The U.S. stock market took a one-day tumble that wiped out most gains this year after Chinese stocks fell to their lowest point in a decade a day before our session ended February 28, 2007. U.S. sales of existing homes jumped in January, and consumer confidence numbers rose higher than expected in the same month, but it was not enough to moderate the system-wide tumble, blamed in part on computer glitches brought on by heavy trading in the wake of a global sell-off.
A day earlier, former Fed chief Alan Greenspan said that the economy may be on its way to a recession. Correction had been the word whispered on Wall Street because of the robust run up in stocks. “Corrections usually happen because of a catalyst, and this may be it,” said Ed Peters, chief investment officer at PanAgora Asset Management. “The move in China was a surprise, and when a major market has a shock it ripples through the rest of the market. With all the trade that goes on with China, there tends to be a knee-jerk reaction with that kind of drop.”
Stocks ended with a downward trend, although the tech-heavy Nasdaq managed to end in the positive column. The PCI Suppliers’ Index lost ground, shedding 30.27 points, or 2.78 percent, and closing at 1056.61. Advancing issues easily outpaced declining issues at a 26-to-10 count.
Albemarle was one of the stocks with its head in the stratosphere as it added 10.16 points, or 14.15 percent to end at 81.96. Albemarle’s earnings for the fourth quarter rose to $63 million, or $1.29 per share, nearly doubling from net income of $32.2 million, or $0.67 per share earned in the year-ago period. The company hit a new 52-week high following the announcement, and Bank of America analyst Kevin McCarthy said in a research note that it is the fifth consecutive quarter that Albemarle has trumped analysts’ estimates. Albemarle was the top dollar gainer for the suppliers this session.
Shares of TOTAL crumbled after net income for the company dropped in its fourth quarter. TOTAL earned €2.23 ($2.9 billion) in the quarter, down from €2.34 billion earned in the same quarter last year; the company cited lower hydrocarbon output, lower oil prices and higher exploration costs. However, TOTAL said strong production growth is expected for 2007, and said it will invest $16 billion for the year, up from $14 billion in 2006. TOTAL shed 4.30 points, or 6.00 percent and was the top dollar loser. TOTAL closed at 67.32.
Omnova surged this session on its fourth quarter profit, as it reported fourth-quarter net income of $17 million, or $0.41 per share, compared to net income of $4.1 million, or $0.10 per share in last year’s fourth quarter. The results include a $0.43 per share gain on the sale of Omnova’s building products unit for $36.4 million. The sale offset sharp rises in the cost of raw materials. Analysts surveyed by Thomson Financial were expecting earnings of $0.03 per share, on average. Omnova was the top percentage gainer, with an increase of 32.75 percent. Omnova was up 1.50 points on the session, and closed at 6.08.
Shares of X-Rite lost 1.12 points, or 9.11 percent, and ended at 11.18. X-Rite sold its Labsphere unit, a division making light measurement and sensor calibration equipment, to U.K.’s Halma, Plc, for about $15 million in cash. X-Rite also announced that it will suspend its quarterly stock dividend indefinitely, effective immediately, to pay down debt and for product and market development.