Why United Airlines Changed Its Mind

• June 1, 2004
• Brice Wightman

Stocks
rose as investors set aside rising oil prices to focus on good economic data.
After spending most of the day in the red, stocks rallied into the close, even
though crude spiked more than $2/bbl., the highest price in 21 years of crude
trading at the NYMEX. On Thursday, OPEC meets in Beruit. Factory employment rose
to the highest level in 31 years as the ISM came in at 62.8, the twelfth
straight month of growth in the manufacturing sector. Construction spending rose
another 1.3%, much higher than the consensus of 0.4% as rising interest rates
caused a rush to build. According to the Semiconductor Industry Association,
worldwide sales of semiconductors rose 4.1% in April to $16.94 billion. Strong
demand for cell phones and growth in the US and China helped push sales higher.

 

Viacom
(
VIA.B |
Quote |
Chart |
News |
PowerRating)
President Mel Karmazin resigned on Tuesday, citing personal and professional
reasons. Tom Freston and Leslie Moonves were named co-presidents and co-chief
operating officers on the announcement. JC Penny
(
JCP |
Quote |
Chart |
News |
PowerRating) said the FTC
has cleared its sale of 2,8000 Eckard drugstores for $4.53 billion.

 

After the close, Alkermes
(
ALKS |
Quote |
Chart |
News |
PowerRating) cut its estimates for 2005, and VCA Antech {WOOF|WOOF] guided
lower.

 

Dow	+14.20	10202.65
S&P 500	+0.52	1121.20
Nasdaq	+4.03	1990.77

Strong today were Internet
(
GIN.X |
Quote |
Chart |
News |
PowerRating) +2.46%, Energy
(
DXE.X |
Quote |
Chart |
News |
PowerRating)
+1.61%, Healthcare Providers
(
RXH.X |
Quote |
Chart |
News |
PowerRating) +1.21% and Oil
(
XOI.X |
Quote |
Chart |
News |
PowerRating)
+1.56%.

Weak today were Gold
(
HUI.X |
Quote |
Chart |
News |
PowerRating) -1.84%, Airlines
(
XAL.X |
Quote |
Chart |
News |
PowerRating)
-1.66% and Disk Drives
(
DDX.X |
Quote |
Chart |
News |
PowerRating) -1.56%.

Economic news releases today include: construction spending that rose much
higher at 1.3%, and ISM index was higher than the forecasted 61.5 at 62.8.

 

10-year Notes were -080
at 108 04

The dollar was -0.08 at 88.88

Crude Oil was +2.50 at 42.33

Volume was 1.2 billion on the NYSE, and 1.4 billion on the Nasdaq.

Market breadth was mixed.

 

NYSE	Issues
Advancing	1694	Up Vol 598
Declining	1602	Down Vol 627
Ratio	1.05	1.05
Nasdaq
Advancing	1709	Up Vol 732
Declining	1419	Down Vol 711
Ratio	1.20	1.03

 

Stocks in the news:

United Airlines
(
UALAQ |
Quote |
Chart |
News |
PowerRating)
decided to roll back its $10 fuel surcharge on North American routes, citing
lack of a follow through from its competitors. The company added the surcharge
just last week.

Immucor
(
BLUD |
Quote |
Chart |
News |
PowerRating) rose after
its board announced a 3 for 2 stock split and authorized a buy back of an
additional 200,000 shares.

Boston Scientific
(
BSX |
Quote |
Chart |
News |
PowerRating)
acquired Advanced Bionics, the maker of implantable
microelectronics for treating neurological disorders and other ailments
for $740 million in cash. The deal is expected to reduce BSX’s earnings by 4
cents in 2004 and 6 cents in 2005.

Manugistics
(
MANU |
Quote |
Chart |
News |
PowerRating) is lower
after forecasting lower Q1 revenue of $51 million with EPS of -0.06.

Brice Wightman

bricew@tradingmarkets.com