• The World Trade Organization (WTO) has published a new draft of plans for a global trade deal that will be discussed the next time world trade ministers meet, BBC News reported. Although the plan doesn’t change existing tariff or subsidy cuts, it does offer some compromises and clarifies some key “sticking points.” Negotiators hope to have a deal closed by the end of the year.

• Battered by increasing steel costs and dampened consumer demand due to high gas prices, Ford Motor Co. (F) announced yesterday (Thursday) that it would not be able to meet Chief Executive Officer Alan Mulally’s goal of returning to profitability by 2009, Bloomberg News reported. North American vehicle production will be cut throughout the rest of this year due to “the rapidly changing business environment in the [United States],” a company statement read.

• First-time jobless claims fell 9,000 to 365,000, from a revised 374,000 the previous week, the Labor Department announced yesterday (Thursday), Bloomberg News reported. The decline was unexpected and indicates that companies are responding to the current U.S. economic slowdown by curtailing hiring, while trying to maintain current employees.

• Hong Kong’s Hang Seng index hit a one-month closing low yesterday (Thursday) in reaction to the declines in the U.S. markets. Oil firms Sinopec Shanghai Petrochemical Co. (ADR: SHI) and PetroChina Co. Ltd. (ADR: PTR) also weighed on the index. “Weak U.S. stocks and Beijing’s denial on an imminent deregulation of oil product prices hurt market sentiment,” Kenny Tang, associate director at Tung Tai Securities, told Reuters.

• Bookseller Barnes & Noble Inc. (BKS) yesterday (Thursday) reported a loss of $2.2 million, or 4 cents per share, for its fiscal first quarter ended May 3, compared with a loss of $1.67 million, or 3 cents per share, for the same period in the prior year, Reuters reported. Barnes & Noble reduced its full-year outlook based on the difficult economic environment and announced it would consider “the feasibility of a transaction” with rival Borders Group Inc. (BGP).

• The American Petroleum Institute, the trade group for major oil and natural gas companies, spent nearly $1.3 million in the first quarter to lobby on fuel economy standards, appropriations bills, and other issues, the Associated Pressreported. The API also lobbied on various pieces of legislation dealing with oil taxes and fees, renewable fuel standards, climate change, offshore drilling and more, according to the form posted online April 21 by the House clerk’s office.

• Bill Miller, portfolio manager at Legg Mason Capital Management, has not signed on to the Yahoo! Inc. (YHOO) investor coup being led by Carl Icahn. However, in an interview at a New York conference Wednesday, Miller, whose fund controls a 5.4% stake in Yahoo, said he wants Microsoft Corp. (MSFT) to reopen talks to buy Yahoo outright and not simply forge a joint venture. “It is a strategic imperative for Microsoft to change its position,” Miller told Reuters after speaking at the hedge fund conference.

• The International Energy Agency announced yesterday (Thursday) that it is studying depletion rates at about 400 oil fields in its first-ever study of world oil supply. The Paris-based group said the study, to be released in November, was prompted by concern about the volatility of world oil markets and uncertainty about supply levels.

• The spinal-products unit of medical-device maker Medtronic Inc. (MDT) will pay $75 million to settle accusations that it defrauded Medicare by telling doctors to bill in-hospital stay – even when a cheaper outpatient visit would have done the job, The New York Times and The Associated Press both reported. Originally, the accusations had been leveled against Kyphon Inc., which Medtronic spent $4.2 billion to buy in November.

Source: Global Investing Roundups: Friday, May 23rd, 2008

Chirowth this year – and that’s after China’s government has taken steps to slow the country’s economy down. Other Asian countries such as India, Vietnam and the Philippines are following in near lockstep.

“Investors who abandon China now will live to regret their decision,” Money Morning Investment Director Keith Fitz-Gerald said. “China will continue to grow for decades to come. And that’s after nearly 30 years of double-digit growth that country has already logged into the history books.”

China Profit Plays

With many indices beat down significantly by the Asian bubble burst and global credit crisis, now may be a time for investors to get in while prices are significantly reduced from their 52-week highs.

However, economic underpinnings are still uncertain – both in Asian and U.S. markets. And only the strongest companies are best suited to grow during good times and bad.

A still-weak greenback will make brand-name imports [both products and services] even more popular in China. And rapidly growing consumer income will give China’s increasingly image conscious consumers the cash to buy them with.

We’ve been predicting that these two trends would converge for some time. That’s one reason why, all the way back in September, we said that brand-name companies such as MGM Mirage (MGM) were actually high-profit plays on China. And we still feel that way.

So the bottom line is that if controlling risk is key to your overall investment strategy, as you sift through China-oriented investment opportunities, look for companies that generate revenue and profit “because” of China including those that are based in more-highly regulated markets such as the United States and Europe.

Look, too, for companies with a solid dividend yield because the cold hard cash you receive can go a long way towards reducing your downside.

Consider the so-called “Global Titans,” including PepsiCo Inc. (PEP), Diageo PLC (DEO), Yum! Brands Inc. (YUM), McDonald’s Corp. (MCD), The Coca-Cola Co. (KO), The Boeing Co. (BA), and a few others.

Every investor must have a China strategy these days.

And while choosing to sit on the sidelines is certainly a viable decision, longer term it’s probably just not a profitable one.

At midday in New York, the blue-chip Dow Jones Industrial Average Index was down 76.86 points (-0.60%), to trade at 12,748.16. The tech-laden Nasdaq Composite Index shed 17.41 points (-0.72%), to reach 2,390.63. And the broader Standard & Poor’s 500 Index decreased 8.41 points (-0.61%), to hit 1,379.76.

Most sectors were down, with the energy sector (up 0.43%) and the basic materials sector (up 0.08%) posting the only gains. The consumer cyclical sector (down 1.75%) and the technology sector (down 1.12%) had the largest declines.

“Earnings and earnings estimates are coming down,” Mike Ryan, the New York-based head of wealth management research for the Americas at UBS Financial Services Inc., which oversees about $734 billion, said in an interview on Bloomberg Television. “We’re likely to see stocks continuing to be under pressure” in the first half of 2008.

Despite a 24% increase in profit, McDonald’s Corp. (MCD) slumped after it announced a slight decrease in same-store sales for March.

Shares of UnitedHealth Group Inc. (UNH) and Texas Instruments Inc. (TXN) were also down sharply after announcing first quarter results.

In overseas markets earlier today, Japan’s Nikkei 225 Index lost 1.1% with a decrease of 148.73 points to close at 13,547.82. Hong Kong’s blue-chip Hang Seng Index gained almost 1% with a 217.48-point climb, to 24,939.15.

European bourses were down, with the Paris-based CAC40, London’s FTSE 100, Madrid’s IBEX 35 and the Frankfurt-based DAX all posting losses.

At midday, the dollar had lost ground against the euro (down 0.457%) and the pound sterling (down 0.812%), but gained ground against the yen (up 0.204%).

At midday in New York, the blue-chip Dow Jones Industrial Average Index was down 40.87 points (-0.32%), to trade at 12,578.40. The tech-laden Nasdaq Composite Index dropped 20.58 points (-0.88%), to reach 2,329.53. And the broader Standard & Poor’s 500 Index decreased 6.31 points (-0.46%), to hit 1,358.40.

Most sectors were down, with the transportation sector (down 1.31%) posting the largest decline.

“Analysts are expecting a pretty dour earnings season, and so are portfolio managers,” Charles Reinhard, director of portfolio strategy at Neuberger Berman, a unit of Lehman Brothers Holdings Inc. (LEH) that manages $129 billion, said in a Bloomberg Television interview. “The market is discounting a lot.”

Pharmaceutical firm Pfizer Inc. (PFE) dropped after announcing a 19% drop in first quarter profits as generic drugs continue to take a hit on the drug giant’s bottom line.

But blue-chip technology stock, International Business Machines Corp. (IBM), gained after the Dow component announced a 26% increase in first quarter profit, beating analyst estimates, and boosted its outlook for full-year 2008.

“IBM beat revenue and earnings expectations substantially with strength across the board,” American Technology Research Analyst Shaw Wu told MarketWatch. “We find this quite impressive in light of the tough economic environment.”

In overseas markets earlier today, Japan’s Nikkei 225 Index gained 1.9% with an increase of 252.17 points to close at 13,398.30. Hong Kong’s blue-chip Hang Seng Index rose 1.6% with a 380.61-point increase, to close at 24,258.96.

In Europe, most major bourses were down, with London’s FTSE 100, Madrid’s IBEX 35 and the Frankfurt-based DAX all posting losses. Only the Paris-based CAC40 managed to eke out a slight 7.04-point gain.

At midday, the dollar had gained ground against the euro (up 0.251%) and the yen (up 0.778%), but lost ground against the pound sterling (down 0.811%).

“On Friday, we had the bad surprise from [General Electric Co. (GE)],” Ken Tower, chief market strategist at Covered Bridge Tactical, told MarketWatch. “But this week, we’re seeing investors pleasantly surprised that earnings overall are not as bad, supporting the view of a shallow economic decline instead of a more severe one.”

At midday in New York, the blue-chip Dow Jones Industrial Average Index was up 179.37 points (1.45%), to trade at 12,541.84. The tech-laden Nasdaq Composite Index gained 48.43 points (2.12%), to reach 2,334.47. And the broader Standard & Poor’s 500 Index increased 18.68 points (1.40%), to hit 1,353.11.

All sectors were up, with the basic materials sector (up 3.02%) and the technology sector (up 2.55%) posting the largest gains.

Intel Corp. (INTC) shares got a boost from strong first quarter sales results in Asia and Europe. Sales increased 9.3% to $9.67 billion, beating analyst estimates.

“These big market-share multinationals are still benefiting from economic growth outside the U.S.,” Keith Wirtz, Cincinnati-based chief investment officer at Fifth Third Asset Management, told Bloomberg News. “It tells me conditions are not all that bad on a global basis.”

March industrial production also rose slightly for the month with a 0.3% increase.

“The manufacturing sector may not be expanding but it is not contracting either, which is good news,” Joel Naroff, president and chief economist of Naroff Economic Advisors, said in a note to clients today.

In overseas markets, Japan’s Nikkei 225 Index gained 1.2% with an increase of 155.55 points to close at 13,146.13. Hong Kong’s blue-chip Hang Seng Index was relatively flat with a 22.98-point drop, to close at 23,878.35.

The FTSEurofirst 300 index of top European shares gained 1.6%. Other major European bourses were up, with the Paris-based CAC40, London’s FTSE 100, Madrid’s IBEX 35 and the Frankfurt-based DAX all posting gains.

At midday, the dollar had lost ground against the euro (down 1.072%), the yen (down 0.010%) and the pound sterling (down 0.785%).

At midday in New York, the blue-chip Dow Jones Industrial Average Index was down 25.57 points (-0.21%), to trade at 12,276.49. The tech-laden Nasdaq Composite Index dropped 6.65 points (-0.29%), to reach 2,269.17. And the broader Standard & Poor’s 500 Index decreased 3.31 points (-0.25%), to hit 1,325.01.

The basic materials sector (up 0.87%) and the conglomerates sector (up 0.61%) posted the biggest gains, while the capital goods sector (down 0.42%) and the technology sector (down 0.49%) posted the largest declines.

“The market is digesting the whole banking and financial issues, but the market has still to digest the recession story and how much of a damage to earnings we’ll get,” Owen Fitzpatrick, head of the U.S. equity group at Deutsche Bank AG (DB), told MarketWatch.

Tech shares such as Dow-component International Business Machines Corp. (IBM) and Cisco Systems Inc. (CSCO) were down. Intel Corp.’s (INTC) earnings release is slated for after the market the closes this evening.

Oil futures traded near $114 a barrel, boosting energy stocks such as Exxon Mobil Corp. (XOM) and Chevron Corp. (CVX).

In overseas markets early today, Japan’s Nikkei 225 Index gained 0.6% with an increase of 73.07 points to close at 12,990.58. Hong Kong’s blue-chip Hang Seng Index inched up 0.4% with a 90.13-point gain, to close at 23,901.33.

European bourses were up, with the Paris-based CAC40, London’s FTSE 100, Madrid’s IBEX 35 and the Frankfurt-based DAX all posting slight gains.

At midday, the dollar had gained ground against the yen (up 0.486%) and the pound sterling (up 0.540%), but lost ground against the euro (down 0.051%).

GE’s stock dropped more than 11%, and was trading at $32.50 shortly after noon EDT.

At midday today in New York, all three of the key U.S. stock indices were down by more than 1%.

The blue-chip Dow Jones Industrial Average Index was down 146.31 points (-1.16%), trading at 12,435.67. Of the 30 stocks in the Dow, 26 were down. The tech-laden Nasdaq Composite Index fell do 2,318.89, a drop of 32.81 points, or 1.4%. And the broader Standard & Poor’s 500 Index skidded 15.08 points (-1.11%), to hit 1,345.47.

The S&P is down 2.1% for the week, as this morning’s sell-off extended the worst weekly decline in a month.

The transportation sector (up 0.14%) posted the only gain, while the conglomerates sector that GE is part of had the biggest decline, plunging 5.60%.

“We are seeing the collateral damage to the economy,” Bill Strazzullo, chief market strategist at financial advisory firm Bell Curve Trading, said in an interview with Bloomberg Television. “We saw this with retail sales, consumer confidence, now we are seeing this with the General Electric earnings. When you look at this from the vantage point on the effect of the broader economy, things are getting worse.”

GE – the world’s third-largest company by market value – reported a 6% decline in its first-quarter profit, due mostly to trouble in the financial divisions that are part of its massive GE Capital unit. Net income dropped to $4.3 billion, or 43 cents per share, while revenue increased 8% to $42.24 billion.

According to FactSet Research, the mean analyst expectation for profit from continuing operations was 51 cents per share. GE reported just 44 cents per share, which caused its shares to tumble.

In overseas markets earlier today, Japan’s Nikkei 225 Index surged 378.43 points to close at 13,323.73. Hong Kong’s blue-chip Hang Seng Index had a 480.69-point gain, and closed at 24,667.79.

European bourses were down, with the Paris-based CAC40, London’s FTSE 100, Madrid’s IBEX 35 and the Frankfurt-based DAX all posting losses.

At midday, the dollar had gained ground against the yen (up 0.216%), but lost ground against both the euro (down 0.449%) and the pound sterling (down 0.086%).

At midday in New York, the blue-chip Dow Jones Industrial Average Index was up 92.42 points (0.74%), to trade at 12,619.68. The tech-laden Nasdaq Composite Index gained 34.57 points (1.49%), to reach 2,356.69. And the broader Standard & Poor’s 500 Index increased 9.73 points (0.72%), to hit 1,364.22.

The technology sector (up 1.23%) and the transportation sector (up 0.92%) posted the biggest gains, while the utilities sector (down 0.24%) and the basic materials sector (down 0.12%) posted the only declines.

“Bigger picture, we’re still in a trading range for the most part. Folks are still trying to figure out which direction we’re headed, and investors are waiting for more earnings reports to see where the economy stands and where the sectors are headed,” Robert Pavlik, chief investment officer at Oaktree Asset Management told MarketWatch.

Wal-Mart Stores Inc. (WMT) gained after bargain hunters helped the retail giant beat sales estimates, and an upgrade by Bank of America Corp. (BAC) gave Intel Corp. (INTC) stock a boost.

Financial shares, such as Citigroup Inc. (C) and Wachovia Corp. (WB), rallied after Goldman Chief Executive Officer Lloyd Blankfein said “we’re closer to the end than the beginning” of the credit crisis, Bloomberg News reported.

In overseas markets early today, Japan’s Nikkei 225 Index lost 166.59 points to close at 12,945.30. Hong Kong’s blue-chip Hang Seng Index had a 202.53-point gain, to close at 24,187.10.

European bourses were down, with the Paris-based CAC40, London’s FTSE 100, Madrid’s IBEX 35 and the Frankfurt-based DAX all posting losses.

At midday, the dollar had gained ground against the euro (up0.165%), but lost ground against the yen (down 0.552%) and the pound sterling (down 0.253%).

• Boeing Co. (BA) delayed the delivery of its 787 Dreamliner again yesterday (Wednesday), this time until the third quarter of 2009. It’s the third postponement in six months. The company said it would deliver just 25 planes next year, less than a quarter of what had originally been planned.

• Citigroup Inc. (C) is planning to sell $12 billion of loans at a loss to Apollo Management LP, Blackstone Group LP and TPG Inc., a person briefed on the matter told Bloomberg News. The loans are part of the $43 billion in financing that Citigroup agreed to provide for leveraged buyouts last year before credit markets froze.

• United Parcel Service Inc. (UPS) cut its profit guidance for the year from between 94 and 98 cents a share to 86 or 87 cents. The company, which carries products that amount to about 5% of gross domestic product each year, cited lower volume and higher fuel costs as the biggest reasons for declining profit.

• The world’s largest air carrier, American Airlines – principal subsidiary of AMR Corp. (AMR) – canceled 1,000 flights yesterday (Wednesday) to reinspect jets. The cancellations affected more than 45% of its scheduled flights, Bloomberg reported, and stranded an estimated 11,000 travelers. The company said to expect more flight cancellations this week.

• Citing rapid growth in China and increasing demand for loans, Industrial & Commerce Bank of China (IBCB) said it expects first-quarter profit to soar 50%. IBCB is the world’s largest bank by market value. So far this year, ICBC has gained 5.2% in Hong Kong this year, compared with a 13.8% drop in the benchmark Hang Seng Index, Bloomberg reported.

• Hershey Trust Co., primary shareholder in The Hershey Co. (HSY), announced its Chief Executive Robert Vowler would retire in April 2009, Bloomberg News reported. Vowler has held the position for 12 years. Vincent Rudisill, the trust’s chief investment officer, will assume CEO duties.

• Crude oil for May delivery hit a new intraday high yesterday (Wednesday). It increased $2.37, or 2.2%, to close at $110.87 on the New York Mercantile Exchange. Earlier in the day, it hit a new intraday high of $112.21 a barrel after the Energy Information Administration announced U.S. stockpiles of crude fell to 316 million barrels in the week ended April 4, MarketWatch reported.

• U.S. wholesale inventories increased 1.1% in February, more than had been forecast. The increase was due to a 0.8% decline in sales for the same period. “Supply is starting to run ahead of demand and that could mean slower growth and also slower inflation further on down the line,” Jonathan Basile, an economist at Credit Suisse Holdings in New York, told Bloomberg News.

At midday in New York, the blue-chip Dow Jones Industrial Average Index was down 45.43 points (-0.36%), to trade at 12,567.00. The tech-laden Nasdaq Composite Index decreased 12.87 points (-0.54%), to reach 2,351.96. And the broader Standard & Poor’s 500 Index shed 5.84 points (-0.43%), to hit 1,366.70.

“We’ll be lucky to see earnings be flat for the year and we’ll probably see earnings decline,” Steven Bleiberg, who helps manage about $6 billion as head of global investment strategy at Legg Mason Asset Management (LM) in New York, said in an interview with Bloomberg Television. “Ultimately you’ve got to have earnings growth, that’s the driver, and I just don’t see it happening. There are so many negative signs out there.”

Washington Mutual Inc. (WM) led financial shares lower as the thrift was forced to slash its dividend even after a $7 billion cash infusion, which was more than the $5 billion expected.

Aluminum manufacturer Alcoa Inc. (AA) dropped after announcing a 50% reduction in earnings after Monday’s close. Advanced Micro Devices Inc. (AMD) shares dropped after announcing a 22% decline in sales.

“Ultimately we’re still in a bear market, and it’s going to take some more digestion and some more sideways movement to get out,” Doug Sandler, chief equity officer at Riverfront Investment Group, told MarketWatch.

In overseas markets, Japan’s Nikkei Index reversed Monday’s gains with a loss of 199.80 points to close at 13,250.43. Hong Kong’s blue-chip Hang Seng Index had a 267.07-point decline, to close at 24,311.69.

European bourses were down with the Paris-based CAC40, London’s FTSE 100, Madrid’s IBEX 35 and the Frankfurt-based DAX all posting losses.

Source:http://www.moneymorning.com/2008/04/08/midday-market-update-stocks-head-lower-on-weak-first-quarter-earnings/