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« April 2006 |
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| June 2006 »
Stocks wrapped up a weak month on a positive note, with the S&P 500 Index putting in its worst May showing in 22 years. The markets finished the month on a dismal note as investors remained uncertain in a market plagued by worries over inflation, slowing economic growth and uncertainty over the outlook for interest rates.
Today, the Dow Jones industrial average closed up 73.88 or 0.67% to 11,168.31, the broader Standard & Poor's 500 index closed up 10.25 or 0.81% to 1,270.09, and the Nasdaq composite index closed up 14.14 or 0.65% to 2,178.88.
Market breadth was positive. On the New York Stock Exchange, winners beat losers by a margin of three to one on volume of 1.98 billion shares. On the Nasdaq, advancers topped decliners by a margin of nearly 19 to 10 as 2.18 billion shares changed hands.
Investors are very worried that the Federal Reserve is making that age-old mistake of raising the short-term interest rates too high and ending the bull market and the recovery. According to a summary of their policy meeting earlier this month, central bank officials appeared very worried about rising prices and expectations among consumers that prices will rise further. The fed-funds futures market has priced in a higher chance of a June rate hike with the odds rising to 72% from 56%.
Business activity expanded in the Chicago region with the Chicago purchasing managers' index rising to 61.5% from 57.2% in April, much stronger than the expected decline to 56.2%. The prices-paid index, an inflation gauge, fell to 76.9% from 77.2%. However, this apparent strength in the economy is something of a double-edged sword for the markets as it raises fears that robust growth will stoke inflationary pressures, prompting the Fed to keep raising rates.
Merrill Lynch cuts its price target on eBay (Nasdaq: EBAY) and on Google (Nasdaq: GOOG). Shares of eBay closed down $0.41 or 1% to $32.80 after the price target was slashed to $44 from $51. Stock of Google lost $3.03 or 1% to $368.91. Additionally, Google also addressed concerns about its strategy and growth prospects. On the other hand, shares of Research In Motion rose 9 cents to $64.89 after J.P. Morgan upgraded the maker of the BlackBerry handheld device, citing valuation and positive catalysts for the company.
The FDA cleared Omnitrope, a hormone used to treat growth disorders. This could possibly set a precedent that could allow for clones of biotechnology drugs. While Novartis' (NYSE: NVS) Sandoz, the maker of Omnitrope, said the ruling is precedent setting and is the first follow-on version of a previously approved recombinant biotechnology drug; the FDA issued a statement specifically denying that Omnitrope is a generic biologic. A recombinant biotechnology drug is one grown in living cell lines, as opposed to a manufactured chemical. This U.S. listed shares of Novartis rose 2.5% to $66.0. As collateral effect, shares of Pfizer Inc. (NYSE: PFE) benefited as the company makes a similar hormone. Pfizer tacked on 8 cents to $23.66.
In merger and acquisition news, Mirant (NYSE: MIR) offered about $8 billion to buy NRG Energy (NYSE: NRG), but NRG, an independent power producer, rejected the proposal without entering into discussions. Shares of Mirant closed down $0.66 or 3% to $24.59, while NRG closed up $6.75 or 16% to $49.76. Network equipment maker ADC Telecommunications (Nasdaq: ADCT) closed down $4.39 or 20% to $17.99, after it said it agreed to buy Andrew Corp (Nasdaq: ANDW) for about $2 billion in stock. Shares of Andrew Corp closed up $0.30 or 3% to $10.08.
U.S. light crude oil for July delivery fell 74 cents to settle at $71.29 a barrel on the New York Mercantile Exchange, on hopes of easing tensions with Iran, and as the OPEC appeared unlikely to cut its output quota. Additionally, the Secretary of State Condoleezza Rice said the United States would open talks with Iran if that country suspended its nuclear activities.
The FDA cleared Omnitrope, a hormone used to treat growth disorders. This could possibly set a precedent that could allow for clones of biotechnology drugs. While Novartis' (NYSE: NVS) Sandoz, the maker of Omnitrope, said the ruling is precedent setting and is the first follow-on version of a previously approved recombinant biotechnology drug; the FDA issued a statement specifically denying that Omnitrope is a generic biologic. A recombinant biotechnology drug is one grown in living cell lines, as opposed to a manufactured chemical. This U.S. listed shares of Novartis rose 2.5% to $66.0. As collateral effect, shares of Pfizer Inc. (NYSE: PFE) benefited as the company makes a similar hormone. Pfizer tacked on 8 cents to $23.66.
Stocks broke a three-session run of gains, after a rise in oil prices, a falling dollar and a disappointing sales forecast from Wal-Mart Stores Inc(NYSE: WMT). raised questions about the outlook for inflation and economic growth. The Dow tumbled 184, Nasdaq sank 2% as investors worried about slowing growth. The outlook appears bleak ahead of a week packed with economic news.
Today, the Dow Jones industrial average closed down 184.18 or 1.6% to 11,094.43, the broader Standard & Poor's 500 index closed down 1.6% and the Nasdaq composite index closed down 45.63 or over 2% to 2,164.74. These declines were the third-biggest in point terms for all three major gauges.
Market breadth was negative. On the New York Stock Exchange, decliners beat advancers by a margin of three to one on volume of 1.5 billion shares. On the Nasdaq, losers also beat winners by a margin of three to one as 1.7 billion shares changed hands.
It is evident that the investors continue to be uncertain; and when there is uncertainty the markets move lower. History shows that in 2004 there were three pullbacks in the market and the average of those three pullbacks was 7.4%. When transposed to the current situation, the S&P may fall from its peak of 1,326 to a target of 1,230. The key factors for the sell-off today were higher oil prices and Wal-Mart's May sales forecast. It is feared that the low-income consumer is finally succumbing to gas prices. Economist predict that the market will remain volatile over the next month as investors pore over each upcoming economic report for clues on the future outlook for interest rates. Additionally, President Bush has nominated Henry Paulson, chairman and chief executive of Goldman Sachs Group, to replace John Snow as Treasury secretary. There had been speculation Paulson wasn't interested in the job and the pick came as a bit of a surprise, but the choice shouldn't rattle investors too much.
Amongst data news, consumer confidence slipped with the index falling to 103.2 in May from a revised 109.8 in April. However, this decline was not as steep as was expected. Economists had expected the index to slip to 100.7.
Shares of Wal-Mart (NYSE: WMT) were down 2.7% to $48.30, after the world's No. 1 retailer said higher gas prices left its May sales gain at the low end of its earlier guidance. It expects same-store sales to show a 2.3% increase for this month, below the average Wall Street estimate. Wal-Mart continues to see higher gasoline and utility prices impacting its customers. As a result, the company has seen more pronounced paycheck cycles.
Shares of General Motors (NYSE: GM) fell 5.4% down $1.26 to $26.57. Deutsche Bank cut the stock to sell, citing valuation and concern about moderating retail vehicle sales. The drop came after the troubled automaker rallied last week on upgrades by Merrill Lynch and Prudential.
Shares of Kinder Morgan (NYSE: KMI) surged more than 18% after senior management of the gas and oil pipeline operator announced plans to take the company private for $100 a share, a premium of about 18.5% over its closing price Friday. This deal would be worth $13.4 billion.
Crude futures rose to a more than two-week high as traders looked ahead to a meeting of the OPEC in Caracas, Venezuela, this week. A serious consideration of output reductions could further rally prices. U.S. light crude for July delivery jumped 66 cents to settle at $72.03 a barrel on the New York Mercantile Exchange.
Shares of General Motors (NYSE: GM) fell 5.4% down $1.26 to $26.57. Deutsche Bank cut the stock to sell, citing valuation and concern about moderating retail vehicle sales. The drop came after the troubled automaker rallied last week on upgrades by Merrill Lynch and Prudential.
Shares of Wal-Mart (NYSE: WMT) were down 2.7% to $48.30, after the world's No. 1 retailer said higher gas prices left its May sales gain at the low end of its earlier guidance. It expects same-store sales to show a 2.3% increase for this month, below the average Wall Street estimate. Wal-Mart continues to see higher gasoline and utility prices impacting its customers. As a result, the company has seen more pronounced paycheck cycles.
Last week had some investors worried after a two-week drop on Wall Street. We reported that the two week slide was over, and indeed it was, and indexes ended up this week and Wall Street is breathing a little easier. The Dow ended today at 11278.61, up 134.55 on the week. The Nasdaq closed at 2210.37, up 16.49, and the S&P500 finished at 1280.16, up 13.13. Crude edged up to 71.37, up 2.08 for the week. Gold futures was the only loser, finishing at 651.00, or down 6.50 over last week but still holding strong.
The two-week slide occurred primarily due to concerns about possible increases in the interest rate. And while a further increase may still be possible, it would seem that the Fed isn't dead set on the idea as investors originally thought. The Fed's "comfort zone" for inflation stops at a two percent maximum; but the 12-month core inflation increase now stands at 2.1 percent. But while there is a 0.1 percent overage here, the Fed has indicated that core inflation is "contained," and they expect it to float back into the comfort zone after the previous interest rate increases have had time to take effect. Whether the Fed raises the interest rate another quarter percent in June will depend for the most part on the data that will be reported between now and then.
A secondary reason the stock market ended on a positive note after a rough start this week is the fact that President Bush signed the tax cut package on Wednesday, as expected. The bill extends investor-friendly tax treatment that includes a lower rate on capital gains and dividends through 2010.
Second-guessing the Fed is a dangerous business, but I'll say that there's a better than even chance that the Fed will lay off the interest hikes for June, at least temporarily. This will give way to a rally immediately after next month's Fed meeting.
Stocks closed higher posting a gain for the week after major gauges extended their rally as investors saw signs of economic strength and a break from inflation in the latest consumer spending and confidence reports. This lifted hopes the Federal Reserve will stop increasing interest rates sooner rather than later. However, some investors worried that some of the data also pointed to a slowdown in U.S. economic growth.
Today, the Dow Jones industrial average closed up 67.56 or 0.6% to 11,278.61, the broader Standard & Poor's 500 index closed up 7.28 points, or almost 0.6%, to 1,280.16, and the tech-laden Nasdaq composite closed up 12.13 or 0.6% to 2,210.37. For the week the Dow rose 1.2%, the S&P 500 advanced 1%, and the Nasdaq gained 0.8%.
Market breadth was positive. On the New York Stock Exchange, advancers beat decliners by a margin of 23 to 9 on volume of 1.3 billion shares. On the Nasdaq, winners beat losers also by a margin of 17 to 11 as 1.5 billion shares changed hands.
While the data that has come out has been mixed, it appears that the sellers are gone and people are feeling better about the market. Personal incomes rose 0.5% in April but the increase was wiped out by a 0.5% rise in consumer prices. Core inflation, excluding food and energy rose 0.2% in April as expected after a 0.3% gain in March. I the last 12 months, this has risen 2.1%, the fastest gain since March 2005. Core inflation is now running slightly above the Federal Reserve's informal "comfort zone" of 1% to 2%. After the personal income and spending report, the odds of a quarter-percentage-point increase in U.S. interest rates fell on the federal-funds-futures market. The federal-funds rate currently stands at 5%. Additionally, U.S. consumer sentiment strengthened slightly with the UMich consumer sentiment index inching higher to 79.1 in line with expectations.
Shares in GM (NYSE: GM) rose 18 cents to $28.08, buoyed by a second broker upgrade in three days. Prudential Equity Group lifted its recommendation on the auto maker to overweight from neutral, saying the stock is attractive for investors with a short-term time horizon. They believes the company's share price will benefit from big year-on-year full-size-SUV sales increases, a strong take-up of its buyout offer by its employees, upward earnings-per-share revisions and a new labor deal between GM, Delphi (OTC: DPHIQ.PK) and the United Auto Workers union. GM, meanwhile, said it plans to make a "major investment announcement" at its Ypsilanti, Mich., transmission plant. The shares have risen more than 40%.
Shares of Merck (NYSE: MRK) closed up 17 cents at $34.56, after the drug giant said it received U.S. regulatory clearance for Zostavax, its vaccine to prevent shingles in people aged 60 and older. Shingles, which is caused by the chickenpox virus, most often occurs in older adults who contracted chickenpox earlier in their lives. Merck said that Zostavax will be priced at $145.35 a dose. About 1 million Americans fall ill with shingles every year.
Luxembourg steel manufacturer Arcelor SA in its attempt to fight off a hostile bid from Mittal Steel (NYSE: MT), has agreed to combine with Russian steelmaker Severstal in what could create the world's leading steelmaker. This leaves the fate of Arcelor to its shareholders, who can still opt for Mittal Steel's bid if they choose, at a meeting scheduled for June 28. The terms call for Alexey A. Mordashov, the 40-year-old billionaire who's Severstal's controlling shareholder, to contribute his 89.6% stake in Severstal's steel business, as well as Severstal's iron ore and coal assets, his stake in Italy's Lucchini, and 1.25 billion euros in cash in exchange for 32% of the enlarged Arcelor. This values the exchange at 44 euros a share. However, shares of Arcelor fell 4.2% to 32.64 euros, giving it a market capitalization of roughly $27 billion. The shareholders can still opt for Mittal Steel's bid if they choose. Mittal Steel shares closed up 4.3% at $33.71. Mittal Steel had last week increased its offer by 34%, valuing the Luxembourg-based steelmaker at 37.74 euros a share at the time of the offer.
The casino operator Las Vegas Sands closed up $5.96 or 9% to $69.63, after it was selected to build and run a casino in Singapore. The drug-maker Celgene closed up $1.02 or over 2% to $41.46, after it won approval from the FDA for its drug Thalomid as a treatment for a form of blood cancer.
U.S. light crude oil for July delivery settled 5 cents higher at $71.37 a barrel in shortened trade on the New York Mercantile Exchange. Crude ended 3% higher for the week.
Shares in GM (NYSE: GM) rose 18 cents to $28.08, buoyed by a second broker upgrade in three days. Prudential Equity Group lifted its recommendation on the auto maker to overweight from neutral, saying the stock is attractive for investors with a short-term time horizon. They believes the company's share price will benefit from big year-on-year full-size-SUV sales increases, a strong take-up of its buyout offer by its employees, upward earnings-per-share revisions and a new labor deal between GM, Delphi (OTC: DPHIQ.PK) and the United Auto Workers union. GM, meanwhile, said it plans to make a "major investment announcement" at its Ypsilanti, Mich., transmission plant. The shares have risen more than 40%.
Shares of Merck (NYSE: MRK) closed up 17 cents at $34.56, after the drug giant said it received U.S. regulatory clearance for Zostavax, its vaccine to prevent shingles in people aged 60 and older. Shingles, which is caused by the chickenpox virus, most often occurs in older adults who contracted chickenpox earlier in their lives. Merck said that Zostavax will be priced at $145.35 a dose. About 1 million Americans fall ill with shingles every year.
Luxembourg steel manufacturer Arcelor SA in its attempt to fight off a hostile bid from Mittal Steel (NYSE: MT), has agreed to combine with Russian steelmaker Severstal in what could create the world's leading steelmaker. This leaves the fate of Arcelor to its shareholders, who can still opt for Mittal Steel's bid if they choose, at a meeting scheduled for June 28. The terms call for Alexey A. Mordashov, the 40-year-old billionaire who's Severstal's controlling shareholder, to contribute his 89.6% stake in Severstal's steel business, as well as Severstal's iron ore and coal assets, his stake in Italy's Lucchini, and 1.25 billion euros in cash in exchange for 32% of the enlarged Arcelor. This values the exchange at 44 euros a share. However, shares of Arcelor fell 4.2% to 32.64 euros, giving it a market capitalization of roughly $27 billion. The shareholders can still opt for Mittal Steel's bid if they choose. Mittal Steel shares closed up 4.3% at $33.71. Mittal Steel had last week increased its offer by 34%, valuing the Luxembourg-based steelmaker at 37.74 euros a share at the time of the offer.
Stocks rallied after the latest reading of economic growth and housing data eased inflation worries and emboldened investors to seek out attractively valued shares in the wake of a two-week sell-off. Yesterday and today represent the market's first back-to-gains since the Federal Reserve last lifted interest rates on May 10 and issued a statement that rattled investors by leaving them uncertain about the central bank's future policy moves.
Today, the Dow Jones industrial average closed up 93.73 or 0.8% to 11,211.05, the broader Standard & Poor's 500 index closed up 14.31 over 1% to 1,272.88, and the Nasdaq composite index closed up 29.07 or 1.3% to 2,198.24.
Market breadth was positive. On the New York Stock Exchange, advancers beat decliners by a margin of 25 to 7 on volume of 1.73 billion shares. On the Nasdaq, winners beat losers by a margin of 11 to 4 as 2.01 billion shares changed hands.
Economist feel that the market is likely to remain volatile in the near term but "the vast bulk of the decline has taken place." The news that stirred the market was when founder of Enron, Kenneth Lay was found guilty on all counts of fraud and conspiracy, and former chief executive Jeffrey Skilling was found guilty on 19 of 28 counts of securities fraud. Additionally, Federal Reserve Chairman Ben Bernanke reiterated in a letter that long-term inflation expectations appear to be well contained and would remain so as long as the Fed remains committed to price stability.
On data news, the Commerce Department stated that the economy grew at a 5.3% annual rate in the first quarter. Many economist were forecasting an upward revision to 5.6%. The core personal-consumption-expenditure price index, rose at a 2% annual rate unchanged from the Commerce Department's initial estimate. Sales of existing homes fell 2% in April and the decline was close to the expected. First-time claims for unemployment benefits, fell to 329,000 in the week ending May 20, the Labor Department said, a decrease of 40,000 from the prior week. Therefore, the latest economic reports shows solid growth but few signs of inflation flaring up. It implies the Fed has another reason to perhaps drag its feet or pause in June.
Shares in Wal-Mart Stores Inc. (NYSE: WMT) closed up $1.42 or 3% to $49.45, after Banc of America Securities raised its rating on the retailer to "buy" from "neutral." This reflects early success from the company's current merchandise initiatives, and hopes for improved margin expectations. Shares of General Motors Corp. (NYSE: GM) closed up $1.39 or 5.2% to $27.90. The company reported that more than 20,000 U.S. factory workers have accepted buyout offers, surpassing its internal target with a month remaining before the offer expires.
Shares in Yahoo Inc. (Nasdaq: YHOO) and eBay Inc (Nasdaq: EBAY) rallied after the two companies entered a multi-year partnership. Stock of eBay closed up $3.68 or 12% to $33.88, after Prudential upgraded the online auctioneer to "overweight" from "neutral." Yahoo closed up $1.13 to $32.92. Yahoo will become the exclusive third-party provider of graphical advertising on eBay's site and eBay's PayPal will become the exclusive payment system on Yahoo's sites. The companies also agreed to a co-branded version of eBay's toolbar, which will include links to Yahoo's search and mail functions. Additionally, the companies will develop "click-to-call" advertising technologies, in which consumers can use a link included inside an advertisement to directly call that advertiser.
Stock of Mastercard (NYSE: MA) closed up $7.00 or 18% to $46.00, in its first day of trading. The credit card company priced its initial public offering of stock at $39 a share, below the $40 to $43 forecasted range. The credit card giant became a listed company after its origins as a banking collective 40 years ago
Shares of XM (Nasdaq: XMSR) closed up 4.7% at $14.35, despite cutting its 2006 subscriber forecast to 8.5 million from 9 million, citing "overall softness" in retail sales of its radio products during the second quarter. In the first quarter, XM had been on pace to achieve its initial projection of 9 million subscribers and has affirmed that it is on track to be cash flow positive in the fourth quarter of this year. The company expects to post subscriber revenue of $835 million for 2006, and a loss before interest, taxes, depreciation and amortization of $235 million.
U.S. light crude oil for July delivery climbed $1.46 to settle at $71.32 a barrel on the New York Mercantile Exchange after tumbling below $70 Wednesday.
Shares of XM (Nasdaq: XMSR) closed up 4.7% at $14.35, despite cutting its 2006 subscriber forecast to 8.5 million from 9 million, citing "overall softness" in retail sales of its radio products during the second quarter. In the first quarter, XM had been on pace to achieve its initial projection of 9 million subscribers and has affirmed that it is on track to be cash flow positive in the fourth quarter of this year. The company expects to post subscriber revenue of $835 million for 2006, and a loss before interest, taxes, depreciation and amortization of $235 million.
Stock of Mastercard (NYSE: MA) closed up $7.00 or 18% to $46.00, in its first day of trading. The credit card company priced its initial public offering of stock at $39 a share, below the $40 to $43 forecasted range. The credit card giant became a listed company after its origins as a banking collective 40 years ago
Shares in Yahoo Inc. (Nasdaq: YHOO) and eBay Inc (Nasdaq: EBAY) rallied after the two companies entered a multi-year partnership. Stock of eBay closed up $3.68 or 12% to $33.88, after Prudential upgraded the online auctioneer to "overweight" from "neutral." Yahoo closed up $1.13 to $32.92. Yahoo will become the exclusive third-party provider of graphical advertising on eBay's site and eBay's PayPal will become the exclusive payment system on Yahoo's sites. The companies also agreed to a co-branded version of eBay's toolbar, which will include links to Yahoo's search and mail functions. Additionally, the companies will develop "click-to-call" advertising technologies, in which consumers can use a link included inside an advertisement to directly call that advertiser.
Stocks bounced amidst heavy volume following frequent swings in and out of positive territory, after the latest economic data and a fresh pullback in commodity prices left investors unsure over the outlook for economic growth and interest rates. Investors took in mixed readings on the economy and sinking crude and gold prices. However, in the final half hour of trading, the oversold market attracted new buyers.
Today, the Dow Jones industrial average closed up 18.97 or 0.17% to 11,117.32, the broader Standard & Poor's 500 index closed up 1.99 or 0.16% to 1,258.57, and the Nasdaq composite index closed up 10.41 or 0.48% to 2,169.17.
Market breadth was negative and the volume was among the heaviest of any session this year. On the New York Stock Exchange, decliners beat advancers by a margin of 19 to 13 on volume of 2.259 billion shares. On the Nasdaq, losers topped winners by a margin of 8 to 7 as 2.635 billion shares changed hands.
The numerous swings in the market today show that investors reacted to data showing both weakness and strength and volatile activity in other markets. It is opined that the markets are not going meaningfully lower from here. We are at valuation support and the downside is limited. We're still trying to shake out those last sellers before the market makes a move higher. On a fundamental basis, the market is worried about slowing growth. The gains in the bond market over the past few days show the market is now less worried about inflation, and more about the impact on corporate earnings of a slowdown in the economy.
Orders for new U.S. made durable goods fell 4.8% in April, against the expected fall of 0.6%. The fed fund futures market has priced in a 44% chance of a 0.25% point rate hike in late June, vs. a 60% chance yesterday. However, concern over a slowing economy was somewhat eased by news that sales of new U.S. homes stayed strong in April rising 4.9%. This sent the odds of a quarter percentage point hike back above 50%. Therefore, on the data front, the signals have been mixed.
Shares in General Motors Corp (NYSE: GM) closed up $2.03 or over 85 to $26.51, after Merrill Lynch upgraded its rating on the automaker to "buy" from "neutral.” The broker said the revised rating is based on expectations around 30,000 of the company's workers will accept its buyout program. As on May 3rd, 12,400 GM workers had asked to take buyouts and the take-up rate would increase as the June 23 deadline for accepting the buyout offer looms closer.
In other news, Sara Lee Corp. (NYSE: SLE) said it will spin off its Hanesbrands Inc branded-apparel business as part of its move to refocus on foods, beverages, and household and personal-care products. Hanesbrands includes such prominent apparel brands as Hanes, Champion, Playtex, Bali and Wonderbra. The stock finished the session 1 cent higher at $17.08.
Shares of Computer Sciences Corp.'s (NYSE: CSC) fell after the computer services company offered up an earnings and revenue forecast that fell short of Wall Street estimates. Its disappointing outlook came as it reported a fourth-quarter profit that more than halved from year-earlier results that had been boosted by disposals, and as charges weighed on the bottom line. The stock fell 28 cents to $54.41.
U.S. light crude oil for July delivery sank $1.90 or 2.7% to settle at $69.86 a barrel on the New York Mercantile Exchange. The Energy Department reported a rise in domestic supplies of gasoline for a fourth week in a row.
In other news, Sara Lee Corp. (NYSE: SLE) said it will spin off its Hanesbrands Inc branded-apparel business as part of its move to refocus on foods, beverages, and household and personal-care products. Hanesbrands includes such prominent apparel brands as Hanes, Champion, Playtex, Bali and Wonderbra. The stock finished the session 1 cent higher at $17.08.
Shares in General Motors Corp (NYSE: GM) closed up $2.03 or over 85 to $26.51, after Merrill Lynch upgraded its rating on the automaker to "buy" from "neutral.” The broker said the revised rating is based on expectations around 30,000 of the company's workers will accept its buyout program. As on May 3rd, 12,400 GM workers had asked to take buyouts and the take-up rate would increase as the June 23 deadline for accepting the buyout offer looms closer.
Despite strong intraday gains, the stocks closed lower as nervous inventors opted to sell into the rally rather than make a longer-term bet on market strength. This sell-off pushed the Nasdaq Composite to its weakest finish since early November. The Dow has lost more than 500 points, or about 4.7% since May 10, when it came about 80 points within reach of its all-time high. The Nasdaq has lost about 9% since hitting its highest level in more than five years last month. The market is vacillating between fears of inflation and economic slowdown.
Today, the Dow Jones industrial average closed down 26.98 or 0.2% to 11,098.35, the broader Standard & Poor's 500 index closed down 5.49 or 0.4% to 1,256.58, and the Nasdaq composite index closed down 14.10 or 0.7% to 2,158.76.
Market breadth was negative. On the New York Stock Exchange, decliners topped advancers by a margin of 17 to 15 on volume of 1.90 billion shares. On the Nasdaq, losers also beat winners by a margin of 17 to 13 as 2.17 billion shares changed hands.
Investors evidently remain nervous and want clarity as to whether recent market weakness was a long- or short-term correction. The markets remain in a very nervous arena and people would rather sell into a rally. Recent sell-offs have been sparked by disappointment that the Fed might not be able to stop raising rates. Federal Reserve Chairman Ben Bernanke said his comments to a CNBC TV anchor that briefly roiled financial markets earlier this month were a " lapse of judgment" on his part that won't happen again. He said that he regretted the incident and in the future his comments to the financial markets would come through regular channels.
Shares of Toll Brothers Inc. (NYSE: TOL) rose 1.7% up $0.45 to $27.35, after the homebuilder reported better than expected earnings. However, the company lowered its earnings guidance in the latest sign of a slowing U.S. housing market, citing increased material and labor costs and higher write-downs, mainly from continuing weakness in the metro Detroit market. Analyst feel that the lack of a profit forecast for 2007 and management's belief that buyers will return to the market when the excess inventory is absorbed reflect hope of improved orders in the second half of 2006 due to community growth.
Shares of Nokia Corp. (NYSE: NOK) rose 2.3% to end at $21.30 after UBS analyst Maynard Um listed several "good reasons" to buy the Finnish mobile phone giant's stock. He said that Nokia's competitive position and fundamentals in the mobile device industry are improving. While earnings expectations remain low, the company was returning a significant amount of cash to shareholders and opportunities existed for more operating efficiency gains.
Fannie Mae (NYSE: FNM) was in focus on news the mortgage giant had agreed to pay a $400 million fine to federal regulators to settle its $11 billion accounting scandal. It was alleged that it manipulated accounting rules in ways that helped increase bonuses for its executives. The stock gained almost 1% up $0.45 to close at $50.72.
Euronext the pan-European stock exchange operator has urged its shareholders to support a takeover bid from the NYSE Group Inc. (NYSE: NYX) over one by Germany's Deutsche Boerse. In presentation, the company argued that the NYSE bid offers the best price, the greatest synergies and the most deliverable option. NYSE shares closed down $2.80 at $60.05.
U.S. light crude oil for July delivery climbed $1.80, or nearly 3%, to settle at $71.76 a barrel on the New York Mercantile Exchange.
Euronext the pan-European stock exchange operator has urged its shareholders to support a takeover bid from the NYSE Group Inc. (NYSE: NYX) over one by Germany's Deutsche Boerse. In presentation, the company argued that the NYSE bid offers the best price, the greatest synergies and the most deliverable option. NYSE shares closed down $2.80 at $60.05.
Shares of Nokia Corp. (NYSE: NOK) rose 2.3% to end at $21.30 after UBS analyst Maynard Um listed several "good reasons" to buy the Finnish mobile phone giant's stock. He said that Nokia's competitive position and fundamentals in the mobile device industry are improving. While earnings expectations remain low, the company was returning a significant amount of cash to shareholders and opportunities existed for more operating efficiency gains.
Shares of Toll Brothers Inc. (NYSE: TOL) rose 1.7% up $0.45 to $27.35, after the homebuilder reported better than expected earnings. However, the company lowered its earnings guidance in the latest sign of a slowing U.S. housing market, citing increased material and labor costs and higher write-downs, mainly from continuing weakness in the metro Detroit market. Analyst feel that the lack of a profit forecast for 2007 and management's belief that buyers will return to the market when the excess inventory is absorbed reflect hope of improved orders in the second half of 2006 due to community growth
Volatile trading led by a pullback in technology and commodity-based shares pulled the market down. An uncertain outlook for interest rates and the possibility of slower economic growth dented sentiment. Investors worried that rising interest rates will choke off economic growth and eyed a sell-off in markets around the world.
Today, the Dow Jones industrial average closed down 18.73 or 0.17% to 11,125.33, the broader Standard & Poor's 500 index closed down 4.96 or 0.39% to 1,262.07, and the Nasdaq composite index closed down 21.02 or 0.96% to 2,172.86.
Market breadth was negative. On the New York Stock Exchange, decliners topped advancers by a margin of two to one on volume of 2.03 billion shares. On the Nasdaq, losers beat winners by two to one as 2.28 billion shares changed hands.
Interest rate uncertainty and attractive treasury bills are steering investors towards bonds. The market appears nervous about slowing economic growth both in the U.S. and abroad due to rising global interest rates. While companies continue to post good numbers, they are also warning of slowdown in the second half. Investors feel that the Federal Reserve's interest rate hikes will hurt economic growth - and corporate earnings.
The big news was that Euronext that its board favors a merger offer from the NYSE Group Inc. (NYSE: NYX) over a rival bid from Deutsche Boerse. The NYSE Group Inc. unveiled a $10.2 billion proposal to buy Euronext, sparking a potential battle with the German bourse for control of the European exchange operator and igniting the possibility of a union of seven exchanges across six countries. However, shares in NYSE Group fell about 2% down $1.48 to $63.02. The battle for Euronext is heating up just as the race to win control of the London Stock Exchange appears close to being settled. On Friday, Nasdaq Stock Market Inc. (Nasdaq: NDAQ) raised its stake in the LSE to 25%. This could the stake could allow Nasdaq to block major corporate events at the LSE, such as a takeover attempt by another exchange.
Shares of Yahoo Inc. (Nasdaq: YHOO) closed up $0.97 to $30.50 after an article in Barron's said the lackluster performance of Yahoo's stock offers a "great opportunity to buy a powerful money spinner." Barron's said Yahoo revenue is climbing 30% to 40% a year, while cash flow, by most analyst estimates, is forecast to jump 60% to $2.5 billion.
Wal-Mart Stores Inc. (NYSE: WMT) said it's selling its South Korean unit to local retailer Shinsegae for $882 million. Shinsegae operates 79 E-Mart discount stores in Korea. Wal-Mart's 16 South Korean stores will continue to operate under the E-Mart name. Wal-Mart's stock was up 3 cents at $47.35.
Germany's BASF (NYSE: BF) has raised its all-cash offer for materials-sciences company Engelhard Corp. (NYSE: EC). In another news, a group of private investors said they have succeeded in a $9.7 billion bid for Dutch publishing company VNU (OTC: VNUVY). In addition to its Nielsen market research brand, VNU publishes Billboard and Hollywood Reporter magazines.
Crude-oil futures bounced off a nearly seven-week low, and closed for June delivery up $0.70 at $69.23 a barrel.
Shares of Yahoo Inc. (Nasdaq: YHOO) closed up $0.97 to $30.50 after an article in Barron's said the lackluster performance of Yahoo's stock offers a "great opportunity to buy a powerful money spinner." Barron's said Yahoo revenue is climbing 30% to 40% a year, while cash flow, by most analyst estimates, is forecast to jump 60% to $2.5 billion.
The big news today was that Euronext that its board favors a merger offer from the NYSE Group Inc. (NYSE: NYX) over a rival bid from Deutsche Boerse. The NYSE Group Inc. unveiled a $10.2 billion proposal to buy Euronext, sparking a potential battle with the German bourse for control of the European exchange operator and igniting the possibility of a union of seven exchanges across six countries. However, shares in NYSE Group fell about 2% down $1.48 to $63.02. The battle for Euronext is heating up just as the race to win control of the London Stock Exchange appears close to being settled. On Friday, Nasdaq Stock Market Inc. (Nasdaq: NDAQ) raised its stake in the LSE to 25%. This could the stake could allow Nasdaq to block major corporate events at the LSE, such as a takeover attempt by another exchange.
Stocks recovered for the day with investors cautiously picking out attractively-valued shares after two days of heavy selling. However, gains were constrained by interest rates uncertainty and worries that a commodities sell-off could signal an economic slowdown. The technology sector was a focus after Dell Inc (NYSE: DELL) announced a restructuring that includes using chips made by Advanced Micro Devices (NYSE: AMD) in some higher-end servers.
Today, the Dow Jones industrial average closed up 15.77 or 0.1% to 11,144.06, the broader Standard & Poor's 500 index closed up 5.39 or 0.4% to 1,267.20, and the tech-heavy Nasdaq composite index closed up 13.56 or 0.6% to 2,193.88. For the week, the Dow lost 2.1%, the S&P 500 lost 1.9%, and the Nasdaq took a 2.2% loss, after nervousness about inflation inspired some heavy sell-offs earlier in the week.
Market breadth was positive. On the New York Stock Exchange, advancers topped decliners by 19 to 13 on volume of 2.2 billion shares. On the Nasdaq, winners edged out losers 17 to 13 as 2.6 billion shares changed hands.
Concerns about inflation and interest rates persisted, and the markets see-sawed all day long. Investors are concerned about inflation pressures as they look for clues as to what the Federal Reserve will do with interest rates at its next meeting in late June. They will pay close attention to the string of economic reports due next week, including April readings on durable goods orders and new and existing home sales.
Shares of Gap Inc. (NYSE: GPS) closed up $0.65 or 3% to $18.57 despite the first-quarter net income falling 17% because of slumping clothing sales at all its store brands. Additionally, the company added that an upturn is unlikely until the second half. However, the profit's managed to exceed Wall Street estimates, while sales of $3.44 billion fell just shy of estimates.
Dell (NYSE: DELL) reported fiscal first-quarter earnings that fell in line with the lowered forecast the company issued last week. The stock closed up $0.62 or 2% to $24.57. The company also stated that it will introduce servers with AMD (NYSE: AMD) chips. This is a significant move since the company has previously only used Intel (Nasdaq: INTC) chips. It also acknowledged that it has lost ground to competitors and is making key changes to re-invigorate growth, including cutting prices and improving customer service. Dell has failed to meet market expectations for long amidst slowing growth and increased competition from HP (NYSE: HPQ). Shares of Dell have plummeted 40% in the last 12 months, while shares of HP gained 52%. In the aftermath of the statement from Dell, shares of Intel Corp. fell to close 14 cents lower at $18.35. Advanced Micro Devices Inc. closed up $3.60 to $34.95.
In a heated takeover bid, Mittal Steel (NYSE: MT) raised its offer for rival Arcelor by 34%, only one day after formally launching a bid for the world's second-biggest steelmaker. On this news, U.S.-listed shares of Mittal Steel fell 3.1% to close at $33.10. Lakshmi Mittal the owner of Mittal Steel has expressed his faith in the fyture of the business and stated that the family holding in the company would reduce to 45%.
Crude futures ended at a 6-week low, after losing almost 5% on the week. Crude for June delivery ended down 92 cents at $68.53 a barrel.
In a heated takeover bid, Mittal Steel (NYSE: MT) raised its offer for rival Arcelor by 34%, only one day after formally launching a bid for the world's second-biggest steelmaker. On this news, U.S.-listed shares of Mittal Steel fell 3.1% to close at $33.10. Lakshmi Mittal the owner of Mittal Steel has expressed his faith in the future of the business and stated that the family holding in the company would reduce to 45%.
Dell (NYSE: DELL) reported fiscal first-quarter earnings that fell in line with the lowered forecast the company issued last week. The stock closed up $0.62 or 2% to $24.57. The company also stated that it will introduce servers with AMD (NYSE: AMD) chips. This is a significant move since the company has previously only used Intel (Nasdaq: INTC) chips. It also acknowledged that it has lost ground to competitors and is making key changes to re-invigorate growth, including cutting prices and improving customer service. Dell has failed to meet market expectations for long amidst slowing growth and increased competition from HP (NYSE: HPQ). Shares of Dell have plummeted 40% in the last 12 months, while shares of HP gained 52%. In the aftermath of the statement from Dell, shares of Intel Corp. fell to close 14 cents lower at $18.35. Advanced Micro Devices Inc. closed up $3.60 to $34.95.
Shares of Gap Inc. (NYSE: GPS) closed up $0.65 or 3% to $18.57 despite the first-quarter net income falling 17% because of slumping clothing sales at all its store brands. Additionally, the company added that an upturn is unlikely until the second half. However, the profit's managed to exceed Wall Street estimates, while sales of $3.44 billion fell just shy of estimates.
The latest economic data, a drop in bond yields and hawkish remarks from a Fed official did little to change investor expectations that interest rates have further to rise. Stocks extended their losses from the previous session's sharp sell-off and the markets closed lower.
Today, the Dow Jones industrial average closed down 73.72 or 0.7% to 11,131.89, the broader Standard & Poor's 500 index closed down 7.22 to 1,263.10, and the Nasdaq composite index closed down 12.65 or 0.7% to 2,183.15.
Market breadth was negative. On the New York Stock Exchange, decliners topped advancers by 5 to 3 on volume of 1.7 billion shares. On the Nasdaq, winners beat out losers by a margin of 18 to 11 as 2 billion shares changed hands.
St. Louis Fed president William Poole, in a speech said that the federal funds future's market has roughly priced in a 50% chance of a rate hike in June. He further added "there is no obvious misalignment of that guess with anything I know that is in the data". He is essentially saying that the market is providing a reasonable estimate of the chances of a rate hike so be prepared for a 25-basis point rate increase in June.
All investors pay close attention to the latest batch of data to see for signs of a slowing economy. The Conference Board stated that the index of Leading indicators fell 0.1% in April against the expected gain of 0.1%. This supports views that economic growth may not sustain a round of rising prices and wages. While factory activity expanded with the index rising to 14.4 points against the expected 13.5; the prices-paid index, which is a measure of inflation, soared to 55.3 from 29. The Labor Department said new claims for jobless surged last week, a sign of possible slowing in the labor market. Therefore, its evident that the indicators are mixed.
Shares of Sears Holding (Nasdaq: SHLD) closed up $17.93 or 13% to $155.89, after posting a quarterly profit compared with a year-ago loss. The retailer's first-quarter earnings came in well above forecast. Separately, the company agreed to settle one class-action lawsuit for $215 million, resulting in an $85 million pretax payment after insurance.
Burger King's (NYSE: BKC) shares rose 2.9% up $0.69 to $17.69 on its first day as a publicly listed company. The 52-year-old hamburger chain's $425 million initial public offering is the biggest U.S. restaurant IPO by market value. The company has priced its IPO at $17 a share, at the high end of its previously announced price range.
Shares of Hewlett-Packard (NYSE: HPQ) closed up $0.39 or 2% to $32.55, boosted by a second analyst upgrade in the wake of strong quarterly results. Morgan Stanley has raised its rating on the computer-hardware and printer maker to equal weight from underweight, on the belief that improving returns on innovation investments will be reflected in enhanced market share and profitability over the long term.
Stock of United Health closed down $1.70 or 3% to $45.19, on news that Omnicare (NYSE: OCR) which supplies pharmaceuticals to nursing homes, is suing the health insurer for violating antitrust laws in contract negotiations. United Health has received a subpoena from the U.S. attorney's office of New York for documents relating to the granting of stock options. Shares of Omnicare closed up $0.29 to $55.24.
Shares of Merck (NYSE: MRK) rose 2.3% to $35.13 after the U.S. Food and Drug Administration said Gardasil, a vaccine designed to protect against cervical cancer is safe and effective. Gardasil is designed to protect against four strains of human papillomavirus, or HPV, which can cause cervical cancer and genital warts. In another report, the FDA indicates that its Vioxx painkiller can increase the risk of heart attack after just four months of use.
Crude for June delivery ended up 76 cents at $69.45 a barrel on the New York Mercantile Exchange. Natural-gas futures, fell to their lowest level in 16 months, after inventories data spurred concerns over a potential supply glut.
Shares of Merck (NYSE: MRK) rose 2.3% to $35.13 after the U.S. Food and Drug Administration said Gardasil, a vaccine designed to protect against cervical cancer is safe and effective. Gardasil is designed to protect against four strains of human papillomavirus, or HPV, which can cause cervical cancer and genital warts. In another report, the FDA indicates that its Vioxx painkiller can increase the risk of heart attack after just four months of use.
Burger King's (NYSE: BKC) shares rose 2.9% up $0.69 to $17.69 on its first day as a publicly listed company. The 52-year-old hamburger chain's $425 million initial public offering is the biggest U.S. restaurant IPO by market value. The company has priced its IPO at $17 a share, at the high end of its previously announced price range.
Shares of Sears Holding (Nasdaq: SHLD) closed up $17.93 or 13% to $155.89, after posting a quarterly profit compared with a year-ago loss. The retailer's first-quarter earnings came in well above forecast. Separately, the company agreed to settle one class-action lawsuit for $215 million, resulting in an $85 million pretax payment after insurance.
A stronger-than-expected consumer inflation report re-ignited fears of inflation and raised the odds of further interest-rate rises. This lead the stocks to end sharply down with the Dow Jones Industrial Average logging its biggest one-day point drop in more than three years. The Nasdaq Composite Index fell for the seventh session in a row to wipe out its gains for the year, while the S&P 500 Index ended at a more than three-month low.
Today, the Dow Jones Industrial average closed down 214.28 or 1.8% to 11,205.61, the broader Standard & Poor's 500 index closed down 21.76 or 1.7% to 1,270.32, and the Nasdaq composite index closed down 33.33 or 1.5% to 2,195.80. Since the Federal Reserve last raised interest rates on May 10, the Dow has pulled back 3.8% and the Nasdaq has fallen 5.4%, while the S&P has shed 3.9%.
Market breadth was negative. On the New York Stock Exchange, decliners topped advancers by five to one on volume of 2.1 billion shares. On the Nasdaq, losers edged out winners by a margin of three to one as 2.4 billion shares changed hands.
The latest consumer-price report indicates clearly that "not only is the economy accelerating, but inflation is picking up." The consumer-price index rose 0.6%. Excluding food and energy prices, consumer prices rose 0.3%. The increase in the CPI and the core rate were both slightly higher than the expected 0.5% and 0.2% respectively. After the inflation data, the federal funds-futures market priced in a more than 50% chance of a rate increase in June.
Amidst the mayhem, shares of Hewlett-Packard Co. (NYSE: HPQ) closed up $1.05 or 3.4% at $32.16. The company reported a 51% rise in its second-quarter profit as the technology giant saw strong sales at its personal-computer and printing and imaging divisions. The company's earnings also beat Wall Street expectations. Additionally, HP also stated that it would consolidate 85 data centers worldwide into six, larger facilities in the U.S. as part of a move to save up to $1 billion. However, this consolidation only affects data centers used for internal purposes. The company would continue to operate 70 separate data centers in 23 countries to serve its customers.
Stock of Applied Materials Inc. (Nasdaq: AMAT) fell $0.92 or 5.2% to $16.93, after the chip equipment maker posted a higher quarterly profit that topped Wall Street estimates. Some analysts, however, expressed concerns about decelerating bookings and a conservative outlook. Net profit rose 35% in its second quarter, helped by stronger demand for its equipment used to manufacture chips that power consumer electronic devices. Sales rose 21% to $2.25 billion and new orders surged 60% to $2.49 billion. These are signs that consumer appetite for portable electronics devices will flourish.
Circuit City Stores Inc. shares (NYSE: CC) rose $0.52 or 1.8% to $29.45 after the consumer-electronics retailer reiterated its outlook for net sales growth of 7% to 11% in fiscal 2007, and said that it sees a break-even performance for the first quarter. Investor confidence is based on higher sales for flat-panel TVs and portable-music players and a promise of improving margins. Sales are expected to rise 7% to 11%, and comparable-store sales are expected to climb 5% to 7% for the year.
Other noteworthy news included Verizon Communications (NYSE: VZ) closed down $0.89 to $30.81, after it denied media reports that it entered into a contract with the National Security Agency, providing the government office with info about its customer phone calls.
Crude-oil futures ended at their lowest level in more than a month after weekly data showed a rise in gasoline supplies for a third week in a row. Oil for June delivery fell 84 cents to $68.69 a barrel on the New York Mercantile Exchange.
Shares of Hewlett-Packard Co. (NYSE: HPQ) closed up $1.05 or 3.4% at $32.16. The company reported a 51% rise in its second-quarter profit as the technology giant saw strong sales at its personal-computer and printing and imaging divisions. The company's earnings also beat Wall Street expectations. Additionally, HP also stated that it would consolidate 85 data centers worldwide into six, larger facilities in the U.S. as part of a move to save up to $1 billion. However, this consolidation only affects data centers used for internal purposes. The company would continue to operate 70 separate data centers in 23 countries to serve its customers.
Stock of Applied Materials Inc. (Nasdaq: AMAT) fell $0.92 or 5.2% to $16.93, after the chip equipment maker posted a higher quarterly profit that topped Wall Street estimates. Some analysts, however, expressed concerns about decelerating bookings and a conservative outlook. Net profit rose 35% in its second quarter, helped by stronger demand for its equipment used to manufacture chips that power consumer electronic devices. Sales rose 21% to $2.25 billion and new orders surged 60% to $2.49 billion. These are signs that consumer appetite for portable electronics devices will flourish.
Circuit City Stores Inc. shares (NYSE: CC) rose $0.52 or 1.8% to $29.45 after the consumer-electronics retailer reiterated its outlook for net sales growth of 7% to 11% in fiscal 2007, and said that it sees a break-even performance for the first quarter. Investor confidence is based on higher sales for flat-panel TVs and portable-music players and a promise of improving margins. Sales are expected to rise 7% to 11%, and comparable-store sales are expected to climb 5% to 7% for the year.
Investors remained nervous about the prospects for more interest-rate increases as most recent indicators show inflation in check and the economy growing at a solid pace. This led the markets to close lower with investors shrugging off a mixed bag of earnings reports. Early in the session stocks climbed higher as investors cheered signs that inflation may be under control, but turned South as disappointing sales from retailers overshadowed the economic reports.
Today, the Dow Jones industrial average closed down 8.88 or 0.1% to 11,419.89, the broader Standard & Poor's 500 index closed down 2.42 or 0.2% to 1,292.08, and the Nasdaq composite index closed down 9.39 or 0.4% to 2,229.13. This is the lowest close for year for the Nasdaq.
Market breadth was positive. On the New York Stock Exchange, advancers topped decliners 16 to 15 on volume of 1.7 billion shares. On the Nasdaq, winners narrowly edged out losers 15 to 14 as 2.1 billion shares changed hands.
Today was a data driven day with the producer price report calming inflation fears, while the industrial production data showed the economy running at a decent pace. U.S. producer prices rose 0.9% in April, due to surging energy prices, but prices outside of energy were well contained. This is against the expected increase of 0.8%. The core producer price index for finished goods rose 0.1%, a hopeful sign that higher energy prices haven't led to a more generalized inflation. This is against the expected 0.2% increase. Additionally, the housing market may be slowing, with housing starts dropped 7.4% in April. This is the largest drop in more than a year.
Home Depot (NYSE: HD) closed down $2.05 or over 5% to $38.45, after reporting a better-than-expected gain in earnings but stating that sales at retail stores were soft. While profit increased 19%, sales fell short of analysts expectation. The company has decided not to provide same-stores sales data.
Stock of Wal-Mart Stores (NYSE: WMT) closed up $0.64 or 1.4% to $48.07, on posting improved earnings in the fiscal first quarter. The company posted a 6.3% increase in first-quarter profit on sales, in line with estimate. The strong performance is attributable to keeping inventory in check and to its new-fashioned merchandise.
Shares in Apple Computer Inc. (Nasdaq: AAPL) fell 4.2% to $64.98 after Creative Technology Ltd. (Nasdaq: CREAF) filed a complaint with the U.S. International Trade Commission, claiming the maker of the market-leading iPod media player infringed on Creative's patents for some of its own music-playing devices. Creative shares rose 4.8% to $5.72. This battle is likely to continue for a while.
Stock of Staples (Nasdaq: SPLS) closed down $1.60 or 6% to $24.82, after the office supply retailer posted higher quarterly profit despite slow sales growth in North American stores. Carnival (NYSE: CCL) closed down $3.94 or 8.5% to $42.60, after cutting its outlook because of higher fuel costs and weakness in demand for Caribbean cruises. DOV Pharmaceuticals (Nasdaq: DOVP) closed down $4.03 or 57% to $3.02, after the drug-maker said that its first-quarter loss more than doubled as revenue fell and research and development expenses rose. Shares of Neurocrine Biosciences (Nasdaq: NBIX) closed down $33.87 or 62% to $20.76, after announcing its sleep drug, which it is developing with Pfizer, was rejected by regulators.
Crude oil for June delivery closed 12 cents higher at $69.53 a barrel on the New York Mercantile Exchange.
Stocks closed mixed after a roller-coaster session that saw heavy losses on the Dow Jones Industrial Average and S&P 500 change into gains in the final hour of trade amid strong demand for blue-chip stocks. The Nasdaq Composite closed at its weakest level of the year. However, overall market sentiment got some help from a sharp pullback in crude-oil prices and a sell-off in metals.
Today, the Dow Jones industrial average closed up 36.50 or 0.4% to 11,417.49, the broader Standard & Poor's 500 index closed up 3.49 or 0.2% to 1,294.73, and the tech-heavy Nasdaq composite index closed down 5.26 to 2,238.52.
Market breadth was negative. On the New York Stock Exchange, decliners topped advancers by a margin of 18 to 13 on volume of 1.8 billion shares. On the Nasdaq, losers beat winners by 19 to 10 as 2 billion shares changed hands.
Investors are convinced that the robust health of the U.S. and global economy means the Fed may not have the liberty to stop the pause in June. Last week, the Federal Reserve raised its short-term interest to 5%, and left open the possibility of further rate increases should data show inflationary pressures developing in the economy. This possibility is looking like a certainty.
The data news shows that manufacturing activity in the New York area expanded at a slower pace in May, with the Empire State Manufacturing index falling to 12.4 in May. This decrease was larger than expected. Additionally, housing market is slowing down with existing-home sales down more than 15% in five states, and 2.1% nationally year-over-year in the first quarter.
Stock of retail giant Target (NYSE: TGT) closed down $2.19 or 4.1% to $50.02, after the retailer posted a 12% increase in quarterly profit. However, earnings fell short of Wall Street expectations despite the sales rising 12% to $12.86 billion. Earnings were pressured by higher expenses and merchandising woes in the home-goods and the fledgling Global Bazaar divisions. While profits rose, margins slumped compared with last year. This sent signals that Target may be feeling the first pangs of Wal-Mart Stores Inc.'s (NYSE: WMT) aggressive efforts to take market share away from its rival.
Boeing Co. shares (NYSE: BA) fell down $1.21 or 1.3% to $85.86 on a Wall Street Journal report that it has agreed to pay $615 million to settle a Justice Department probe over procurement violations by its defense contracting business. This is to end three years of investigations into the scandal. The deal allows Boeing to avoid criminal charges or any admission of wrongdoing.
Stock of Microsoft Corp. shares (Nasdaq: MSFT) fell 3 cents to $23.13 after the Department of Justice said in a court filing that the software giant had agreed to a two-year extension of a key part of its landmark settlement. It also found a new search feature in the latest version of Microsoft's Web browsing software was not anticompetitive. Microsoft has agreed to an extension until at least 2009 of a program to provide technical data to competitors that allows their rival software products to work with Microsoft's Windows operating system.
Shares of eBay (Nasdaq: EBAY) closed down $0.26 to $31.23, after the Supreme Court set aside a patent injunction against the online auctioneer. On the other hand, Bausch & Lomb (NYSE: BOL) closed up $5.64 or over 12% to $50.08, after it recalled its contact-lens solution that has been linked to an outbreak of fungal eye infections that can cause blindness.
Crude-oil futures fell below $70 a barrel amid a broader pullback in commodities. Crude for June delivery ended down $2.63, or 3.7%, to $69.41 a barrel.
Stock of retail giant Target (NYSE: TGT) closed down $2.19 or 4.1% to $50.02, after the retailer posted a 12% increase in quarterly profit. However, earnings fell short of Wall Street expectations despite the sales rising 12% to $12.86 billion. Earnings were pressured by higher expenses and merchandising woes in the home-goods and the fledgling Global Bazaar divisions. While profits rose, margins slumped compared with last year. This sent signals that Target may be feeling the first pangs of Wal-Mart Stores Inc.'s (NYSE: WMT) aggressive efforts to take market share away from its rival.
Boeing Co. shares (NYSE: BA) fell down $1.21 or 1.3% to $85.86 on a Wall Street Journal report that it has agreed to pay $615 million to settle a Justice Department probe over procurement violations by its defense contracting business. This is to end three years of investigations into the scandal. The deal allows Boeing to avoid criminal charges or any admission of wrongdoing.
Stock of Microsoft Corp. shares (Nasdaq: MSFT) fell 3 cents to $23.13 after the Department of Justice said in a court filing that the software giant had agreed to a two-year extension of a key part of its landmark settlement. It also found a new search feature in the latest version of Microsoft's Web browsing software was not anticompetitive. Microsoft has agreed to an extension until at least 2009 of a program to provide technical data to competitors that allows their rival software products to work with Microsoft's Windows operating system.
Concerns about rising bond yields and inflation had an adverse effect and stocks sank for the second straight session. The Dow industrials closed down more than 260 points over the two-day drubbing. Investors are worried that rising commodity prices will translate into higher inflation and prompt the Federal Reserve to raise interest rates again in June.
Today, the Dow Jones industrial average closed down 119.74 or 1% to 11,380.99, the broader Standard & Poor's 500 index closed down 14.68 or 1% to 1,291.24, and the tech-heavy Nasdaq index closed down 28.92 or 1.3% to 2,243.78. For the week, the Dow Jones Industrials lost 1.7%, the S&P 500 dropped 2.6%, and the Nasdaq caved in 4.2%.
Market breadth was negative. On the New York Stock Exchange, decliners topped advancers by a margin of 13 to 3 on volume of 1.8 billion shares. On the Nasdaq, losers beat winners by 22 to 7 as 2.2 billion shares changed hands.
On the data front, the trade deficit narrowed 5.6% to $62 billion against the expected widening to $66.9 billion. The consumer-sentiment plunged in May on rising gasoline prices and a softening labor market. The University of Michigan consumer-sentiment index fell to 79 in May from 87.4 in April. Prices of goods imported into the United States rose 2.1%, powered by an 11.5% increase in the price of imported petroleum. Import prices rose 0.1%, the fifth consecutive increase. The deficit will probably head higher over the next few months because of the fact that oil prices rose sharply after March. The first-quarter GDP is likely to be revised higher, and that can lead to bond yields rising to new cycle highs.
Shares of General Motors Corp. (NYSE: GM) rose 1% to close at $26.09. KeyBanc Capital Markets has upgraded GM to buy from hold. The broker said that it believes negotiations among the company, the United Auto Workers and parts supplier Delphi will be successfully completed with no material labor disruptions. KeyBanc also sees earnings improving in 2006 and 2007, bolstered by the introduction of new, full-size sport utility vehicles and pickup trucks, as well as by cost-saving initiatives.
Stock of Microsoft (Nasdaq: MSFT) closed down $0.05 to $23.17, after the software giant agreed to extend one of the key provisions of its landmark 2002 antitrust settlement with the government. Analog Devices (NYSE: ADI) closed up $1.35 or over 4% to $36.03, after stating that its profit and revenue rose in the second quarter. Shares of Advanced Micro Devices (NYSE: AMD) closed up $0.17 to $31.66, after Matrix Research upgraded the stock to "buy" from "sell." Imclone (Nasdaq: IMCL) closed up $3.42 or 10% to $41.69, after a report said four suitors may be considering a purchase of the company. However, Best Buy Co. (NYSE: BBY) fell almost 2.3% to $52.60 after it agreed to buy a majority interest in Jiangsu Five Star Appliance Co. The deal calls for Best Buy to invest $180 million, including $122 million in capital.
The largest steel manufacturer in the world, Mittal Steel (NYSE: MT) and Arcelor both reported first-quarter profit declines on lower steel prices and rising raw-material costs. The world's leading steelmakers are locked in a bitter takeover battle. Both companies, however, forecast better times ahead. The fall in profit came as steel prices fell over 9% and raw material prices such as iron ore increased over 71.5%. However, they see better times ahead as prices are starting to recover, and selling prices are improving. Additionally, world steel consumption is expected to rise 6% in 2006.
Crude-oil futures fell after the International Energy Agency cut its estimate for 2006 oil demand by 15%, prompting some investors to lock in gains logged over the last week. Crude for June delivery closed down $1.28 at $72.04 a barrel, but logged a weekly gain of 2.6%.
The largest steel manufacturer in the world, Mittal Steel (NYSE: MT) and Arcelor both reported first-quarter profit declines on lower steel prices and rising raw-material costs. The world's leading steelmakers are locked in a bitter takeover battle. Both companies, however, forecast better times ahead. The fall in profit came as steel prices fell over 9% and raw material prices such as iron ore increased over 71.5%. However, they see better times ahead as prices are starting to recover, and selling prices are improving. Additionally, world steel consumption is expected to rise 6% in 2006.
Shares of General Motors Corp. (NYSE: GM) rose 1% to close at $26.09. KeyBanc Capital Markets has upgraded GM to buy from hold. The broker said that it believes negotiations among the company, the United Auto Workers and parts supplier Delphi will be successfully completed with no material labor disruptions. KeyBanc also sees earnings improving in 2006 and 2007, bolstered by the introduction of new, full-size sport utility vehicles and pickup trucks, as well as by cost-saving initiatives.
There was mayhem and stocks logged their biggest one-day decline since January, on concerns that rising commodity prices will translate into higher inflation and will prompt the Federal Reserve into raising interest rates again in June. The Dow industrials crashed over 140 points on inflationary concerns as investors turned their focus from the strong economy and earnings growth towards soaring gold prices, rising oil and Treasury yields.
Today, the 30-stock Dow industrials index closed down 141.92 or 1.2% to 11,500.73, the broader Standard & Poor's 500 index closed down 16.93 or 1.3% to 1,305.92, and the Nasdaq composite index closed down 48.04 or 2.1% to 2,272.70.
Market breadth was negative. On the New York Stock Exchange, losers beat winners 4 to 1 on volume of 1.8 billion shares. On the Nasdaq, decliners beat advancers 4 to 1 on volume of 2.5 billion shares.
Will they do it again? Is the question that is on the mind of investors when talking about the rising short term interest rate. When you look at gold and oil today, there is still a very strong possibility that they'll raise interest rates in June. This is likely to result in a very volatile until the June meeting, as investors would react to each piece of economic data and gauge its importance for the outlook on interest rates. However, today's sell-off was owing to a combination of the Fed, oil, Iran, Nigeria, Gold and probably everything else.
Amongst data news, April retail sales increased 0.5%, against the expected larger increase of 0.7%. The reading suggests that higher gas prices may be hurting consumer spending. U.S. business sales and inventories each increased 0.7% in March, keeping stockpiles of unsold goods at very lean levels. The number of initial jobless claims in the week ended May 6 fell to 324,000, but this was down only 1,000. All these are data news that are worrying for inflation and a concern to investors.
American International Group Inc. (NYSE: AIG) was one of the biggest percentage decliners within the Dow industrials, down $3.39 or 5.1% at $63.15. Earnings excluding items rose from a year earlier, but nonetheless missed analysts' forecasts. The insurance giant posted a strong performance by its property and casualty division which was offset by weakness in its foreign life-insurance business.
General Motors Corp. (NYSE: GM) closed down $0.78 or 2.9% to $25.81 after a five-session rally that saw the stock gain 18%. The stock had risen after the troubled automaker issued a revised quarterly earnings report Monday night that showed a profit. The automaker, nevertheless, gathered some upbeat analysts' comments a day after its chief financial officer expressed optimism in a deal with parts maker Delphi Corp. (OTC: DPHIQ.PK) that might soon be at hand.
Movie Gallery Inc. (Nasdaq: MOVI) attracted investors and the shares surged more than 50% up $1.62 to $4.78 after the company said that it planned to restructure leases at more than 1,100 stores, close stores as conditions warrant, consider selling assets and cut capital spending thanks in part to its March 2005 purchase of Hollywood Entertainment. The company's also said that it would be open to some type of deal with Blockbuster (NYSE: BBI). Shares of Blockbuster Inc. got a boost, gaining 8.3% to $5.07.
Stock of News Corp. (NYSE: NWS) advanced up $0.57 or 3% to $19.69 after the media conglomerate's profit more than doubled, and beat analysts' forecasts. The media behemoth also said it would boost its share buyback program to $6 billion from $3 billion. BSkyB (NYSE: BSY), the U.K. satellite operator partly owned by News Corp., should also see gains, buoyed by an upgrade from Morgan Stanley.
Amongst Pharma, Johnson & Johnson (NYSE: JNJ) closed up 52 cents to $58.84, after being upgraded to buy from neutral at Banc of America Securities. Shares of Pfizer Inc. (NYSE: PFE) fell 23 cents at $24.81, despite the U.S. Food and Drug Administration approving Chantix, its drug aimed at helping people give up smoking.
Crude oil for June delivery jumped $1.19 to settle at $73.32 a barrel on the New York Mercantile Exchange. Causes of concern are refinery snag, continuing uncertainty in the Middle East and violence in Nigeria that could lead to disruption in oil supplies heading into the summer-driving season.
Movie Gallery Inc. (Nasdaq: MOVI) attracted investors and the shares surged more than 50% up $1.62 to $4.78 after the company said that it planned to restructure leases at more than 1,100 stores, close stores as conditions warrant, consider selling assets and cut capital spending thanks in part to its March 2005 purchase of Hollywood Entertainment. The company's also said that it would be open to some type of deal with Blockbuster (NYSE: BBI). Shares of Blockbuster Inc. got a boost, gaining 8.3% to $5.07.
General Motors Corp. (NYSE: GM) closed down $0.78 or 2.9% to $25.81 after a five-session rally that saw the stock gain 18%. The stock had risen after the troubled automaker issued a revised quarterly earnings report Monday night that showed a profit. The automaker, nevertheless, gathered some upbeat analysts' comments a day after its chief financial officer expressed optimism in a deal with parts maker Delphi Corp. (OTC: DPHIQ.PK) that might soon be at hand.
American International Group Inc. (NYSE: AIG) was one of the biggest percentage decliners within the Dow industrials, down $3.39 or 5.1% at $63.15. Earnings excluding items rose from a year earlier, but nonetheless missed analysts' forecasts. The insurance giant posted a strong performance by its property and casualty division which was offset by weakness in its foreign life-insurance business.
Stocks closed mixed after the Federal Reserve lifted its key short-term rate to 5% as expected, but did not specify that its rate-hiking campaign is over, as some had hoped. The Nasdaq composite slumped and broader market was mixed as investors were left stranded about the outlook for interest rates moving forward.
Today, the Dow Jones industrial average closed up 2.88 or 0.02% to 11,642.65, putting it about 80 points shy of its all-time high of 11,722.98, where it closed on Jan. 14, 2000. The broader Standard & Poor's 500 index closed down 2.29 or 0.2% to 1,322.85, and the Nasdaq composite index closed down 17.51 or 0.8% to 2,320.74.
Market breadth was negative. On the New York Stock Exchange, losers beat winners 17 to 14 on volume of 1.61 billion shares. On the Nasdaq, decliners topped advancers by 18 to 11 on volume of 2.05 billion shares.
The central bank, opted to boost the overnight bank lending rate to 5% as expected. However, it also seemed to keep the door open for future rate hikes. The future policy depends on how the data looks between now and the June meeting. While it acknowledged the strength of the economy, but suggested that further policy firming may yet be needed to address inflation risks. The extent would depend on the economic outlook as implied by incoming information. The bottom line is that the Fed is not committed to 5.25% at June, and that the bankers are going to see what the data show and how the economy responds to the hikes that are already in place.
Cisco Systems Inc. (Nasdaq: CSCOT) closed down $0.93 or 4.6% to $20.75 after the data-networking giant issued a tepid profit outlook for the current quarter. The company reported solid earnings for the third quarter, with revenue jumping 18% to $7.32 billion and topping Wall Street expectations of $7.17 billion. Results were helped by improved demand for its networking gear in the U.S. and contributions from the recently acquired Scientific-Atlanta. On a per-share basis, the company made 22 cents, up from 21 cents a share in last year's third quarter.
Walt Disney Co. (NYSE: DIS) closed up $0.53 or 1.8% to $30.11 after the media giant surprised analysts with earnings that rose from a year earlier and beat estimates. Gains at its ESPN sports-television channel helped overcome a lackluster performance turned in by its consumer-products and studio divisions. Its net income rose to $733 million, or 37 cents a share, from $657 million, or 31 cents a share, a year ago. Sales were $8.03 billion vs. last year's $7.83 billion.
The auto sector saw broad gains, with General Motors Corp. (NYSE: GM) closing up $0.89 rising or 4% to $26.59. Its 10-Q filing, outlined the company’s ongoing efforts to work with the United Auto Workers on whittling down labor costs. Additionally, prospects of a potential deal with Delphi (OTC: DPHIQ.PK) to avert a strike is significant in maintaining the stock's upward momentum.
Shares of Federated Department Stores Inc. (NYSE: FD) closed 1.2% lower at $77.98 after the company turned in a first-quarter loss amid hefty integration costs of its recently acquired May Department Stores business. Legg Mason (NYSE: LM) closed down $8.44 or 6% to $108.08, after reporting quarterly earnings that rose from a year ago but missed analysts' estimates. Teva Pharmaceuticals (Nasdaq: TEVA) closed down $5.35 or 11% to $37.56, after reporting quarterly earnings that fell from a year earlier and missed estimates.
Crude oil for June delivery rose $1.44 to $72.13 a barrel on the New York Mercantile Exchange after a government report showed a surprising jump in crude and gasoline inventories at an eight-year high.
Walt Disney Co. (NYSE: DIS) closed up $0.53 or 1.8% to $30.11 after the media giant surprised analysts with earnings that rose from a year earlier and beat estimates. Gains at its ESPN sports-television channel helped overcome a lackluster performance turned in by its consumer-products and studio divisions. Its net income rose to $733 million, or 37 cents a share, from $657 million, or 31 cents a share, a year ago. Sales were $8.03 billion vs. last year's $7.83 billion.
Cisco Systems Inc. (Nasdaq: CSCOT) closed down $0.93 or 4.6% to $20.75 after the data-networking giant issued a tepid profit outlook for the current quarter. The company reported solid earnings for the third quarter, with revenue jumping 18% to $7.32 billion and topping Wall Street expectations of $7.17 billion. Results were helped by improved demand for its networking gear in the U.S. and contributions from the recently acquired Scientific-Atlanta. On a per-share basis, the company made 22 cents, up from 21 cents a share in last year's third quarter.
Stocks closed mixed as investors decided to await hints on the Federal Reserve's future course on interest rates. However, broad-based gains in blue-chip stocks lifted the Dow Jones Industrial Average to within 85 points of its all-time high, thanks to a rally in General Motors (NYSE: GM).
Today, the Dow Jones industrial average closed up 55.23 or 0.5% to 11,639.77. The gain brought the index to within about 85 points of its record of 11,722.98, where it closed on Jan. 14, 2000. The broader Standard & Poor's 500 index closed up 0.48 to 1,325.14, and the Nasdaq composite index closed down 6.74 or 0.3% to 2,338.25.
Market breadth was mixed. On the New York Stock Exchange, losers and winners were narrowly mixed on volume of 1.51 billion shares. On the Nasdaq, decliners topped advancers 17 to 13 on volume of 1.89 billion shares.
Today's market sentiment is an indication that people are bullish on the prospect that the Fed may pause in its rate tightening cycle. The Federal Open Market Committee will announce its decision Wednesday at around 2.15 p.m. EST. There is a growing sentiment that the Fed will take a pause sometime in the near future, if not after this meeting. The bigger question is whether the Fed has gone far enough to slow inflation or will they potentially go too far and slow growth. The economic indicators have been strong and with the inflationary pressures of rising oil and gasoline, it's unlikely the central bank will pause soon. Overall, the market appears to be in a bullish phase and capable of withstanding some disappointment from the Fed tomorrow, once investors get beyond a knee-jerk reaction to the statement.
Shares of Dell (NYSE: DELL) slumped after the company warned first-quarter profit and revenue would fall short of Wall Street expectations, saying it had been forced to cut prices amid heated competition. The stock closed down $1.23 or 4.6% at $25.20. The giant pegged its revenue at $14.2 billion and an EPS of 33 cents against an expected 38 cents. This had a affect on rival PC-makers Hewlett-Packard (NYSE: HPQ) that closed down $0.67 or 2% to $33.12, and Gateway (NYSE: GTW) that closed down $0.06 to $2.08.
McDonald's Corp. (NYSE: MCD) closed up $0.44 or over 1% to $35.83 after the fast-food giant said worldwide same-store sales rose 6.2% in April. U.S. same-store sales rose 4.1%, Europe posted up 9.3%, Asia-Pacific, Middle East and Africa regions climbed 6.5%. Contributors to this growth have been the chicken sandwiches, breakfast business, and longer store hour. In an unrelated news, McDonald's has filed to sell 4.2 million shares of Chipotle Mexican Grill Inc. (NYSE: CMG) reducing its stake to 52% from 65%.
Stock of General Motors (NYSE: GM) closed up $2.25 or nearly 10% to $25.80, after it revised its first-quarter results to show a profit. Walt Disney Co. (NYSE: DIS) has decided to let its exclusive cross-promotional agreement with McDonald's (NYSE: MCD) run out at year's end, although it added that it wanted to continue working with the company. The effect of this news has yet to be felt on the stocks of respective companies.
Oil for June delivery rose 92 cents to settle at $70.69 a barrel on the New York Mercantile Exchange on revived international tensions over Iran's nuclear program and just ahead of an expected increase in U.S. gasoline inventories.
McDonald's Corp. (NYSE: MCD) closed up $0.44 or over 1% to $35.83 after the fast-food giant said worldwide same-store sales rose 6.2% in April. U.S. same-store sales rose 4.1%, Europe posted up 9.3%, Asia-Pacific, Middle East and Africa regions climbed 6.5%. Contributors to this growth have been the chicken sandwiches, breakfast business, and longer store hour. In an unrelated news, McDonald's has filed to sell 4.2 million shares of Chipotle Mexican Grill Inc. (NYSE: CMG) reducing its stake to 52% from 65%.
Shares of Dell (NYSE: DELL) slumped after the company warned that first-quarter profit and revenue would fall short of Wall Street expectations. They stated that the company had been forced to cut prices amid heated competition. The stock closed down $1.23 or 4.6% at $25.20. The giant pegged its revenue at $14.2 billion and an EPS of 33 cents against an expected 38 cents. This had an adverse effect on rival PC-makers Hewlett-Packard (NYSE: HPQ) that closed down $0.67 or 2% to $33.12, and Gateway (NYSE: GTW) that closed down $0.06 to $2.08.
The waiting game has started with all major indexes closing the session with minor changes. Drop in oil prices and a slew of big mergers in the financial, metals and scientific-research industries failed to move the market upwards. Investors appear to be waiting to see what the Federal Reserve decides to say about interest rates after its policy meeting on Wednesday.
Today, the Dow Jones industrial average closed up 6.8 or 0.06% to 11,584.54, the broader Standard & Poor's 500 index closed down 1.10 or 0.8% to 1,324.66, and the Nasdaq composite index closed up 2.42 or 0.1% to 2,344.99. The blue-chip average stands within 140 points of its all-time high of 11,722.98, where it closed on Jan. 14, 2000.
Market breadth was mixed. On the New York Stock Exchange, winners and losers were narrowly mixed on volume of 1.26 billion shares. On the Nasdaq, decliners beat advancers by 15 to 14 on volume of 1.45 billion shares.
The merger and acquisition announcements go to show that the corporations have enough confidence in the economy to move ahead and make acquisitions. While lower crude prices have cheered investors, they have also been made uneasy by Buffett's continuing negative view about growing U.S. trade and current-account imbalances, which he said could cause a painful correction in the dollar. The fact that he is going to be deploying capital outside the U.S. rather than in the U.S. is overweighing the investors. Investors, will focus also on the statement accompanying the Fed decision, searching for clues to what might happen at the next meeting, in June, and beyond.
Merger Monday lived up to its reputation with a number of companies promoting freshly signed deals. Wachovia Corp. (NYSE: WB) agreed late Sunday to buy California's Golden West Financial Corp. (NYSE: GDW) in a $25.5 billion cash-and-stock deal that would add to its presence in the West and put it deeper into the volatile mortgage business. Stock of Wachovia closed down $3.95 or over 6% to $55.44, while that of Golden West closed up $4.41 or nearly 7% to $74.92, This deal comes 10 months after Wachovia failed in its bid to buy MBNA Corp., the credit-card company that was eventually bought by Bank of America Corp. (NYSE: BAC).
Scientific and lab gear maker Thermo Electron Corp. (NYSE: TMO) and Fisher Scientific International Inc. (NYSE: FSH) agreed to combine in a deal valued at about $10.6 billion. The merger would create a leading provider of laboratory products and scientific equipment. Thermo shares closed down $0.99 or 2.3% to $38.54, while shares of Fisher Scientific closed up $2.22 or 3% to $75.95.
Berkshire Hathaway (NYSE: BRK/A) agreed to buy 80% of the closely held Israeli toolmaker Iscar for $4 billion. The famed investor Buffett told shareholders at Berkshire's annual meeting over the weekend that he will make more investments in the U.K. and other European countries during the next year and will consider acquisitions in Japan. This has caused some concerns on the economy and the strength of the Dollar since he is looking at investing outside the U.S.
Inco (NYSE: N) soared on receiving an unsolicited bid. Shares of the Nickel and copper producer climbed up $7.99 or 12% to $67.07, after it received a $16 billion buyout offer from Canadian zinc miner Teck Cominco. The deal is dependent on Inco giving up its $10.6 billion offer for fellow metals producer Falconbridge(NYSE: FAL). Stock of Falcombridge closed up $2.61 to $45.24. This also had a positive impact on other metals companies such as Alcan (NYSE: AL) that closed up $1.99 to $55.99, and Alcoa (NYSE: AA) that closed up $1.02 to $36.12.
Two brokers, Caris & Co and American Technology Research have upgraded Intel (Nasdaq: INTC) and this led the stock to close up $0.60 or over 3% to $20.11. The company has branded its new chips for laptop and desktop computers Core 2 Duo. As an effect, stock of Advanced Micro Devices (NYSE: AMD) closed down $0.46 to $33.97.
A U.K. judge ruled that Apple Computer Inc. (Nasdaq: AAPL) is entitled to use an apple logo on its iTunes Music Store. Stock of Apple Computers closed unchanged at $71.89. Apple Corps, the record label owned by the Beatles, contended the computer company had broken a 1991 agreement, under which each agreed not to enter into the other's field of business. However, this will also clear the way for Apple to sell Beatles songs through iTunes for the first time.
Crude-oil futures closed below $70 a barrel following comments from Iran that hinted at a moderating posture in its nuclear dispute with the West, and after the head of an energy association said current oil levels are unsustainable. Crude for June delivery finished down 42 cents at $69.77 a barrel.
Wachovia Corp. (NYSE: WB) agreed late Sunday to buy California's Golden West Financial Corp. (NYSE: GDW) in a $25.5 billion cash-and-stock deal that would add to its presence in the West and put it deeper into the volatile mortgage business. Stock of Wachovia closed down $3.95 or over 6% to $55.44, while that of Golden West closed up $4.41 or nearly 7% to $74.92, This deal comes 10 months after Wachovia failed in its bid to buy MBNA Corp., the credit-card company that was eventually bought by Bank of America Corp. (NYSE: BAC).
Inco (NYSE: N) soared on receiving an unsolicited bid. Shares of the Nickel and copper producer climbed up $7.99 or 12% to $67.07, after it received a $16 billion buyout offer from Canadian zinc miner Teck Cominco. The deal is dependent on Inco giving up its $10.6 billion offer for fellow metals producer Falconbridge(NYSE: FAL). Stock of Falcombridge closed up $2.61 to $45.24. This also had a positive impact on other metals companies such as Alcan (NYSE: AL) that closed up $1.99 to $55.99, and Alcoa (NYSE: AA) that closed up $1.02 to $36.12.
The Dow and the price of gold both saw record highs this week, with the Dow closing at 11577.74, up a whopping 210.60 on the week. The good news on the Dow came in spite of bad news for the auto industry, which we have come to expect. Both Ford and GM logged declines in auto sales in April. A temporary dip in oil prices also contributed to the increase in the Dow. Today, every component of the Dow rose, except for Honeywell (NYSE: HON) which was unchanged, and Procter & Gamble (NYSE: PG) which was down 0.13 on disappointing results.
Gold closed at its highest level in 25 years at 684.30, up 29.80 on the week. And while the Dow may go up and down, gold's upward trend is unstoppable, and we'll see 700.00 soon. Gold mining stocks with even a moderate outlook in production will enjoy impressive gains in share price over the next few weeks.
The Nasdaq's gains were slimmer this week, closing at 2342.57, up just 20.00 for the week. The S&P500 closed at 1325.76, inching up over last week by 15.15. Although the week's gain for the S&P wasn't spectacular, the index's steady gains means that this week's closing number marked the highest level since early 2001 for the S&P.
Crude dipped below the $70 mark this week but only briefly, closing at 70.19, down 1.69 for the week. Although it may dance around the $70 mark for a while, don't look for crude to go significantly below that. It hit the $75 mark two weeks ago and it will exceed $75 this spring.
Will he or won't he? Investors will be holding their breath next week as they wait to see what Fed chief Bernanke will do on the 10th. Most people are expecting the rate to go to five percent at next week's meeting, but it's what will happen afterwards that has investors wringing their hands. It's anybody's guess as to what he will do in June--although speculation is that the rate will stay at five percent at least for a while.
A weaker-than-expected jobs report improved the odds the Fed will stop raising interest rates sooner rather than later. This catapulted the Dow Jones Industrial Average and the S&P 500 Index to multiyear highs. This wrapped up a week of solid gains for the markets, that nave been buoyed by a pullback in oil prices, a strong first-quarter earnings season and data showing the resilience of the U.S. economy in the face of rising energy costs.
Today, the Dow Jones industrial average closed up 138.88 or 1.2% to 11,577.74, and set it at its highest close since Jan. 14, 2000, when it ended at 11,722.98, an all-time high. The broader Standard & Poor's 500 index closed up 13.51 or 1% to 1,325.76, and the Nasdaq composite index closed up 18.67 or 0.8% to 2,342.57. For the week, the Dow gained nearly 1.9%, the S&P added around 1.2% and the Nasdaq was up nearly 0.9%.
Market breadth was positive. On the New York Stock Exchange, winners beat losers nearly three to one on volume of 1.68 billion shares. On the Nasdaq, advancers topped decliners by more than three to two on volume of almost 1.99 billion shares.
In data news, the Labor Department reported that U.S. non-farm payrolls expanded by 138,000 in April, less than the 199,000 expected by economists. The unemployment rate remained at 4.7%. The equities market liked the report because it offered some hope the Fed could ease up on its monetary-policy tightening. The falling dollar is another positive for stock investors, as it makes exports of U.S. goods cheaper and increases the value of repatriated corporate earnings.
The annual meeting of Berkshire Hathaway (NYSE: BRK/A) is scheduled this weekend. It is expected that its famous chairman, 75-year-old Warren Buffett, may use the meeting to announce a number of acquisitions. In his annual letter to shareholders earlier this year, Buffett made it clear that he was looking for attractive buys to put his company's $40 billion cash pile to work. This may affect the path of many shares on Monday. San Francisco power company PG&E (NYSE: PCG) and Los Angeles automotive insurer Mercury General (NYSE: MCY) are possible acquisition targets. PG&E shares were up 3.4% at $40.80, while shares of Mercury General climbed 3.6% to $57.52.
Stock of Walt Disney (NYSE: DIS) closed up $0.69 or 2.4% to $29.09, after shareholders of Pixar Animation Studios (Nasdaq: PIXR) voted to approve the company's purchase by Disney in a deal worth $7.4 billion in stock. Shares of Activision closed up $1.67 or 13% to $14.76, after the video game software publisher reported a narrower-than-expected quarterly loss and sales that beat forecasts. Shares of Warner Music (NYSE: WMG) which has spurned a $4.2 billion takeover offer from EMI Group, were up 2.3% at $29.40 after the company posted a narrower-than-expected loss.
Oil stocks also jumped back as they got some help from El Paso (NYSE: EP) and EOG Resources (NYSE: EOG), which both reported sharply higher earnings that beat estimates. Shares of El Paso closed up $1.69 or 12.5% to $15.18, and EOG closed up $4.86 or 7% to $76.31. El Paso reported first-quarter earnings that tripled and topped Wall Street forecasts.
Crude oil for June delivery settled up 25 cents at $70.19 a barrel on the New York Mercantile Exchange. Oil has tumbled over 6% in the last two days in response to a government report showing a rise in oil and gas supplies.
The annual meeting of Berkshire Hathaway (NYSE: BRK/A) is scheduled this weekend. It is expected that its famous chairman, 75-year-old Warren Buffett, may use the meeting to announce a number of acquisitions. In his annual letter to shareholders earlier this year, Buffett had made it clear that he was looking for attractive buys to put his company's $40 billion cash pile to work. In an unrelated yet connected story, San Francisco power company PG&E (NYSE: PCG) and Los Angeles automotive insurer Mercury General (NYSE: MCY) are possible acquisition targets. Amidst this expectation, PG&E shares were up 3.4% at $40.80, while shares of Mercury General climbed 3.6% to $57.52.
Wal-Mart Stores Inc. (NYSE: WMT) reported a 6.8% rise in same-store sales. Numbers were buoyed by brisk sales of toys, games and candy for the Easter holiday. Sales matched the company's own forecast and handily outpaced the 5.7% average again expected by analysts. However, the world's largest retailer, is forecasting a slowdown in May, with same-store sales expected to grow 2% to 4%. Same-store sales is a common measure of retail performance, and logs sales from stores open at least a year.
Strong April sales results from retailers, a drop in crude-oil prices and upbeat retail sales fired up the bulls, to lift the Dow Jones Industrial Average to its best level in more than six years. Gains came despite latest data showed a rise in labor costs in the first quarter, which is a worrying development for those concerned that the Federal Reserve may have to keep raising interest rates to choke off inflationary pressures.
Today, the Dow Jones industrial average closed up 38.58 or 0.3% to 11,438.86, the broader Standard & Poor's 500 index closed up 4.40 or 0.3% to 1,312.25, and the tech-fueled Nasdaq composite index closed up 19.93 or 0.9% to 2,323.90. The rally pushed the Dow to its highest close in more than six years and within 300 points of its all-time high of 11,722.98 set on Jan. 14, 2000.
Market breadth was positive. On the New York Stock Exchange, winners beat losers by five to three on volume of 1.76 billion shares. On the Nasdaq, advancers topped decliners 18 to 11 on volume of 2.09 billion shares.
For the quarter, productivity in the American workplace increased at a 3.2% annual rate against the expected 2.9%. Unit labor costs increased 2.5% in the non-farm business sector against the expected 1.3%. The Federal Reserve has made it clear it will be looking closely at data to help it decide the future course of interest rates and this productivity data is a double edged sword.
A number of retailers reported strong April sales at stores open a year or more. This is a key measure known as same-store sales. Retail sales showed that consumers took to the malls and shopping centers to ring up robust year-over-year sales. This however, may not continue for the month of May.
The pace today was set by Wal-Mart Stores Inc. (NYSE: WMT) with a 6.8% rise in same-store sales, buoyed by brisk sales of toys, games and candy for the Easter holiday. Sales matched the company's own forecast and handily outpaced the 5.7% average again expected by analysts.
Some salient results from retailers included Target Corp. (NYSE: TGT) which posted a 10.4% rise in April sales, Costco Wholesale Corp. (Nasdaq: COST) posted a 7% rise, BJ's Wholesale Club Inc. (NYSE: BJ) managed a 1.2% gain, American Eagle Outfitters (Nasdaq: AEOS), Limited Brands (NYSE: LTD) closed up $0.82 to $26.34, Pacific Sunwear of California (Nasdaq: PSUN), Abercrombie & Fitch (NYSE: ANF), Talbots (NYSE: TLB) closed up $2.05 to $25.58, and The Gap Inc. (NYSE: GPS) all posted same-store sales that came in ahead of analyst estimates. Whole Foods Markets closed up $8.27 to $70.42, after reporting higher-than-expected second-quarter earnings, and April same-store sales. Starbucks Corp. (Nasdaq: SBUX) closed up $1.44 or 3.9% to $38.79, after the ubiquitous coffee chain saw second-quarter profit climb 17% to $127 million, ahead of analyst expectations.
Stock of International Paper Co. (NYSE: IP) fell 9 cents at $36.97, after the company reported a loss of more than $1.2 billion for the first quarter. The company is holding several paper-making businesses for sale in a far-reaching restructuring program.
Shares in Tyco International (NYSE: TYC) closed up $0.98 or 3.6% to $27.92, after reporting second-quarter earnings that met analysts' estimates. The company also lowered its third-quarter and full-year earnings forecast, due to the run up in the price of copper and gold, which the company uses for its electronic products. The company has also announced a $2 billion share buyback.
Crude oil for June delivery sank $2.34 or over 3% to settle at $69.94 a barrel on the New York Mercantile Exchange. Iran took a back seat to supply data that showed the first increase in U.S. gasoline supplies in nine weeks and placed crude inventories at their highest level in eight years.
Stocks ended slightly lower as a sharp pullback in oil prices helped offset disappointing results from Procter & Gamble (NYSE: PG) and ease concern over the outlook for interest rates following strong data. The slide in crude prices didn't do much to help as Treasury prices declined, raising the yield on the benchmark 10-year.
Today, the Dow Jones industrial average closed down 16.17 or 0.1% to 11,400.28, the broader Standard & Poor's 500 index closed down 5.36 or 0.4% to 1,307.85, and the tech-fueled Nasdaq composite index closed down 5.87 or 0.3% to 2,303.97.
Market breadth was negative. On the New York Stock Exchange, winners beat losers 18 to 13 on volume of 1.73 billion shares. On the Nasdaq, losers narrowly beat winners 15 to 14 on volume of 2.16 billion shares.
News on data included new orders for U.S. made factory goods increased 4.2% in March against the expected 3.7%. This is the largest gain in orders in 10 months. N on-manufacturing sectors of the economy expanded at a faster pace with the index rising to 63% from 60.5% in March. This increase is against the expected fall to 59.6%. This stoked inflation worries and the price index soared to 70.5% from 60.5% in March. It is apparent that the economy is showing a lot of resilience, and that the market now realizes the Fed isn't stopping at 5%.
Shares of Procter & Gamble Co. (NYSE: PG) tumbled $1.89 or 3.25% to $56.22. The world's largest consumer-goods company said third-quarter profit rose 37%, helped by the Gillette acquisition, price increases and cost controls. But sales fell short of expectations, hurt by inventory-reduction efforts at retail customers like Wal-Mart Stores Inc. (NYSE: WMT). The company, whose stock tumbled 3%, also forecast fiscal fourth-quarter earnings that are short of estimates.
Stock of Time Warner (Nasdaq: TWTC) closed down $0.20 to $17.22, after the company reported quarterly earnings and sales in line with expectations. The company posted a 59% growth in first-quarter net income, but its AOL Internet unit remained a weak spot.
Adobe Systems Inc. (Nasdaq: ADBE) saw shares slide 8.6% down $3.29 to $35.06 after the software maker said that quarterly results would come in at the low end of its prior forecast on weaker than expected demand in Europe and North America. This news is likely to have continued effect on the stock. Electronic data Systems (NYSE: EDS) closed down $1.62 to $26.00, despite the fact that quarterly earnings late rose from a year ago, but missed forecasts. PDL Biopharma (Nasdaq: PDLI) closed down $6.49 to $21.10, after reporting quarterly earnings that improved from a year ago but missed estimates. Cigna (NYSE: CI) closed down $15.50 to $90.00, and wireless headset maker Plantronics (NYSE: PLT) closed down $10.78 to $25.86, after posting quarterly profit declines.
On the upside, Qualcomm Inc (Nasdaq: QCOM) closed up $0.69 to $51.75, after boosting its fiscal third-quarter earnings forecast, on strong orders for mobile phone chips. The company also sees revenue at the high end of its earlier range of $1.77 billion to $1.87 billion. Stock of Motorola Inc. (NYSE: MOT) rallied 3.1% to $21.90 after Bank of America Securities upgraded it to buy from neutral. They expect Motorola to rebound from recent weak performance due to increasing "value share" gains and new products.
While stock of Microsoft Corp. (Nasdaq: MSFT) closed down 3.5% at $23.17 after the Wall Street Journal, quoted people familiar with the company, saying that its top management remains open to a deal with Yahoo Inc. (Nasdaq: YHOO), which may include acquiring a stake in the Internet giant. This is likely to have a positive long term effect on the share.
Crude oil for June delivery tumbled $2.33 to settle at $72.28 a barrel on the New York Mercantile Exchange after the government's weekly inventory report showed an increase in crude supplies. Crude supplies also rose. Traders, however, continue to monitor problems in Iran and other trouble spots with large oil supplies.
A number of solid earnings reports and a rally in oil, mining and metals shares fueled by higher commodity prices lifted the Dow Jones Industrial Average to a six-year high and the S&P 500 Index to its best level in more than five years. Investors said that Federal Reserve Chairman Ben Bernanke's reported concern that the market had misinterpreted recent remarks on monetary policy, which took stocks lower on Monday, did little to change the interest-rate outlook.
Today, the Dow Jones industrial average closed up 73.16 or 0.6% to 11,416.45, putting the blue-chip indicator at its highest level since Jan. 19, 2000. The broader Standard & Poor's 500 index closed up 8.02 or 0.6% to 1,313.21, at its highest point since May 21, 2001. The tech-heavy Nasdaq composite index closed up 5.05 or 0.2% to 2,309.84.
Market breadth was positive. On the New York Stock Exchange, winners beat losers by 20 to 11 on volume of 1.7 billion shares. On the Nasdaq, advancers beat decliners by 17 to 13 on volume of 2.1 billion shares.
After CNBC reported the Fed chief's remarks, the federal funds futures market has priced in a higher probability of continued rate increases. The recent economic reports, such as personal-income and consumer-spending data, and the latest survey showing the manufacturing sector in robust health would have raised "red flags" at the central bank. Therefore, there may be a pause but the interest hike may continue.
Verizon Communications Inc. (NYSE: VZ) dipped 15 cents to $32.64 after the company posted adjusted quarterly results that topped analysts' estimates. The company also said that it added 541,000 high-speed Internet customers and 1.7 million wireless subscribers in the March quarter. However, the earnings fell from a year earlier, and disappointed investors.
Automotive stocks came into focus as the Big Three continued to disappoint. General Motors Corp. (NYSE: GM) shares rose 2.5% to $23.21 as investors took heart from a 2% rise in truck sales in April. Car sales, however, tumbled 18%. Ford Motor Co. (Nasdaq: F) posted a 7% decline in April sales, hurt by a sharp decline in truck sales. Its auto division fared better than GM's, posting an 8% gain on an adjusted basis. The stock ended unchanged at $6.91. DaimlerChrysler (NYSE: DCX) posted a 6% fall in April sales, and the stock dipped 19 cents at $54.41. Shares of Visteon Corp. (NYSE: VC) surged 18.6% to $6.95 after the auto-parts maker swung to a first-quarter profit as it shed plants and returned control of a group of factories to former parent Ford.
Strong first quarter earnings sent the stock of TXU Corp. (NYSE: TXU) up $7.59 or 15% to $57.50, Sirius Satellite Radio (Nasdaq: SIRI) closed up $0.26 or 6% to $4.88, after the company reported a wider quarterly loss from a year earlier that was nonetheless narrower than what analysts had expected. Vical (Nasdaq: VICL) closed up $1.69 or 30% to $7.19, after the biotech drug developer beat estimates and said its vaccine protected some animals against the bird flu in studies. St Paul Travelers (NYSE: STA) closed up $2.20 to $45.60, on higher-than-expected first-quarter profit and Archer Daniels Midland (NYSE: ADM) closed up $3.90 to $41.90, on better-than-expected first-quarter profit.
Home builders came under pressure after Hovnanian Enterprises Inc. (NYSE: HOV) cut its second-quarter and full-year earnings forecasts due to production delays, slower sales and other issues that suggest the company is feeling the effects of a cooling U.S. housing market. Hovnanian's shares were off 6.2% at $36.39.
Light, sweet crude oil for June delivery settled 91 cents higher at $74.61 a barrel on the New York Mercantile Exchange.
Stocks ended lower as prospects of a pause in interest-rate hikes dimmed after CNBC reported that Federal Reserve Chairman Ben Bernanke felt the media had misunderstood recent remarks alluding to that possibility. It is apparent that the Federal Reserve may not be as close to a pause with its interest-rate boosting campaign as previously thought.
Today, the Dow Jones industrial average closed down 23.85 or 0.2% to 11,343.29, the broader Standard & Poor's 500 index closed down 5.42 or 0.4% to 1,305.19, and the Nasdaq composite index closed down 17.78 or 0.85 to 2,304.79.
Market breadth was negative. On the New York Stock Exchange, losers beat winners nine to seven on volume of 1.72 billion shares. On the Nasdaq, decliners topped advancers by nearly two to one as 2.11 billion shares changed hands.
A televised report from CNBC said Federal Reserve Chairman Ben Bernanke is worried about the market perceiving him to be dovish on inflation. CNBC anchor Maria Bartiromo had a discussion with Bernanke over the weekend and he stated that it was worrisome that people would look at him as dovish and not necessarily an aggressive inflation-fighter. Last week, Bernanke had said further-interest-rate hikes would be dependent on economic data, but that bankers might pause for one or more meetings. This had fueled speculation that the central bank could be ready for a pause as early as June.
In data news, factory activity accelerated in April, and the ISM index rose to 57.3% in April from 55.2% in March. Readings above 50 indicate expansion. This data raises some concern about inflation. Personal incomes increased 0.8% in March, and consumer prices rose 0.4%. Core prices, rose 0.3%. Core inflation is up 2% in the past 12 months, - and this is at the top of the Fed's comfort zone. The increase in inflation lifts the likelihood that the Federal Reserve will need to keep boosting rates, the fact that consumer activity remains robust is positive for the stock market.
The star of the day was news on mergers and buy-outs. Aviall (NYSE: AVL) closed up $9.26 or 25% to $46.96, after Boeing (NYSE: BA) said it had agreed to buy the aviation parts and services company for about $1.7 billion. This represented a 27% premium to Aviall's closing price on Friday. Telecom services company Level 3 Communications Inc. (Nasdaq: LVLT) said it would buy private telecom firm TelCove Inc. for for $1.24 billion in cash and stock. Level 3 closed up $0.32 or 6% to $5.72. Aramark Corp. (NYSE: RMK) said it has received a $32-a-share buyout offer from an investment group led by its chief executive, valuing the food services group at about $5.94 billion. On this news, Aramark shares surged 20.6% to $33.90. Aztar Corp. (NYSE: AZR) said that it received a bid of $50 a share from Columbia Entertainment, topping a bid of $48 a share made earlier by Pinnacle Entertainment (NYSE: PNK). Stock of Aztar rose 2.8% to $48.83.
U.S. light crude oil for June delivery surged $1.82, or about 2.5%, to settle at $73.70 a barrel on the New York Mercantile Exchange after a refinery fire in Italy fueled concerns about supply disruptions. Iran jitters with the U.S. still pushing toward U.N. sanctions continue to affect oil prices. Added concerns are the loss of a fifth of Nigerian production, Bolivia's move toward the Venezuelan model of total control over oil produced by foreign companies and the summer-driving season staring us in the face. There does not appear to be any respite from oil prices.
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