightly cowed by an April drop in consumer confidence brought on by high oil
prices. Despite strong earnings news and an unexpected, if small, increase in
housing starts, investors traded in a narrow range and many viewed market
increases warily. “What the market is always going to ask is, what have you
done for me lately?” said Alan Gayle, senior investment strategist at Trusco
Capital Management. “The good earnings news has at least to some degree been
reflected in stock market prices – companies are going to have to continue
generating these good numbers to see the market go higher.”
The
PCI Suppliers’ Index followed
its cousin, the Manufacturers’ Index (see May issue), into robust terrain. The
index increased 79.82 points, or 7.54 percent, to close the session at 1138.43.
Advancing issues handily outpaced declining issues by a 2-to-1 margin. BASF,
Altana and Bayer were the heavy hitters in the chart, each increasing by more
than 10 points this session. Albemarle (NYSE: ALB) had a 2-for-1 stock split
effective March 2, 2007.
Shares of BASF tore ahead after the company reported first quarter profit ahead
by almost 9 percent, upped by its acquisition of Englehard last year. The
company earned €1.04 billion, or US$1.42
billion, compared to €950 billion earned in the same quarter last year.
Analysts surveyed by Dow Jones Newswires had expected earnings of €920 billion, or US$1.26
billion, on sales of US$19.74 billion. BASF reported sales of US$19.97 billion
for the quarter. “The good start in the first quarter confirms our positive
outlook for 2007,” said BASF CEO Juergen Hambrecht. “We expect significantly
higher sales based on organic growth and the acquisitions made in 2006.” BASF
also rose on rumors that the company may be a takeover target. BASF leaped
17.04 points, or 16.74 percent, and was the top dollar gainer. BASF closed at
118.81.
Ashland stumbled on news that its fiscal
second quarter earnings were flat. Net income for the quarter was $49 million,
or $0.77 per share, versus $49 million, or $0.67 per share earned in the
year-ago quarter. Gains in the company’s Valvoline and water technologies
segments were dampened by softness in other divisions. Ashland lost 5.55
points, or 8.47 percent, and closed at 59.95. Ashland was the top dollar
loser.
Shares of Altana jumped after the company reported a first quarter
profit that more than doubled from the last-year quarter, and beating analysts’
expectations. Altana earned €50 million, or US$68.24 million, compared to €19 million earned in the
comparable quarter last year. Analysts surveyed by Dow Jones Newswires had
expected earnings of €46 million, or US$62.79 million. Sales were up 7
percent for the quarter. The company said it also plans to delist from the New
York Stock Exchange. Altana grew by 14.50 points, or 23.92 percent, and was the
top percentage gainer this session. Altana closed at 75.13.
