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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 |
