While U.S. stocks closed lower today, S&P posted its biggest first quarter gain since '99, and the Nasdaq its best since 2000. All new data points towards a resilient economy, and the future does look bright.

Today, the Dow Jones industrial average closed down 41.38 or 0.4% to 11,109.32, the Standard & Poor's 500 index closed down 5.42 or 0.4% to 1,294.83, and the Nasdaq composite index closed down 1.03 to 2,339.79. For the quarter, the Dow gained around 3.7%, the S&P gained 3.7% and the Nasdaq closed up 6.1%. This has been the best first-quarter performance since 2000, when the Nasdaq gained 12.3%.

Market breadth was mixed. On the New York Stock Exchange. Losers barely topped winners on volume of 1 billion shares. On the Nasdaq, advancers edged out decliners as 1.3 billion shares exchanged hands.

Market sentiment took a turn for the better after release of data showing a rise in consumer spending in February, and a modest increase in personal incomes. This is a factor that eased wage-inflation fears. The prices component of the report, which is another gauge of inflation, came in unchanged. The consumer sentiment strengthened in late March, and the index rose to 88.9 points in late March from 86.7 in February. This is against the forecast 86.9. Orders for U.S. made manufactured goods rose a much weaker-than-expected 0.2% in February, against the expected rise of about 1.4%.

Shares of General Motors (NYSE: GM) initially fell over 3.4% before closing up $0.21 to $21.27. The United Auto Workers union said court approval to void the labor contract could lead to strike action. Delphi (OTC: DPHIQ.PK), filed motions in bankruptcy court to void its union contracts and said it was closing all but eight of its U.S. plants and looking to shed 28,000 workers. It said it would also seek to shed "unprofitable" supply contracts it currently has with General Motors Corp.

Dow Chemical (NYSE: DOW) closed down 1.2% at $40.60 after Prudential cuts its rating on the company to neutral weight from overweight, citing concerns over weakening demand. Germany's SAP (NYSE: SAP) declined to comment on trader speculation that International Business Machines (NYSE: IBM) is preparing an offer for the software company. U.S. listed shares of SAP closed up 40 cents at $54.32, while IBM shares finished down 73 cents at $82.47.

Citigroup Inc. (NYSE: C) has been charged by the Australian securities regulator with insider trading, over buying shares of Patrick Corp. (Nasdaq: PATK) one day before one of the bank's clients, Toll Holdings, launched a takeover bid for the company. While Citigroup has denied the charges, its shares finished down 5 cents at $47.23.

Oil prices declined, but still ended the session near $67 a barrel. U.S. light crude oil for May delivery fell 52 cents to settle at $66.63 a barrel on the New York Mercantile Exchange.

Posted by Manuel Backus to The Markets at 11:12 PM | Permalink

Higher interest rates and inflation fueled concerns about corporate borrowing costs, and this took most blue-chip stocks Southwards. While the markets once again tried to push to new highs for the indices, the rally stalled and higher bond yields may be weighing on the minds of investors.

Today, the Dow Jones industrial average closed down 65.00 or 0.6% to 11,150.70, the broader Standard & Poor's 500 index closed down 2.64 or 0.2% to 1,300.25, and the Nasdaq composite index closed up 3.04 to 2,340.82, closing at a fresh nearly five-year high.

Market breadth was mixed. On the New York Stock Exchange, losers beat winners nine to seven on volume of 1.61 billion shares. On the Nasdaq, decliners and advancers were narrowly mixed as 2.19 billion shares changed hands.

On the economic front, the U.S. economy grew at a 1.7% annualized rate in the fourth quarter, up from an initial estimate of 1.6%. However, the gross domestic purchases price index, an inflation gauge, increased 3.7% annualized. While investors took the weak number in stride, due to recent signs that the economy has rebounded strongly in the first quarter; the inflation gauge is a cause for concern.

The advance today ran into trouble as the rise in bond yields picked up fresh steam. Yields have been rising since the Fed started boosting rates and said that more rate hikes may be needed. The combination of rising bond yields, rising oil prices and a jump in gold and copper all put pressure on stocks, especially the blue chips. There are worries that the Fed will be forced to tighten more to quash inflation. The fear is that they tighten so much that it hurts the economy and hurts corporate profits. However, the decline today was lower than the gains yesterday and this is a positive aspect.

The biggest loser today was General Motors (NYSE: GM) that slipped down $1.09 or nearly 5% to $21.06. The company is close to selling a majority stake in its GMAC finance unit to an investor group led by Cerberus Capital, and is discussing selling its stake in Isuzu Motors. However, it is opined that any deal for the finance unit would not be enough to return GMAC to the investment-grade status.

Stock of Google (Nasdaq: GOOG) closed down $6.54 or 1.6% to $388.44, after the Internet search giant filed with regulators to periodically sell up to 5.3 million shares of stock. The company stated that it was making more shares available to the marketplace in an effort to absorb the demand from index funds following the company's inclusion into the S&P 500.

The Nasdaq Stock Market (Nasdaq: NDAQ) closed down 4.3% to $40.06, after dropping its $4.2 billion bid for the London Stock Exchange after failing to win the recommendation of the U.K bourse. The stock of fell LSE ended 6.8% lower in London trading.

Vonage, a company the is hemorrhaging money, may be trying to shop itself to a larger telecom firm. While it filed to go public nearly two months ago it has yet to file any amended registration statements with the SEC. This has led to speculation about whether Vonage might be looking to sell out instead. This might affect the price of the share in the near future.

U.S. light crude oil for May delivery jumped 70 cents to $67.15 a barrel on the New York Mercantile Exchange on supply concerns ahead of the summer driving season. The U.N. Security Council unanimously adopted a "presidential statement" late on Wednesday calling on Iran to freeze its uranium enrichment work. However, Tehran has rejected this demand and traders are worried the dispute could result in a disruption of crude shipments from Iran.

Posted by Manuel Backus to The Markets at 08:02 PM | Permalink

Nasdaq reaching its best finish in five years as stocks rallied after investors decided that the prior-session's Fed-inspired sell-off was overdone. Investors went in for across-the-board bargain-hunting, with the Nasdaq remaining a bit ahead of the other two indices.

Today, the Dow Jones industrial average closed up 61.16 or 0.6% to 11,215.70, the broader Standard & Poor's 500 index closed up 9.66 or 0.8% to 1,302.89, and the Nasdaq composite index closed up 33.32 or 1.5% to 2,337.78. This is the highest level for the Nasdaq since February 2001.

Market breadth was positive. On the New York Stock Exchange, winners beat losers by 3 to 1 on volume of 1.57 billion shares. On the Nasdaq, advancers topped decliners by more than 11 to 4 on volume of 2.42 billion shares.

Today, the investors considered the fact that yesterday’s Fed statement was pretty positive overall and showed little change from the January statement. While worries are still in place about the threat of inflation and the possibility of the Fed "overshooting" or raising rates so much that it starts to slow the economy; these are at best second-half worries. Those who believe in the growth story of the economy, have to believe the growth story in stocks that we are seeing today.

It is expected that the economic growth in the first quarter could be the silver cloud with the dark lining. In the aftermath of a sluggish fourth-quarter performance, many economists are expecting a growth rate of 5% or more. The growing GDP could prompt the Fed’s to keep raising the interest rates, to 5.25% - which may be too far.

Shares in Dow component General Motors Corp (NYSE: GM) closed down $0.60 or 2.6% to $22.15, after the it filed its delayed annual report with the U.S. SEC. The company said it would restate financial results for its GMAC financing unit from 2003 through to the third quarter of 2005. This is aimed at tidying up bookkeeping problems at GMAC that might otherwise scuttle a possible stake sale as well as ease pressure on GMAC's credit rating.

Morgan Stanley upgraded Sun Microsystems (Nasdaq: SUNW) and the stock closed up $0.22 or 4.6% to $5.25. Morgan Stanley upgraded the network computing company two notches to overweight from underweight, citing the financial benefits of an expected cost-cutting effort.

Shares in Boeing Co. (NYSE: BA) rose 2.1% to $79.18 after the company won an airplane order worth $4 billion at list prices. The company said the General Electric Co's (NYSE: GE), GE Commercial Aviation Services has put in a firm order for 30 Boeing Next-Generation 737s, with an option to buy 30 more. This continues the Cinderella story for Boeing and Airbus.

Stock of 3M (NYSE: MMM), closed up 1.6% at $77.56 after Merrill Lynch raised its recommendation on the diversified industrial company to buy from neutral. It stated that the company’s overseas exposure means it is poised to benefit from faster international economic expansion.

Shares in Accenture (NYSE: ACN) closed down $1.79 or 6% to $29.11, after the company reported a drop in quarterly profit due to a $450 million pre-tax provision it took related to contracts with the UK's National Health Service. Its fiscal second-quarter net income slumped 67% over year-ago levels.

Crude-oil futures finished higher after investors weighed a Department of Energy report showing a rise in weekly U.S. crude supplies, against the biggest drawdown in gasoline stocks since August 2003. The benchmark May contract closed up 38 cents at $66.45 a barrel on the New York Mercantile Exchange.

Posted by Manuel Backus to The Markets at 10:24 PM | Permalink

The Federal Reserve raised interest rates and added skids to the market. Investors were further disappointed by the signals that further increases may be on the way. While the quarter-percentage point rate hike was expected, indication that the rate-hiking campaign is not over yet is what started the downhill trend.

Today, the Dow Jones industrial average closed down 95.57 or 0.8% to 11,154.54, the broader Standard & Poor's 500 index closed down 8.38 or 0.6% to 1,293.23, and the tech-heavy Nasdaq composite index closed down 11.12 or 0.55 to 2,304.46.

Market breadth was negative. On the New York Stock Exchange, losers beat winners 21 to 11 on volume of 1.56 billion shares. On the Nasdaq, decliners topped advancers by 18 to 11 on volume of 2.04 billion shares.

The 15th increase in a row was as expected. It was in the statement that the bankers went into greater detail than in recent statements about the health of the economy in the first quarter after a rough fourth quarter, and about the impact of higher energy prices and other inflationary factors. What mattered was the part of the statement that hints at future policy. This still stated that some further firming "may be needed." The market was concerned with the signal of continued hikes as well as the fact that the Feds underplayed the slowing of economic growth last quarter. The statement also did not discuss the housing market or the yield curve.

It has been reported that the Citigroup Inc. (NYSE: C) and the National Bank of Greece are battling to win control of a Turkish bank. Should Citigroup secure control of Finansbank in a deal expected to be valued at more than $5 billion, it would mark the company's biggest transaction since Chuck Prince became chief executive. However, Citigroup shares ended the day down 4 cents at $47.60.

The Wall Street Journal reported that Lucent Technologies Inc. (NYSE: LU) and France's Alcatel SA (NYSE: ALA)are moving toward a plan to allay potential U.S. security concerns by placing some of Lucent's most sensitive defense-related research under control of a separate board composed only of Americans. This however, led Lucent shares to close down 4 cents at $3.04. U.S. listed shares of Alcatel rose 1 cent to $15.44.

General Motors (NYSE: GM) said it is laying off several hundred employees as part of its plan to bring its ailing North American operations back to profitability. The automaker is expected to announce more job cuts later in the year. Shares of General Motors Corp. closed down 18 cents or 0.8% at $22.75. This news came amid media reports that it's planning to file its delayed annual report and that its board is expected to meet this week to discuss the potential sale of its GMAC financing arm.

The biggest losers in the market today were the tech and financial shares. Some of these included Hewlett Packard (NYSE: HPQ) that closed down $1.04 or 3% to $32.07, AIG (NYSE: AIG) closed down $1.12 to $66.03, American Express (NYSE: AXP) closed down $0.79 to $52.57, and JP Morgan (NYSE: JP) closed down $0.55 to $41.56.

U.S. light crude oil for May delivery rallied $1.91 or over 3% to settle at $66.07 a barrel on the New York Mercantile Exchange. The
rise is attributed to fears of supply problems in Nigeria, Iraq, Iran; and the industrial disruptions in Europe adding to the increasing pressure.

Posted by Manuel Backus to The Markets at 09:18 PM | Permalink

Stocks closed mixed as investors played it cautious ahead of an expected interest-rate hike from the Federal Reserve on Tuesday, at the end of its two-day meeting. Modest strength in the technology sector allowed the Nasdaq Composite Index to end a bit higher.

Today, the Dow Jones industrial average closed down 29.86 or 0.3% to 11,250.11, the broader Standard & Poor's 500 index closed down 1.34 or 0.1% to 1,301.61, and the tech-heavy Nasdaq composite index closed up 2.76 or 0.1% to 2,315.58.

Market breadth was mixed. On the New York Stock Exchange, losers beat winners nine to seven on volume of 1.37 billion shares. On the Nasdaq, decliners and advancers were roughly equal balanced on volume of 1.88 billion shares.

Fed policy-makers are meeting Monday and Tuesday to discuss rates, with a decision due Tuesday afternoon. The central bank is expected to boost its target for the short-term interest rate to 4.75%. While the market is expecting this raise, investors will be focused on what the bankers imply about future rate hikes in the closely watched statement. It is opined that the statement will be fairly ambivalent in terms of future rate hikes, so as to allow them to look at and evaluate the data between now and the next meeting in May.

Looking at the immediate future, the most important catalyst for equities is likely to be first-quarter earnings season and whether companies will be able to maintain margins at near record levels. Many investors are skeptical that they can be maintained at this level, particularly with productivity slowing down. This is one factor that may guide the path the markets take.

Several mining companies rallied after Citigroup (NYSE: C) became more upbeat on industrial metals, upgrading key players such as Inco (NYSE: N), Phelps Dodge Corp. (NYSE: PD), Alcan (NYSE: AL) and Rio Tinto (NYSE: RTP). The broker abandoned its longstanding bearish stance on copper and nickel. It opines that the sector will benefit from rising economic growth and structurally tight inventories, with sluggish new capacity additions and recurring operating outages also lending support to prices. This lead Alcoa (NYSE: AA) to close up $0.50 or 2% to $30.33, Alcan closed up $0.46 to $45.76, Phelps Dodge closed up $1.47 to $76.61, and Newmont Mining (NYSE: NEM) closed up $1.06 to $50.52.

Lucent Technologies Inc. (NYSE: LU) closed up $0.02 or 1% to $3.08, on news that Alcatel's (NYSE: ALA) board will meet this week to consider the joint merger of the two telecoms. U.S. listed shares of Alcatel finished down 1.7% at $15.43.

With Goldman Sachs becoming bullish on Intel Corp, (Nasdaq: INTC) its shares advanced 14 cents to close at $19.73. The analysts believe that Intel's new desktop central processing unit will help it stop rival Advanced Micro Devices Inc. (NYSE: AMD) market-share gains in the second half of 2006.

In the beginning of this crucial week for General Motors Corp. (NYSE: GM), its shares climbed 1.2% to $22.93. The company is poised to file its delayed annual report, and its board is expected to meet to discuss the potential sale of its GMAC financing arm. Additionally, GM will reportedly begin laying off part of its white-collar workforce on Tuesday as part of its aim to reduce its salaried workers by 7% this year, or at least by 2,500 positions.

Stock of Walgreen Co. (NYSE: WAG) rose 1.4% to $45.02. The drugstore operator has reported an increase in second-quarter profit, as solid sales of Christmas and Valentine's Day merchandise helped partially offset a mild flu season, which damaged pharmacy sales. However, sales came in slightly shy of analyst expectations.

U.S. light crude oil for May delivery fell 10 cents to settle at $64.16 a barrel on the New York Mercantile Exchange.

Posted by Manuel Backus to The Markets at 07:55 PM | Permalink

Stocks ended higher today to finish a mostly flat week, as investors preferred to tread cautiously ahead of an upcoming Federal Reserve meeting on interest rates. A soft housing report led some to believe the Fed would bring an end to its rate hiking campaign soon, but gains were modest as some investors worried about slowing economic growth.

Today, the Dow Jones Industrial Average rose 9.68 points to 11,279.97, the broader Standard and Poor’s 500 Index was up 1.28 points at 1,302.95, and the Nasdaq Composite Index closed up 12.67 points at 2,312.82. For the week, the Dow closed flat, the S&P dipped 0.3% and the tech-rich Nasdaq gained 0.3%.

Market breadth was positive. On the New York Stock Exchange, winners beat losers by 19 to 12 on volume of 1.4 billion shares. On the Nasdaq, advancers topped decliners by 19 to 10 as 1.9 billion shares exchanged hands.

Investors are particularly sensitive ahead of next week's Federal Reserve policy meeting, at which the central bank is expected to boost its key short-term interest rate to 4.75%. The market is likely to see choppy trading ahead of the Tuesday meeting. Investors however, are not worried about the quarter-percentage point increase, but are waiting to see if the commentary will point to one, two or more interest-rate increases.

Stocks today received a boost after a bigger-than-expected decline in new homes sales in February. This report offered a sharply contrasting view to Thursday existing-home sales data. New- home sales slumped 10.5% to 1.08 million units in February, their lowest level since May 2003, against the expected 1.21 million. This report saw bond prices rally, sending yields lower. However, investors fear that strong data will see the Fed pursuing its course of higher interest rates as it attempts to slow the pace of economic growth and keep inflation at bay.

Personal bankruptcies skyrocketed a record 30% in 2005 as debtors rushed to file petitions. This is in response to the passage of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), which went into effect on Oct. 17, 2005. Bankruptcies filed in the federal courts totaled close to 2.1 million in 2005, up from 1.6 million petitions filed in 2004. This is the largest number of bankruptcy petitions ever filed in any 12-month period in the history of the federal courts.

Shares of Google Inc. (Nasdaq: GOOG) surged 7% to $365.80 after Standard & Poor's said it would add the leader in Internet search to its benchmark S&P 500 Index at the close of trading March 31. The decision puts Google on the shopping list of hundreds of mutual-fund managers who run portfolios that track components of the S&P 500. Google will replace Burlington Resources (NYSE: BR) that closed up $0.52 to $90.80, which is being bought by ConocoPhilips (NYSE: COP) which closed up $0.60 to $61.72.

Lucent Technologies (NYSE: LU) jumped up $0.24 to $3.06, on news that it is in advanced discussions with French telecom gear maker Alcatel (NYSE: ALA) to form a combined company with a market cap of nearly $34 billion. Stock of Alcatel closed up $0.32 to $15.77. This could signal the start of a new wave of consolidation in the telecommunications-equipment industry. The merger would give Alcatel, Europe's second-largest telecom-gear maker, better access to U.S. telecom operators.

Shares in Palm Inc. (Nasdaq: PALM) rose as much as 6.5% after the company posted forecast-beating quarterly results on the back of strong demand for its Treo handheld communications devices. Palm also offered a profit outlook ahead of Wall Street estimates.

Stock of Cephalon (Nasdaq: CEPH) tumbled $9.67 to $63.64, after a FDA panel recommended against approval of the company's Sparlon, attention-deficit disorder drug, for treatment of ADHD in children and teens over safety concerns. Further, J.P. Morgan downgraded the drug company to neutral from overweight, as the approval is likely to be delayed.

Crude-oil futures ended higher, finding support from data showing the first drawdown in U.S. supplies in six weeks, and amid continued concerns about supplies from Nigeria, Iran and Iraq. This extended Thursday's $2 jump with the crude delivery for May rising 35 cents at $64.26 a barrel on the New York Mercantile Exchange.

Posted by Manuel Backus to The Markets at 12:19 AM | Permalink

Strong housing data, a spike in crude oil and a rise in long-term interest rates, prompted some investors to lock in prior-session gains. The Dow industrials retreated from near five-year highs and the markets closed in the red.

Today, the Dow Jones industrial average closed down 47.14 or 0.4% to 11,270.29, the broader Standard & Poor's 500 index closed down 3.37 to 1,301.67, and the Nasdaq composite index closed down 3.20 to 2,300.15.

Market breadth was mixed. On the New York Stock Exchange, losers edged winners by a narrow margin of 16 to 15 on volume of 1.45 billion shares. On the Nasdaq, winners gained a 15 to 14 edge over losers as nearly 2 billion shares changed hands.

The Fed's Open Market Committee meets next week, and a 5.2% upswing in monthly sales of existing homes eased worries about a slowdown in the housing market. However, there are fears that the Federal Reserve will continue boosting interest rates to stave off price inflation. Investors also fretted about a Labor Department report that 302,000 workers applied for jobless benefits last week, down 11,000 from the week. This job growth has added to Wall Street's inflation and interest rate concerns. The unemployment numbers increase the probability the Fed will make its way back to closer to 5%. Despite these concers, since the beginning of the year, the Dow industrials are up more than 5%, the S&P 500 has gained 4.5% while the Nasdaq has risen over 4%.

It is expected that the rate increase would happen on Tuesday, the concern is not what they (the central bankers) do, but what they say in the statement and how they say it. The investors will be looking to see if the Fed changes the language in its statement and whether that means another hike is in the offing for the Fed's next meeting on May 10 -- and perhaps even after its two-day meeting in late June.

Despite strong first quarter results, stock of Adobe Systems (Nasdaq: ADBE) closed down $0.29 to $36.33, after the company warned that its current-quarter earnings and revenue could miss forecasts. This led to a number of software stocks sliding with the Goldman Sachs Software index closing down by 0.7%. The effect was seen in other technology shares with Microsoft (Nasdaq: MSFT) closing down $0.30 to $26.85, and IBM (NYSE: IBM) losing $1.21 to $83.24.

Some tech stocks that gained included, Advanced Micro Devices (NYSE: AMD) rose 1.1% to $34.75 on news that Dell (NYSE: DELL) would use AMD processors in its computers. This deal should be positive for the chipmaker, as it would mark the first time Dell has used AMD processors in its personal-computer portfolio. Shares of Liberty Global Inc. (Nasdaq: LBTYA) climbed 6.4% to $19.74 after the cable operator agreed to sell its French cable business, UPC France SA, for about $1.51 billion. Yahoo (Nasdaq: YHOO) stock closed up 3.5% at $31.83, following on a UBS upgrade to buy from neutral, citing the Internet bellwether's valuation.

Stock of General Motors Corp. (NYSE: GM) closed lower at $22, over unresolved labor issues at Delphi (OTC: DPHIQ.PK). However, this was partially offset by news that it had sold a majority stake in its property-finance arm, GMAC Commercial Holding Corp in a deal valued at $9 billion. When Delphi announced its retirement package, it reiterated an intention to file a motion to reject labor contracts if a settlement with the United Auto Workers and other unions isn't reached by March 30. If a judge approved that motion, the UAW could strike, and that could cripple production at GM.

Crude-oil futures rose sharply as traders continued to focus on Wednesday's surprise decline in U.S. crude supplies, and ongoing production concerns related to Iraq, Iran and Nigeria. U.S. light crude oil for May delivery jumped $2.14 or nearly 3.5% to settle at $63.91 a barrel on the New York Mercantile Exchange.

Posted by Manuel Backus to The Markets at 09:43 PM | Permalink

A spate of good news such as stabilizing long-term interest rates, strong Morgan Stanley (NYSE: MS) earnings and a labor deal at General Motors Corp. lifted the Dow Jones Industrial Average to its best level in nearly five years. Gains in various sectors and uplifting earnings news fueled positive sentiment.

Today, the Dow Jones industrial average closed up 81.96 or 0.7% to 11,317.43, the broader Standard & Poor's 500 index closed up 7.81 or 0.6% to 1,305.04, and the Nasdaq composite index closed up 9.12 or 0.4% to 2,303.35.

Market breadth was positive. On the New York Stock Exchange, winners beat losers by eleven to five on volume of 1.48 billion shares. On the Nasdaq, advancers beat decliners by more than three to two on volume of 2.15 billion shares.

After yesterday’s sell off, stock prices were a bargain today and many investors stepped in to take advantage. Stocks were also supported by a recovery in treasury prices. Bond prices crept higher, and this lowered the yield on the benchmark 10-year note to 4.70%. That gave a lift to financial stocks, as did a strong earnings report from Morgan Stanley (NYSE: MS).

Amongst the movers today was Morgan Stanley (NYSE: MS) that closed up $1.53 to $61.94, after reporting higher quarterly earnings that beat estimates on record revenue. This in turn helped a number of bank stocks to advance. Bear Stearns (NYSE: BSC) closed up $3.07 to $136.37, JP Morgan closed up $0.85 to $42.05, and Goldman Sachs (NYSE: GS) closed up $2.42 to $151.82. This was the primary catalyst that moved the markets into the black today.

Stock of Bristol-Myers Squibb (NYSE: BMY) moved up 10.6 % up $2.41 to $25.24, and France's Sanofi-Aventis (NYSE: SNY) gained 9.6% up $4.20 to $47.88. The two companies have reached an agreement with Canada's Apotex Inc. over that company's attempt to market a generic version of the blockbuster blood-thinning drug Plavix. This eliminates the key risk to owning shares of Bristol-Myers to its investors.

GM (NYSE: GM) closed up $0.01 to $22.01, on announcing the agreement with United Auto Workers union, and Delphi Corp. (OTC: DPHIQ). The parties agreed on a plan to buy out 113,000 hourly workers with a maximum of $35,000 in payments each. This offer is to leave the troubled automaker as it extends its push to cut labor costs and put an end to billions of dollars in losses.

Microsoft (Nasdaq: MSFT) stock sank after the company delayed the launch of its new operating system. Microsoft closed down $0.72 or 3% to $27.02, after announcing that it will push back the consumer launch of its Windows Vista operating system, to January 2007. However, this could be a boost for Apple (Nasdaq: AAPL). As it would benefit from a less competitive market for another holiday season. The stock of Apple closed lower by 14 cents at $61.67. Stocks of PC makers such as Hewlett-Packard (NYSE: HPQ) closed down $0.18 to $33.36, and Gateway (NYSE: GTW) lost $0.07 to $2.36.

Crude prices gyrated after the government's report on fuel inventories showed a surprise decline in crude oil stocks. U.S. light crude oil for May delivery fell 57 cents to settle at $61.77 a barrel on the New York Mercantile Exchange after having hit as high as $62.85 earlier in the session.

Posted by Manuel Backus to The Markets at 09:59 PM | Permalink

Stocks fell today amidst worries about interest rate and a mixed wholesale inflation data. The speech by the Federal Reserve Chairman Ben Bernanke failed to signal an end to the current cycle of interest-rate increases. This was a catalyst for this decline.

Today, the Dow Jones industrial average closed down 39.06 or 0.3% to 11,235.47, the Standard & Poor's 500 index closed down 7.85 or 0.6% to 1,297.23, and the Nasdaq composite index closed down 19.88 or 0.8% to 2,294.23.

Market breadth was negative. On the New York Stock Exchange, losers beat winners by about three to one on volume of 1.5 billion shares. On the Nasdaq, decliners topped advancers two to one on volume of 2.4 billion shares.

A sell-off in the bond market pushed Treasury yields higher and inverted the yield curve - this occurs when short-term rates exceed long-term ones. This sparked concerns about more rate hikes ahead as an inverted curve has historically signaled an economic slowdown. The investors are looking for a normalized yield curve. Additionally, a core inflation reading that topped estimates also added to the rate worries. The wholesale price index posted its biggest drop in three years in February, while the "core" Producer Price Index, which excludes volatile food and energy prices, increased 0.3%.

The Federal Reserve chief Ben Bernanke in his speech on Monday said that the flattening of the yield curve was not a sign of an economic slowdown. However, he did little to shed light on the future course of the Fed's interest-rate hiking campaign. He stated that the economy was in pretty good shape, and such statements are an indication that we have a long way to go to before what would be considered a higher enough interest rate to slow the economy. It appears that the short-term rate could climb as high as 5.5%. While many market observers expect the Fed to raise rates at least two more times, some see three more hikes in the cards.

An interesting study has brought out that stocks may slip for the next two quarters. This is related to the four-year cycle of the presidency, where year two is typically the worst. Typically the second and the third quarters show declines of around 2% each. This year brings nothing to suggest that stocks will buck the trend.

Stock of Oracle (Nasdaq: ORCL) closed down $0.10 to $13.62, as investors expressed some disappointment with the weaker-than-expected database revenue the company reported. The company said revenue in its database segment, while higher, fell short of some investors' hopes and overshadowed a 42% jump in profit on strong sales of new licenses.

On the other hand, Intel (Nasdaq: INTC) closed up $0.16 to $19.78. The world's largest chipmaker saw its shares plummet on January 18 after its fourth-quarter sales came in below estimates, and its first-quarter outlook disappointed. Since that date, Intel's shares have struggled to recover. In a further boost for the stock, Bank of America told clients it will recover its competitive advantage over rival Advanced Micro Devices (NYSE: AMD) in the second half of 2006. Shares of Advanced Micro Devices also closed up $0.29 or 1% to $34.44.

Another gainer on the Dow was General Motors (NYSE: GM) that closed up $1.15 or over 5% to $22.00, on hopes that it might be closer to a deal with its union and Delphi Corp (OTC: DPHIQ) that would provide buyouts to thousands of workers. The three parties have been in talks to stave off a strike at bankrupt Delphi, which would severely impact GM's supply chain.

Stock of Merck & Co. (NYSE: MRK) tacked on 23 cents to $35.89. The company agreed to license technology to make anti-hypertension drugs from French biotech NicOx, in return for up to $340 million in milestone payments as well as other payments.

Oil futures ended slightly higher as traders weighed expectations for another increase in U.S. crude supplies against ongoing threats to production from Nigeria, Iran and Iraq. The benchmark April contract ended up 15 cents at $60.57 a barrel, after falling as low as $59.60 earlier in the session. The May contract, which became the lead contract at the end of the session, rose 38 cents to $62.34.

Posted by Manuel Backus to The Markets at 09:18 PM | Permalink

Awaiting an evening speech by the new Federal Reserve chairman Ben Bernanke, the markets remained cautious while the stock of Wal-Mart Stores Inc. (NYSE: WMT) blossomed on news of plans to expand its operations in China. While technology gained on the back of Internet and computer hardware shares, the broader market struggled as investors decided to play it safe despite a fall in crude prices.

Today, the Dow Jones industrial average closed down 5.12 to 11,274.53, the Standard & Poor's 500 index closed down 2.17 to 1,305.08, and the Nasdaq composite index closed up 7.63 or 0.3% to 2,314.11.

Market breadth was mixed. On the New York Stock Exchange, losers topped winners by nine to seven on volume of 1.41 billion shares. On the Nasdaq, decliners and advancers were narrowly mixed on volume of 1.98 billion shares.

In economic news, investors took in stride the February leading economic indicators index, which fell a narrower-than-expected 0.2 percent. However, the January index was revised much lower, due to a previously reported slide in aircraft orders during that period.

The flat performance of the market is an indicator of hesitation to make bold moves ahead of Bernanke's speech. Investors want the new Fed chairman to signal that an end to the cycle of rate increases is near, especially after a batch of slightly weaker-than-expected economic data last week soothed inflation fears. He is set to speak about the yield curve and monetary policy at the Economic Club of New York.

Boston Federal Reserve President Cathy Minehan warned of the risk to the economy due to a sharp slowdown in the housing market. The rising stock of unsold new homes would result in a decline in construction, a gradual flattening of house prices, and a restrained economic activity. The Fed sees a soft economic growth of 3.5% this year.

The star today was Wal-Mart shares (NYSE: WMT) that rose to its best level of 2006 after the company said it will hire 150,000 people in China over the next five years and open 15 to 20 stores in the country in 2006. The stock was closed up $1.07 at $47.76. In another expansionist move, Dell Computers closed up $0.68 or 2.3% to $29.76, on news that it plans to double its workforce in India over the next three years.

Woes at General Motors (NYSE: GM) continue with the stock closing down 28 cents at $20.85 after its board asked top management to explain newly uncovered accounting problems that forced it to delay its annual report. Additionally, GM, Delphi Corp. and the United Auto Workers union reportedly continued negotiations on possible labor deals that could lead to contract buyouts of thousands of Delphi employees.

Shares of Lucent Technologies Inc (NYSE: LU) closed down $0.08 or 3% to $2.82, after an article in financial weekly Barron's said the stock could be vulnerable should large customers demand lower prices. It stated that the company faces long odds in its comeback effort, due to a smaller pool of customers and to third-generation high-speed wireless data services that have not proved as successful with cell-phone customers as initially hoped.

In takeover news, shares of Michaels Stores Inc. (NYSE: MIK) surged almost 13%, up $4.39 to $38.35 after the retailer of arts-and-crafts supplies said its board is exploring strategic alternatives to boost shareholder value, including a potential sale. Stock of Prudential (NYSE: PUK) closed up $2.37 or 10% to $26.32, after rejecting a $30 billion stock-swap buyout offer from UK rival Aviva. The jump is on speculation that Aviva would improve its bid proposal.

Crude-oil futures moved sharply lower as traders weighed above-average supplies against the latest violence in Nigeria. U.S. light crude oil for April delivery fell sharply, losing $2.35, or about 3.7%, to settle at $60.42 a barrel on the New York Mercantile Exchange.

Posted by Manuel Backus to The Markets at 06:31 PM | Permalink

The Department of Labor noted that consumer price inflation was under control for February, as consumers paid less for energy, food and clothing, offset by higher costs for healthcare, housing and airline fares. The consumer price index rose just 0.1 percent for the month. There is almost surely going to be one more hike later this month, with the overnight rate going up a quarter percent to 4.75 percent, although this has been widely anticipated. However, it is very likely that this hike will be an end to the interest rate increases for the foreseeable future.

The CPI report was good news for the stock market, and stocks were up all around this week showing positive gains in all major indexes. The Dow closed this week at 11,279.65, up an impressive 203.31 over last week, and despite big but unsurprising losses at General Motors. The Nasdaq ended at 2306.48, also up last week by a good margin of 44.44, reversing losses seen last week. The S&P 500 finished out the week at 1307.25, up 25.67 over last week.

Troubled General Motors (NYSE: GM) reported that it had two billion more in losses than it had originally reported for 2005. GM closed Friday at 21.13, losing 2.35 percent over the week. The troubled automaker's stock is now trading near the bottom of its 52-week low, creating a drain on this week's otherwise bullish Dow. However, GM's losses didn't greatly impact the overall bull market this week--a factor that tells us that investors have a high rate of confidence in the market. Another positive indicator--GM was up in after-hours trading Friday, recovering some of its losses to reach 21.59 on Instinet.

We're all still suffering from high winter heating bills and big prices at the gas pump, but energy stocks saw a little pressure this week as crude inventories continued to rise, with stockpiles the highest since 1999. Crude closed down today at 64.20 and energy prices dropped 1.2 percent in February overall, gasoline fell 1.0 percent, and natural gas dropped 4.5 percent. Despite the month's small decreases, energy stocks are still earning strong, and energy prices are up over 20 percent year-over-year.

Posted by Manuel Backus to The Markets at 10:39 AM | Permalink

Stocks closed with modest gains and allowed the major averages to enjoy weekly gains. Investor concern about rising interest rates was soothed by data showing steady economic growth with inflationary pressures contained. The Dow industrials and S&P 500 index reached their best levels since May 2001.

Market breadth was positive. On the New York Stock Exchange, winners edged losers eight to seven on volume of 1.54 billion shares. On the Nasdaq, advancers narrowly topped decliners on volume of 2.09 billion shares.

Some encouraging news on the data front included, increase in U.S. industrial output by 0.7% in February as cooler weather boosted utility production. Auto production fell 0.8%, manufacturing output was flat, high-tech output rose 2.3%, and utility output jumped 7.9%. Capacity utilization in industry which is a key gauge of supply-side inflationary pressures rose to 81.2% against the expected 81.4%. This shows that inflation is under control and gives the Feds another input towards rate stabilization.

A panel of economists said that they expect the
Federal Reserve to wrap up its campaign to boost interest rates by midyear at the latest as economic risk is shifting from inflation to slower growth. They expect the growth in consumer spending to slow to less than 3% in the year ahead. Unemployment rate is likely to remain steady at 4.8% and a rise in this rate would represent an inflation risk if the economy grew too swiftly. However, interest rate increase in Mar as well as in May expected.

American International Group (NYSE: AIG) lost almost 2% to $68.82, after reporting quarterly earnings that fell 72% in the fourth quarter and missed estimates. The insurer saw a steep drop in profit due to a $1.64 billion charge it took to settle claims of fraud and bid rigging. The company also took a $1.19 billion after-tax charge for increased reserves for losses and loss expenses.

Some good gainers today included Boeing (NYSE: BA) closed up $1.10 to $77.83, Pfizer (NYSE: PFE) closed up $0.40 to $26.45, United Technologies (NYSE: UTX)closed up $0.58 to $58.81, Brocade Communications (Nasdaq: BRCD) closed up $0.33 to $6.09, and Extreme Network (Nasdaq: EXTR) gained $0.27 to $4.99.

In takeover news, SBA Communications (Nasdaq: SBAC) closed up $2.29 or over 10% to $23.86, on news that it will buy fellow wireless tower owner AAT Communications for about $1 billion in cash and stock. A report also stated that St Paul Travelers (NYSE: STA) is looking to buy Zurich Financial. Stock of Zurich Financial rose over 12% while that of St Paul fell almost 3.3% to $41.55.

Crude-oil futures traded slightly lower, pulling back from their sharp gains of the previous session after the OPEC cut its 2006 oil demand growth view by 100,000 barrels a day. U.S. light crude oil for April delivery closed down 81 cents, or 1.3%, at $62.77 a barrel, losing 4.7% on the week.

Posted by Manuel Backus to The Markets at 09:38 PM | Permalink

Blue chips glittered while the tech faltered. Stocks closed mixed after a spike in oil prices due to political tensions in Iran took some of the shine off inflation data that suggested the Federal Reserve could stop raising interest rates sooner rather than later. While industrials and S&P 500 build on yesterday's push towards best levels since May 2001, the Nasdaq was hit by a chip sell-off.

Today, the Dow Jones industrial average closed up 43.47 or 0.4% to 11,253.24, the Standard & Poor's 500 index closed up 2.31 or 0.2% to 1,305.33, and the Nasdaq composite closed down 12.28 or 0.5% to 2,299.56.

Market breadth was mixed. On the New York Stock Exchange, winners beat losers by almost two to one on volume of 1.65 billion shares. On the Nasdaq, decliners and advancers were narrowly mixed on volume of 2.39 billion shares.

The latest economic reports showed the nation's economy is growing at a steady pace, with inflationary pressures apparently contained. There have been growing concern about rising interest rates, but a sign that inflation is under control alleviates any kind of fear that the Fed is going to move much beyond 5% in terms of interest rates. The Labor Department reported that the CPI rose 0.1% in February, as expected by the market. The core CPI, increased 0.1%, lower than the 0.2% gain expected by economists.

On the housing front, the pace of constructing new homes fell 7.9% in February. This is higher than economists' expectations. This was a good sign for Home Construction stocks and this was one of the best-performing sectors on the day.

Semiconductors have been a dampener and it is seen that semiconductors and the Nasdaq tend to move in tandem. The SOX is struggling at an important technical level that many traders watch, and this is part of the reason the Nasdaq composite has not done well. The SOX closing below this key level is potentially a bearish sign for the chips and the Nasdaq in the short term.

Altria Group Inc (NYSE: MO) closed up $0.03 to $73.90, after boosting its 2006 earnings forecast. The move reflects $1 billion in tax benefits and the sale of the Milk-Bone brand by Kraft Foods (NYSE: KFT), of which Altria is the majority owner. Share of Kraft closed up $0.13 to $30.27, after it too lifted its 2006 earnings forecast.

Shares of Bear Stearns (NYSE: BSC) down $0.94 to $133.27, despite posting quarterly earnings that topped analyst estimates. The earnings have been driven by record institutional equities and fixed-income revenue. The reason for the decline is that according to the SEC, the company will have to pay $250 million to settle a mutual fund trading violations case.

To cast off its bad Vioxx image, Merck (NYSE: MRK) is working on an AIDS drug that will help in repairing its tarnished reputation. This announcement led the stock of Merck to close up $0.14 to $35.30. On the other hand, stock of ConAgra Inc. (NYSE: CAG) fell almost 4.5% to $19.50 after the company cut its dividend by 34% as part of a series of moves aimed at boosting long-term operating performance.

Stock of Ford Motor Co. (Nasdaq: F) rose 1% to $7.93 after J.P. Morgan slashed its rating to underweight. They cited concerns about SUV sales and the launch of a GM pick-up truck to rival Ford's own product offering. Shares of General Motors (NYSE: GM) rallied 2.3% on this news. Merrill Lynch has upgraded telecom technology company Qualcomm Inc. (Nasdaq: QCOM) to buy from neutral, which led the shares to close up 14 cents at $49.93

U.S. light crude oil for April delivery rose $1.41 to $63.58 a barrel on the New York Mercantile Exchange, a gain of more than 2 percent.

Posted by Manuel Backus to The Markets at 10:06 PM | Permalink

A Federal Reserve report showing the economy growing at a steady pace with few inflationary pressures was the catalyst that made the S&P 500 breach the 1,300 mark for the first time since May 2001. The underlying strength in the economy buoyed investor sentiment to make the Dow industrials and S&P 500 rise to their highest level in nearly five years.

Today, the Dow Jones industrial average closed up 58.91 or 0.6% to 11,210.25, the Standard & Poor's 500 index closed up 5.90 or 0.5% to 1,303.38, and the Nasdaq composite index closed up 16.30 or 0.7% to 2,312.20.

Market breadth was positive. On the New York Stock Exchange, winners beat losers 21 to 11 on volume of 1.6 billion shares. On the Nasdaq, advancers edged decliners 18 to 11 on volume of 2.1 billion shares.

The Beige Book on economic conditions around the country suggested growth, but not too much growth and that was what the market was looking for. Inflation pressures have been muted in the past six weeks, and prices at the retail level increased only slightly. Any data that suggests inflation is benign is greeted positively by Wall Street. This is a good input for the Feds when they decide on the interest rate policy. While market participants have already factored in another quarter-percentage point rate hike at the March 28 meeting, this doesn't really change the sentiment about interest rates.

Investors were also pleased with a report showing a decline in import prices in February and a modest rise in export prices. U.S. import prices fell 0.5% in February against the expected 0.4%. Manufacturing in the New York area surged in March, and this has raised question marks over interest rates.

Shares of DuPont (NYSE: DD) rose up $0.96 or 2.3% to close at $42.87 after the blue-chip chemical company lifted its first-quarter adjusted earnings forecast. DuPont also raised its 2006 earnings forecast to a range of $2.60 to $2.70 a share before items and said it was restructuring one of its units and would cut 1,500 jobs

Stock of Lehman (NYSE: LEH) fell $1.15 to $144.15, despite posting a 24% rise in first-quarter earnings on strong fixed-income trading and near-record merger activity. While this topped analyst forecasts, it did not match the growth of more than 60% rise in quarterly net income generated by Goldman Sachs Group (NYSE: GS) which also closed down $0.64 to $148.78.

Sears Holdings (Nasdaq: SHLD) rallied 12% to close up $15.02 to $132.29 after posting fourth-quarter earnings that topped analyst estimates. The company expects to continue doing better with tight cost controls to help offset weakness in sales at stores open at least a year.

Stock of General Motors Corp. (NYSE: GM) closed up 36 cents at $21.50. The Wall Street Journal reported the automaker has received a bid for its GMAC finance arm from investors led by Kohlberg Kravis & Roberts. This would allow the company to get on the path of recovery and rebuilding.

U.S. light crude oil for April delivery fell 93 cents to settle at $62.17 a barrel on the New York Mercantile Exchange, after the release of a mixed read on weekly inventories. Crude prices have risen more than 5% in the previous two sessions.

Posted by Manuel Backus to The Markets at 10:57 PM | Permalink

A significant decline in long-term interest rates sparked a rally and pushed the Dow 30 and S&P 500 to their highest levels in nearly 5-year. The key was the weak retail sales report that helped bond yields cave in, and any drop in long-term rates takes pressure off the consumer.

Today, the Dow Jones industrial average closed up 75.32 or 0.7% to 11,151.34, the broader Standard & Poor's 500 index closed up 13.35 or 1% to 1,297.48, and the Nasdaq composite index closed up 28.87 or 1.3% to 2,295.90.

Market breadth was positive. On the New York Stock Exchange, winners topped losers by close to three to one on volume of 1.56 billion shares. On the Nasdaq, advancers edged decliners by more than three to two on volume of 1.94 billion shares.

A couple of catalysts today were the strong earnings from Goldman Sachs (NYSE: GS), and a rally in the bond market. These combated against higher oil prices and a mild quarterly outlook from Procter & Gamble (NYSE: PG). The path ahead would depend upon the read on import and export prices, as well as the read on consumer prices.

U.S. retail sales fell 1.3% in February, the biggest decline in six months, dragged down by weak auto sales. This is against the expected 0.9% decline. Excluding autos, retail sales decreased 0.4%, the biggest drop since April 2004. Excluding both autos and gas, retail sales decreased 0.3%. There were steep declines in furniture and clothing stores and lesser drops in gasoline and restaurants.

Federal Reserve Chairman Ben Bernanke stated that he was concerned about the U.S. budget deficit and that the gap could put future living standards in the United States 'at risk'. The trade gap and corresponding surpluses overseas reflected saving abroad that exceeded investment. This excess saving has been attracted to the US by the favorable investment climate, strong productivity growth, and deep financial markets. He said the US should endeavor to raise its savings and cut the trade shortfall to curtail rising debt servicing costs. Pro-growth policies among U.S. trading partners and improving the long-term fiscal outlook would help protect living standards.

Treasury prices rallied on a report that the Federal Reserve is near the end of its rate-hiking campaign. Normally, a weaker-than-expected retail sales report would have been a fundamental driver of higher Treasury prices and lower yields. But on the back of a strong January number, it was in line with what markets were anticipating.

Goldman Sachs (NYSE: GS) kicked off the earnings season for the investment-banking sector on a positive note. Shares rallied up $8.70 or 6.2% to close at a record high of $149.42. The investment bank posted a forecast-beating first quarter and the board also raised its quarterly dividend.

The biggest decliner on the Dow was Procter & Gamble (NYSE: PG) that slid 3.2% to end at $60.01. Excluding the impact of acquisitions, divestitures and foreign exchange, it reported expected gains of 5% to 6%. The revised view reflects recent customer-inventory reductions and tempered quarterly outlooks for Asia and Eastern Europe

Some other prominent gains included Bear Stearns (NYSE: BSC) up $3.41 to $134.53, Morgan Stanley (NYSE: MS) closed up $1.24 to $60.03, Lehman Brothers (NYSE: LEH) closed up $3.08 to $145.30, 3M (NYSE: MMM) closed up $1.44 to $73.53, Home Depot (NYSE: HD) closed up $0.89 to $42.14, and Alcoa (NYSE: AA) closed up $0.51 to $29.60.

U.S. light crude oil for April delivery added $1.33 to settle at $63.10 a barrel on the New York Mercantile Exchange, a gain of more than 2%.

Posted by Manuel Backus to The Markets at 09:40 PM | Permalink

Stocks closed mixed today, on Merger Monday - enthusiasm for a flurry of acquisition announcements was tempered by a 3% rise in crude-oil prices and continuing concern about U.S. interest rates. While the Nasdaq managed modest gains, the broader market continued to struggle.

Today, the Dow Jones industrial average closed down 0.32 to 11,076.02, the broader Standard & Poor's 500 index closed up 2.55 or 0.2% to 1,284.13, and the Nasdaq composite index closed up 4.99 again about 0.2% to 2,267.03.

Market breadth was positive. On the New York Stock Exchange, winners beat losers 18 to 13 on volume of 1.51 billion shares. On the Nasdaq, advancers topped decliners by eight to seven on volume of 1.68 billion shares.

Treasury yields rose once again to reach 4.77%. This sparking renewed concerns about pressure to the economy. An attractive bond market is attractive to investors and leads to pulling money away from stocks. The run up in interest rates leads to losses especially in financial stocks. This was evident with American Express (NYSE: AXP) closing down $0.39 to $53.84, and Citigroup (NYSE: C) closing down $0.15 to $46.84.

In a new take on interest rates, San Francisco Fed President Janet Yellen said the central bank's credibility would be enhanced if it established a specific inflation target. She favors an inflation target of a 1.5% as measured by PCE Index. A numerical target could help to anchor the long-term inflation expectations and avoid stability concerns. This would also help the Fed keep the economy on an even keel, by enhancing the flexibility of monetary policy to respond to the real effects of adverse shocks. This is in tune with the Fed chief Ben Bernanke who has said he would like to steer the central bank towards setting a formal inflation target.

The Merger Monday provided little surprises since most merger deals had been rumored previously. The first was Capital One Finance (NYSE: COF) that closed down $6.82 or 7.6% to $83.10, announcing that it would buy North Fork Bancorp (NYSE: NFB) for about $14.6 billion in stock and cash. Stock of North Fork Bancorp closed up $3.80 or 15% to $29.20. McClatchy Company (NYSE: MNI) closed down $1.51 or 3% to $51.55, on announcing that it is buying larger Knight Ridder (NYSE: KRI) for $4.5 billion in cash and stock. Knight Ridder closed down $1.08 or 1.7% to $63.92. Watson Pharmaceuticals (NYSE: WPI) closed down $0.55 or 2% to $29.00, on agreeing to buy Andrx (Nasdaq: ADRX) that closed up $2.14 or 10% to $23.73, for $1.9 billion in cash. Additionally, Verizon (NYSE: VZ) has made an informal offer to Vodafone (NYSE: VOD) about acquiring Vodafone's 45% stake in Verizon Wireless for about $40 billion.

A report has brought out that rising mortgage rates have had a direct impact on home affordability, home prices and an overvalued home market. Demand in the housing market has declined in the past few months and as rates rise, homebuyers may start demanding lower prices. This can have a direct effect on home construction stocks.

The failed port deal gets a further twist. The central-bank governor of the UAE suggested his country may switch up to 10% of its $22.5 billion in currency reserves into euros. While unsaid, this could be a sign of fallout over congressional hostility toward the acquisition of some U.S. ports by a Dubai-based firm. The deal has damaged the reputation of President Bush with his approval rate falling to historic levels.

Notable news from off-shores include; shares of the London Stock Exchange (UK: LSE) rallied nearly 30% as shareholders reacted favorably to a $4.2 billion buyout offer from the Nasdaq Stock Exchange (Nasdaq: NDAQ) and reports the NYSE Group Inc. (NYSE: NYX) also may be interested in taking over Europe's largest stock exchange. NYSE shares closed up 9% at $81.30 while Nasdaq shares lost 1.9% to close at $42.88. Additionally, Germany's Schering AG rejected a hostile $17.4 billion cash offer Merck KGaA.

U.S. light crude oil for April delivery jumped $1.81 or nearly 3% to settle at $61.77 a barrel on the New York Mercantile Exchange. This led most oil stocks to jump up by 2%.

Posted by Manuel Backus to The Markets at 09:26 PM | Permalink

Exxon Mobil (NYSE: XOM), which made news earlier this year for posting the highest profit ever for a U.S. company, said Wednesday that it would put an extra two billion dollars into oil and natural gas drilling in an attempt to boost output by 25 percent by 2010.

According to the company report, CapEx will hit $20 billion a year between 2007 and 2010--and this is one factor that will drive more profits for Big Oil (especially Exxon) for years to come. Oil futures closed at just under $60 a barrel today for the first time in over a month, with domestic crude inventories at a seven-year high.

But oil and gas is in no immediate danger of losing money, to be sure. Natural gas went up three percent today, and it's likely that crude will not dip below the $60 level again for the foreseeable future. Although supplies are high, a strong economy will boost demand over the next two quarters as seasonal demand picks up.

Another noteworthy event this week was the New York Stock Exchange itself going public, and is now trading under the ticker symbol NYX. Shares jumped 25 percent during the first day of trading on Wednesday this week. Besides giving us one more stock to trade, the deal will have some impact on just how business is done on the floor.

The transformation immediately followed the NYSE's acquisition of Archipelago Holdings, an electronic trading platform--and the result will inevitably be more electronic trading and less of the chaotic but exciting open outcry model that has been in use since the beginning.

And the telecom business is definitely going places, but just where it is going is anybody's guess. This week AT&T (NYSE: T) announced plans to cut 10,000 jobs if its purchase of BellSouth (NYSE: BLS) is approved by regulators.

Telecom is in a particularly unique position, with giants like AT&T feeling increasing pressure from smaller and more nimble start-ups that are eager to edge their way into this lucrative business.

Stocks ended well on Friday after a shaky week, with the Dow closing at 11076.34, up 54.75 over last week's close. The Nasdaq however, ended at 2262.04, losing 40.56 over last week, and the S&P500 closed at 1281.58, down 5.65 over last Friday.

The Treasury Department was the bearer of bad news today, as it announced that the federal deficit hit $119 billion in February, beating the previous record of $114 billion.

But the good news (at least some government economists would call it good news) is that the $119 billion deficit is actually $2 billion short of the $121 billion deficit that had been forecast by the Congressional Budget Office.

Posted by Manuel Backus to The Markets at 03:01 PM | Permalink

A strong jobs report allowed investors to focus on the current strength of the economy, and helped them set aside interest-rate concerns that have plagued the market for most of the week. The upbeat jobs report provided the catalyst for investors to move back into stocks after a mixed week and allowed the markets to close on a positive note.

Today, the Dow Jones industrial average closed up 104.06 or 1% to 11,076.34, the broader Standard & Poor's 500 index closed up 9.35 or 0.7% to 1,281.58, and the Nasdaq composite index closed up 12.32 or 0.5% to 2,262.04. For the week, the Dow gained 0.5%, the S&P lost 0.4%, and the Nasdaq declined 1.8%.

Market breadth was positive. On the New York Stock Exchange, winners beat losers by more than two to one on volume of 1.21 billion shares. On the Nasdaq, advancers topped decliners by 19 to 10 as 1.37 billion shares traded hands.

The labor Department reported that U.S. non-farm payrolls increased by a better-than-expected 243,000 in February, versus a downwardly revised gain of 170,000 in January. Additionally, the jobless rate ticked back up to 4.8%, from a five-year low of 4.7% in January. The number of unemployed people rose by 153,000 to 7.2 million. However, the report shows that the economy is still growing at an above trend pace and with slack in labor and product markets all but fully absorbed, inflation pressures are likely to gradually build this year. That gives the Federal Reserve a green light to raise interest rates again. On the flip side, it also shows that the economy continues to recover and that inflation remains contained, which are both supportive factors for stocks.

The average hourly pay of workers jumped 3.5%, the biggest rise since 2001. While that's good news for employees, it once again raises the chances that the Fed will hike interest rates further in a bid to contain inflation.

On the data front, U.S. wholesale inventories were as tight as ever in January, as sales growth of 1% outpaced inventory gains of 0.1%. Tight inventories should lead to higher production later as wholesalers try to keep up with rising demand by increasing orders to producers and increasing imports. This would lead to a growth in economy.

The London Stock Exchange on Friday said that it rejected a $4.17 billion bid from the Nasdaq Stock Market Inc. (Nasdaq: NDAQ). The LSE (UK: LSE), has been the target of at least two buyout attempts recently. This also ramps up a competitive war between Nasdaq and the rival NYSE Group Inc. (NYSE: NYX) Both are setting their sites on targets both domestically and abroad. They are seeking a European market for foreign companies that cannot meet U.S. listing requirements. The ripe targets are the Deutsche Bourse, LSE and Euronext.

Some prominent gains today included Verizon Communications (NYSE: VZ) that closed up $0.51 or 1.4% to $34.09, General Motors (NYSE: GM) closed up $0.36 or 2% to $21.70, Honeywell (NYSE: HON) closed up $0.80 or 2% to $42.07, Advanced Micro Devices Inc (NYSE: AMD) closed up $0.35 to $36.56, Novellus Systems (Nasdaq: NVLS

Recent data on crude reserves showed plentiful U.S. inventory levels and after the OPEC major oil producers left their output limits unchanged this week, the front-month contract fell 52 cents to $59.95 a barrel on the New York Mercantile Exchange. On the week, crude dropped 5.8%.

Posted by Manuel Backus to The Markets at 09:43 PM | Permalink

Investors are nervous and concerns over the impact of higher interest rates continued to dog the market. Additionally, uncertainty ahead of the release of the February employment report also kept some buyers on the sidelines. Concerns about a slowdown in semiconductor sales as well as weakness in Google (Nasdaq: GOOG) continued to weigh on techs. A steep sell-off in chips and other tech stocks sent the Nasdaq tumbling for the seventh straight session.

Today, the Dow Jones industrial average closed down 33.46 or 0.3% to 10,972.28, the broader Standard & Poor's 500 index closed down 6.24 or 0.5% to 1,272.23, and the Nasdaq composite index closed down 17.74 or 0.8% to 2,249.72.

Market breadth was negative. On the New York Stock Exchange, losers topped winners 17 to 14 on volume of 1.55 billion shares. On the Nasdaq, decliners topped advancers 17 to 12 as 2.07 billion shares changed hands.

Amongst the reports that missed the mark today were the Jobless Claims and the Trade Balance. Jobless claims rose by 8,000 to 303,000 last week, which exceeded analysts' estimates. The January trade balance widened by 5.3% to $68.5 billion against the forecasts for a rise to $66.5 billion. The previous record was $67.84 billion in October

The nervous investment environment can be attributed to the bond rates that is up and the increased concern about the financial futures market, which appears to be predicting three more rate hike for the Fed funds. The employment report due tomorrow also throws up uncertainty. The unemployment rate is forecast to rise to 4.8% from 4.7% in January. If the report comes in stronger than expected the Federal Reserve could view it as a signal that economy is still growing at a pace that is fueling inflationary pressures. This would force a continued interest rate hike.

Despite strong earnings report, stock of National Semiconductor (NYSE: NSM) closed down $0.85 to $27.18. While reporting higher earnings, the investors were concerned about the buildup in inventories. Google (Nasdaq: GOOG) too closed down $10.88 or 3% to $343.00, as its latest blunder continued to weigh on investors. The company also said that it had agreed to settle a class action lawsuit over advertising fraud by outside parties on its site for up to $90 million.

Reports of an approaching agreement led General Motors (NYSE: GM) to close up $0.92 or 4.5% to $21.34. It is reported that the automaker and its supplier Delphi are nearing an agreement with the United Auto Workers (UAW) Union to avoid a strike and cut labor costs. This however, was denied by the UAW. This had a positive effect on auto stocks, with Ford (Nasdaq: FORD) closing up $0.20 or 2.7% to $7.75, and Daimler Chrysler (NYSE: DCX) gaining $0.80 or 1.5% to $55.12.

Congressional leaders reportedly told President Bush that the United Arab Emirates-owned DP World deal for port maintenance was essentially dead on Capitol Hill. Anticipating this, the company announced that it would transfer its operations of American ports to a U.S. entity. However, the announcement did not specify which U.S. company would be involved.

Crude futures rebounded after tumbling the previous session. U.S. light crude oil for April delivery added 45 cents to settle at $60.47 a barrel on the New York Mercantile Exchange.

Posted by Manuel Backus to The Markets at 07:14 PM | Permalink

A drop in crude-oil prices and a stabilizing bond market offered some respite to investors concerned about inflation and rising interest rates. Blue chips advanced in a choppy day of trading while tech stocks slumped for the fifth straight session. NYSE Group (NYSE: NYX), took birth today and surged over 18% on the very first day.

Today, the Dow Jones industrial average closed up 25.05 or 0.2% to 11,005.74, the Standard & Poor's 500 index closed up 2.59 or 0.2% to 1,278.47, and the Nasdaq composite index closed down 0.92 to 2,267.46.

Market breadth was negative. On the New York Stock Exchange, losers narrowly beat winners on volume of 1.8 billion shares. On the Nasdaq, decliners topped advancers 15 to 14 on volume of 2.1 billion shares.

Investors continue to be on the edge about the prospect of rising interest rates. However, analyst's feel that the stock market's long-term outlook is upbeat. The longer-term trend has for the most part been positive. In the near term, investors are waiting for the release of the February employment report due on Friday. If unemployment is still dropping when we've just had a report showing productivity is declining, then the Fed would be really concerned about wage inflation. That would mean we would be more likely to see more than one or two rate hikes.

The bright spark of the day was the NYSE Group (NYSE: NYX) that closed up $15.75 to $80.00, and made a splash with its market debut. Shares surged 25% on the first day of trading in the exchange's 213-year history, and the Big Board sealed its purchase of rival Archipelago Holdings on Tuesday, creating a new company worth more than $10 billion.

Twenty out of 30 Dow components posted gains today. Some of these were Procter & Gamble (NYSE: PG) that closed up $0.77 to $61.07, Coke (Nasdaq: COKE) closed up $0.43 to $42.23, and Martek Biosciences (Nasdaq: MATX) gained $3.69 or 12% to $34.22, after the company reported quarterly results that topped estimates.

The string of blunders continued from Google (Nasdaq: GOOG) and the stock closed down $10.57 or nearly 3% to $353.88. The tech bellwether said late Tuesday that slides showing sales projections were mistakenly posted on the Web during its recent analyst meeting.

Good news for the housing sector, in a report it is felt that the U.S. housing market should remain strong in 2006. It is expected that the housing activity will stabilize and remain at a high level this year. This is based on the expectation that the Federal Reserve will keep underlying inflation low and stable.

The Energy Department reported that weekl