The PremiereTrade Market Wrap for 10/12/07

Prices paid by businesses at the wholesale level jumped more than expected in September on higher food and energy prices. The Producer Price Index showed a 1.1 percent increase in the month, following a 1.4 percent drop in those prices in August. The more closely watched core PPI reading, which strips out volatile food and energy prices, rose only 0.1 percent.

Retail sales saw a surprisingly better-than-expected bounce in September, although many merchants complained that unseasonably warm weather hurt demand for fall merchandise last month. The Commerce Department said that total sales last month rose 0.6 percent after rising 0.3 percent in August. Economists had forecast a rise of 0.2 percent for the month.

U.S. businesses built up their inventories in August from a very lean level. Sales at U.S. businesses fell 0.4% in August, the biggest decline since January, while inventories increased 0.1%. The report indicates that most businesses have lean inventories and are positioned well to respond to any unexpected declines in demand.

Confidence among U.S. consumers this month fell to the lowest since August 2006 as the outlook for housing worsened. The University of Michigan preliminary index of consumer sentiment fell to 82.0 from 83.4 in September.

Oracle Corp. (ORCL) confirmed it offered to buy BEA Systems Inc. (BEAS) for more than $6.66 billion earlier this week.

Alcoa Inc. (AA) has been awarded a $360 million contract by the defense contractor Lockheed Martin Corp. to supply parts for new stealth fighter jets that will replace aging military planes.

In Earnings News

General Electric Co. (GE) said that third-quarter earnings rose 14 percent. The company earned $5.54 billion, or 54 cents per share.

McDonald's Corp. (MCD) said its third quarter profit would beat Wall Street analysts' expectations. The country's No. 1 hamburger chain said it expects to earn 89 cents per share in the quarter.

Scheduled Economic Reports (Next Week)

New York Empire State Index, Industrial Production, Capacity Utilization, Consumer Price Index, Housing Starts, Building Permits, Fed Beige Book, Leading Indicators, Philadelphia Fed Survey

Scheduled Earnings Reports (Next Week)

Citigroup, Mattel, Dominoes Pizza, Delta Air Lines, IBM, Intel, Yahoo, Johnson & Johnson, AMR Corp, Coca Cola, Gannett, Washington Mutual, Bank of America, Continental Airlines, Google, Nokia, Southwest Airlines

Stocks in the News

Black Hills Corp's (BKH) board approved a review of the company's strategic options, including potential divestiture of certain independent power production plants throughout the western U.S.

Avon Products (AVP) authorized a $2 billion stock buyback over a five-year period after it completes its current buyback.

Electronic Arts (ERTS) said it agreed to acquire VG Holding Corp., the owner of video game companies BioWare Corp. and Pandemic Studios., for $620 million in cash.