1:15PM Retail stocks decline.
Retail stocks declined after economic reports and earnings revision from Chicos and coldwater creek. While Coldwater Creek (CWTR: chart) raied its earnings guidance Chico’s reported earnings growth but its forecast for the same store sales and lowered earnings for the full year 2006 and 2007 hurt the stocks.

Chico’s (CHS: chart) is trading down $5.95 or 25% to $18.16. The stock has declined from its peak of $49.40 in February of this year. The steady decline in stock is the result of slow down in same-store sales and earnings revision.

The company reported earings for the second quarter of 30 cents vs. 27 cents a year ago, including 2 cents of options expenses in the current quarter. The sales in the quarter rose 18% to $405 million and earnings rose to $54 from $49 million.

The company also said in the press release that after nine years of double digit same-store sales growth at the flagship Chico’s stores the store chain is facing a slow down and may have a negative comp sales. The company guided flat or a low single digit same-store sales growth in the third and fourth quarter of this year. For the full-year the operating margin company expects to decline from 17% and 19% to 14% and 15%.

The company has now a portfoli of chains including flagship Chico’s, sportwear casual chain Fitigue, intimate apparel chain of stores Soma and White House/Black Market selling casual black, white and gray apparel. The recently acquired Fitigue failed to deliver expected sales grwoth in the quarter, White House/Black Market sales rose 19% but flag ship chain Chico’s sales grew only at 3%, slowest in nine years.

The company blamed the same-store sales decline to lack of merchandise availabililty, failure of the recent promotion to pull new customers in the stores and slow traffic at stores.

11:30AM Market averages trade in a lackluster fashion.
Market averages have remained subdued after the release of three economic repots. New home sales, durable goods order and weekly jobless claims. New home sales dropped 4.3% from the revised estimate sales in June 1.12 million and 21.6% from a year ago. The median home sales price in July 2006 was $230,000 and average sales price was $293,000. Median home price in June was $233,800 and in July 2005 was $229,200. Inventory of new homes rose to a 6.5 months supply at the end of July 2006.

Durable goods order for July moth dropped 2.4% but orders excluding transportation oders gained 0.5% in the month. The total oders in the month droped $5.3 billion to $212 billion. The orders for the transportation equipment dropped 9.6% including the 10% drop in aircraft orders and 7% drop in automobile orders.

Unemployment claims at the end of the last week declined 1,000 to 313,000.

Toro Company (TTC: chart) reported third quarter earnings of 91 cents compared to 74 cents a year ago on revenue rise of 2%. The company reported earnings of $40.3 million on revenue of $477.9 million. The company also said that the professional segment sales rose 5.7% and residential sales dropped 2.2%. Toro cut its sales guidance for the year 2006 to 3% to 5% from 8% and raised its earnings grwoth target from 14% to between 15% and 17% for the year.

10:30AM Sensex jumps on bonds and likely fuel price stability.
The Sensex on BSE soared 125.30 points, or 1.1%, to close at 11,531.95. This is the highest closing since 17 May 2006. The turnover on BSE amounted to Rs 3,146 crore, higher than Wednesday’s Rs 2,998 crore. The market-breadth was initially negative but turned positive in late trading, as 1,349 shares advanced on BSE, 1,113 declined and 81 shares were unchanged.

Reliance Industries led the advancers. The stock surged in late trading and triggered the turnaround in the market from negative to positive. Most blue-chips advanced towards the second half of trading, in contrast to an early fall. Reliance Industries surged 5.3%, to Rs 1,118.

Metal shares bounced back in the latter part of trading. Sterlite Industries gained 4% to Rs 424.95, Hindalco advanced 4% to Rs 168.50, Hindustan Zinc rose 3% to Rs 594, and Tata Steel jumped 2.4% to Rs 518.55. Metal shares had retreated in early trade in the wake of commodity price drop in European trading.

Select cement stocks gained on hopes of a rise in demand as the monsoon season is about to end. Gujarat Ambuja Cements gained 3.4% to Rs 113.80, ACC rose 2% to Rs 912, Grasim was up 1.2% to Rs 2,220, India Cements advanced 3% to Rs 191.40, JK Lakshmi Cement jumped 3% to Rs 142.75, and Madras Cement added 3% to Rs 2,870.

State Bank of India also gained 1.5% to Rs 876. Its board meets later in the day to consider a hike in prime lending rates. Cellular services operator Bharti Airtel advanced 2.3% to Rs 415 on reports that it has offered a contract worth $ 1 billion to expand and upgrade its telecom network to telecom equipment maker Ericsson. Gas transmission company, GAIL India, also jumped 4.4% to Rs 267.25.

Select auto stocks gained on hopes that the government will not raise domestic fuel prices in the near term due to the recent retreat of global crude oil price. Hero Honda gained 2.5% to Rs 718, Mahindra & Mahindra rose 1.6% to Rs 642.50, car major Maruti Udyog advanced 0.7% to Rs 831.50 and Tata Motors added (TTM: chart) 1.5% to Rs 860. Hindustan Motors soared 9.91%, to Rs 40.50 on high volumes of 4.2 million shares on BSE as compared to a two-week average volume of 0.13 million shares.

9:45AM Early trading indicate a positive bias.
Market maintained the upward bias in the first twenty minutes of trading. Nasdaq traded 6 points up, Dow traded 18 points up and S&P 500 gained 3 points after twenty minutes of trading. Durable goods orders and jobless claims report led traders to conclude that interest rates may not need to be revised.

Creative Techonologies is up $1.39 to $7.40 on the news of the patent settlement worth $100 million with Apple Computer. Williams Sonoma (WSM: chart) is down $2.60 to $30.00 on the earnings news. The company reported second quarter earnings of 30 cents compared to 26 cents a year ago.

In the large cap stocks dominating various indexes IBM, Johnson & Johnson an Merck are up 40 cents, United Technologies is up 46 cents and Honeywell is up 22 cents. However, Caterpillar is down 63 cents and Home Depot is down 19 cents.

Chico’s (CHS: chart) dropped to $5.06 or 21% to $19 on the earnings news. The company reported second quarter earnings of 30 cents vs. 27 cents a year ago on revenue growth of 19%. Same store sales grew 3%, below the projected rise of 4.5% by the management. The company lowered its full year fiscal 2006 year earnings per share guidance between $1.10 and $1.14 and for the year 2007 to $1.28 to $1.36.