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.