While you were sleeping: BusinessWire overnight wrap

Wednesday 23rd July 2008

Wall Street advanced as oil prices extended their recent slide, helping to ease the disappointment of poor earnings and forecasts from American Express and Apple.

Oil prices fell to a six-week low amid concerns over sliding US energy demand and expectations that a tropical storm pushing through the Gulf of Mexico would spare most offshore oil production.

The Dow Jones industrial average rose 135.16 points, or 1.18%, to 11,602.50, while the Standard & Poor's 500 Index ended up 17.00 points, or 1.35%, at 1,277.00. The Nasdaq Composite Index was up 24.43 points, or 1.07%, at 2,303.96.

American Express fell the most since January 11, declining 7.1% to $37.99 after it said second-quarter profit fell 37% on worse-than-expected consumer defaults and CEO Kenneth Chenault withdrew his 2008 forecast.

Apple lost 2.6% to $162.02. Fourth-quarter profit will be $1 a share as sales climb to $7.8 billion, the company said. That compares with the average analyst estimate of $1.24 a share in earnings and $8.3 billion in sales.

Consumer stocks like Coca-Cola and Wal-Mart and airlines - all sensitive to higher fuel costs - advanced on the extended slide in oil prices. An index of airline stocks surged 22%.

Caterpillar shares rose 2.4% to $74.98 after the maker of heavy construction equipment posted a stronger-than-expected quarterly profit.

Oil's Retreat

Crude oil for August delivery fell $3.09 to $127.95 a barrel on Tuesday and touched $125.63, the lowest since June 5, on forecasts that a tropical storm in the Gulf of Mexico will miss oil fields and refineries.

The US dollar also got a boost from the president of the Philadelphia Federal Reserve Charles Plosser who said the US central bank couldn't wait too long to increase interest rates to keep inflation in check.

In late afternoon trading in New York, the euro tumbled 0.9% to $1.5776, well below its record high of $1.6037 set last week, according to Reuters Dealing. Based on current prices, the single currency was on track for its biggest daily fall in nearly three weeks against the dollar.

Investors should buy Australia's dollar against New Zealand's currency on bets central bankers in Wellington will cut borrowing costs before their Australian counterparts, according to Bank of Tokyo-Mitsubishi Ltd.

The Aussie rose yesterday to a seven-year high on speculation the Reserve Bank of New Zealand will reduce its target lending rate for the first time since 2003 when it meets July 24.

Treasury-Bund Spread Narrows

The two-year US Treasury note's yield rose 12 basis points to 2.72% yesterday. The rate was 187 basis points lower than that of the comparable-maturity German bund, the narrowest since July 11.

Futures traded on the Chicago Board of Trade showed yesterday a 49% chance the Fed will increase its 2% target rate for overnight lending between banks by at least a quarter-percentage point by September 16, up from 41% odds on July 21. Policy makers next meet August 5.

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