[R]11:30AM Stock markets rallied on earnings optimism.[/R]
Stocks rallied Monday as after weeks of volatile trading on confusion about interest rates, investors gained optimism for a strong Q2 earnings session. A few multibillion-dollar acquisitions also helped to generate positive sentiment. Kraft Foods Inc. (KFT: chart) agreed to buy the Spanish and Portuguese units of United Biscuits for $1.07 billion and Kimco Realty Corp. agreed to acquire Pan Pacific Retail Properties Inc. for $2.9 billion. Lower oil prices supported the market's advance, helping stocks steady themselves from steep losses in the prior session.

The airline sector continued its strong performance, sending the Amex Airline Index higher by 2.1%. Despite the decrease by the price of oil, some strength emerged in the oil service sector, lifted by strong gains by Cameron (CAM: chart) and Schlumberger (SLB: chart). The health insurance sector also showed continuous strength, with Morgan Stanley Healthcare Payor Index up 1.2%. Some retail stocks also posted significant gains, with Gap (GPS: chart) turning in one of the sector's best performances, rising up 5.4%. Meanwhile, some technology stocks came under pressure, helping to limit the upside for the tech-heavy Nasdaq. Some computer hardware, networking, and semiconductor stocks also moved notably lower. In late morning trading, the Dow rose 72.12, or 0.65%.The Standard & Poor's 500 index was up 6.16, or 0.49%, and the Nasdaq composite index gained 2.75, or 0.13%. Bonds pulled back from last week's rally, with the yield on the 10-year Treasury note ending up to 5.15% from 5.13% late Friday.


[R]10:30AM The Sensex end higher buoyed by rise in IT and cement shares.[/R]
The Sensex in India ended 174.77 points, or 1.6% higher, to close at 10,684.30. The turnover on BSE was $500 million or Rs 2,236 crore, a decline of 20% from Friday’s trading. The market-breadth was weak with 1,304 stocks advanced, 1,040 declined and 71 shares were unchanged.

IT shares soared on hopes that firms may lift their earnings and revenue guidance for the fiscal year 2007 on strong volume growth and weak rupee against dollar. I-flex solutions surged 6.5% to Rs 1,211, Wipro rose 5% to Rs 494, HCL Tech gained 5% to Rs 517, TCS rose 3% to Rs 1,804, Infosys advanced 2.7% to Rs 3,190 and Satyam Computer gained 2.6% to Rs 710.

Bharti Airtel climbed 5% to Rs 390 on 1.1 million trading volume at a price of Rs 403 and Rs 412. Bharti Airtel added more than 1.2 million GSM base subscriber in June 2006, enlarging its user base to about 23.1 million customers.

ONGC advanced 4% to Rs 1,136.15. ONGC and Mittal Steel will work together in 21 countries, as the two firms have a joint venture, ONGC Mittal Energy, to buy energy assets outside India. GAIL India advanced 2.6% to Rs 254. ONGC and GAIL, on Friday, signed an agreement under which ONGC will supply gas for 15 years to GAIL. Under the agreement, ONGC will supply 50 million cubic metres of gas per day.

Metal shares advanced in the wake of stable metal prices in London trading and on the back of recent increase in domestic prices. Sterlite Industries advanced 4.4% to Rs 425 and Hindalco gained 2.3% to Rs 172.65. Hindustan Zinc advanced nearly 4% to Rs 600.

Reliance Communications gained 3.3%, to Rs 256 supported by reports that it had won a bandwidth order from China Netcom for an estimated value of $35 million. Reliance Industries advanced 1.1% to Rs 1,043.50 on volume of 2 million.

Cement shares gained on a strong guidance for cement prices over the medium-term and on expectations of strong results in the first quarter of 2006. Gujarat Ambuja Cements advanced 3.3%, to Rs 103.45, ACC gained 2.2% to Rs 811.45, and Grasim added 1.5% to Rs 1,930.50.

Among other gainers were large-cap Maruti Udyog rising 2.4%, to Rs 800 and BHEL gaining 3% to Rs 1,950.


[R]9:45AM Stocks opened higher on acquisitions.[/R]
Stocks opened higher on optimism for another solid earnings season and merger-and acquisition news. Kraft Foods Inc. (KFT: chart) agreed to acquire the Spanish and Portuguese units of United Biscuits for $1.07 billion, and Kimco Realty Corp. said it will buy Pan Pacific Retail Properties Inc. for $2.9 billion.

The airline sector turned in one of the market''s best performances in early trading due to a notable decrease by the price of oil. Some strength emerged in the health insurance sector, supported by notable gains for Cigna (CI: chart) and Coventry (CVH: chart). Semiconductor stocks also moved to the upside after ending at a one-year closing low Friday. Meanwhile, gold stocks posted significant weakness, followed by oil stocks which also moved lower, as the decrease by the price of oil generated some selling pressure. In the first hour of trading, the Dow rose 59.93, or 0.54%. The Standard & Poor''s 500 index was up 6.45, or 0.51%, and the Nasdaq composite index gained 12.30, or 0.58%. Bonds pulled back from last week''s rally, with the yield on the 10-year Treasury note ending up to 5.15% from 5.13% late Friday.


[R]9:00AM Stock futures pointed to a higher start.[/R]
U.S. stock futures moved higher at the start of the week ahead of the second-quarter earnings season. Aluminum producer Alcoa (AA: chart) is due to announce its results after the closing bell, with analysts predicting it will earn 86 cents a share on revenue of $8.01 billion. General Electric (GE: chart), PepsiCo (PEP: chart), Genentech (DNA), and Texas Instruments (TI: chart) are also due to report quarterly earnings this week.

Merger-and-acquisition activity is also likely to attract some attention on Monday, with shares of Heritage Property (HTG: chart) moving higher in pre-market trading after the real estate investment trust said it agreed to be acquired by Australia-based Centro Properties Group for $3.2 billion. Under the terms of the deal, Heritage Property shareholders will receive $36.15 for each share held, representing a 5.7% premium to Heritage Property''s average closing price over the past 10 days. Reportedly, Kraft Foods (KFT: chart) said that it agreed to acquire the Spanish and Portuguese operations of United Biscuits in a deal value at $1.07 billion. At the same time, housing stocks are expected to see some early weakness after KB Homes (KBH: chart) said negative trends in the U.S. housing market could extend in 2007. Dow Jones futures were recently up 25 points, S&P 500 futures rose 2.5 points, and Nasdaq futures rose 2.8 points.

Chattem Inc, (CHTT: chart), manufacturer of healthcare products, reported Q2 net income dropped to 52 cents a share, down from 76 cents a share in the year-earlier period despite revenue growth. If not for items, net income in Q2 was 57 cents a share. The company quoted increased advertising and promotional spending to support new products, primarily Icy Hot Pro-Therapy and Selsun Salon. The company missed analysts’ forecasts for earnings of 58 cents a share.

Shaw Group Inc, (SGR: chart), engineering and construction firm, reported its Q3 loss was narrower, coming to 21 cents a share, from 31 cents a share in the year-ago quarter on 37% revenue growth. The company said it overstated Q2 net income by 14%, because of two errors. Shaw added it will refile and restate those results, which it said came from errors that were a result of material weaknesses in financial controls.

Helen of Troy Ltd., (HELE: chart), maker of household and personal care products, reported Q1 net earnings sank to 21 cents a share, from 33 cents a share in the year-ago period despite net sales growth, missing analysts’ forecasts for a profit of 26 cents a share. The company reaffirmed its fiscal year sales forecast of $600 million to $620 million and earnings of $1.70 to $1.80 a share.