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« May 2006 |
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Stocks closed lower for today and mixed for the second quarter on a lackluster note. Markets were pressured by the latest Chicago purchasing managers' monthly report which suggested a worst-case scenario of economic slowing alongside higher prices. However, shares of General Motors (NYSE: GM) rose 8.5% on news that the investor Kirk Kerkorian is urging the auto maker to consider an alliance with foreign rivals Renault SA and Nissan Motor Co. Wild swings characterized the stock market in the second quarter, as investors worried about inflation, slowing economic growth and the interest rate outlook.
Today, the Dow Jones Industrial average closed down 40.58 or 0.36% to 11,150.22, the broader S&P 500 index closed down 2.67 or 0.21% to 1,270.20, and the Nasdaq composite closed down 2.29 or 0.11% to 2,172.09. During the second quarter, the Dow gained 0.5%, the S&P 500 lost 1.8% and the Nasdaq tumbled 7.1%.
Market breadth was positive. On the New York Stock Exchange, advancers beat decliners by a margin of two to one on volume of 1.77 billion shares. On the Nasdaq, winners beat losers by a margin of three to two as 2.50 billion shares changed hands.
Investors have been worried that in an effort to ward off inflation, the Fed would raise rates too much and choke off economic growth and corporate profits. Their statement yesterday contained some softer language, saying future decisions will depend on the latest economic numbers. Many took the statement as a sign that an end to the central bank's two-year old rate-hiking campaign may be in sight.
In data news, the National Association of Purchasing Managers' Chicago group said its index of regional business activity slowed to 56.5% from 61.5% in May. This is below the expected 59.4%. However, the prices-paid component leapt to 89% from 76.9%, indicating sharply higher costs for manufacturers. Therefore, consumers both earned and spent more last month, but inflation canceled out most of the gains. Consumer prices increased 0.4% in May. Core prices increased 0.2% in May for a second month. These reports indicate that inflationary pressure is persisting even in a weakening economy.
Shares of General Motors Corp. (NYSE: GM) closed up 8.5% to $29.79, after Kirk Kerkorian, one of the company's largest investors, urged them to consider a three-way partnership with Japan's Nissan Motor Corp. and France's Renault SA. GM stated that the suggestion would be "taken under advisement by the board," but that it "has received no offer or proposal from Renault/Nissan" about a potential linkage."
Shares of computer maker Apple Computer Inc. (Nasdaq: AAPL) closed down $1.70 or 3% to $57.27. The company launched an internal probe of executive stock options granted over a 4-year period, including a grant to Chief Executive Steve Jobs that was later canceled.
Stock of Palm Inc. (Nasdaq: PALM) closed down 13.7% at $16.10, after the maker of the Treo phone issued a weaker-than-expected sales forecast for the current quarter. The company plans to stop European sales June 30 as the product doesn't meet new environmental requirements on lead content. Sales are expected to be in the range of $380 million to $385 million, against the forecast $413 million.
On news that storage-technology giant EMC (NYSE: EMC) would buy RSA for slightly less than $2.1 billion, shares of RSA Security Inc. (NYSE: RSA) vaulted 18.5% to $27.11, while that of EMC fell 2.5% to $10.97. The companies expect the acquisition to close late in the third quarter or early in the fourth quarter. In the last three years, EMC has bought 25 companies and feels that acquiring a security company like RSA is a necessity for continued growth.
U.S. light crude oil for August delivery rose 40 cents to settle at $73.92 a barrel on the New York Mercantile Exchange. Traders focused on gasoline supplies heading into the Fourth of July holiday, a time when many Americans take long driving trips. Crude rose 7% during the second quarter.
On news that storage-technology giant EMC (NYSE: EMC) would buy RSA for slightly less than $2.1 billion, shares of RSA Security Inc. (NYSE: RSA) vaulted 18.5% to $27.11, while that of EMC fell 2.5% to $10.97. The companies expect the acquisition to close late in the third quarter or early in the fourth quarter. In the last three years, EMC has bought 25 companies and feels that acquiring a security company like RSA is a necessity for continued growth.
Stock of Palm Inc. (Nasdaq: PALM) closed down 13.7% at $16.10, after the maker of the Treo phone issued a weaker-than-expected sales forecast for the current quarter. The company plans to stop European sales June 30 as the product doesn't meet new environmental requirements on lead content. Sales are expected to be in the range of $380 million to $385 million, against the forecast $413 million.
Shares of General Motors Corp. (NYSE: GM) closed up 8.5% to $29.79, after Kirk Kerkorian, one of the company's largest investors, urged them to consider a three-way partnership with Japan's Nissan Motor Corp. and France's Renault SA. GM stated that the suggestion would be "taken under advisement by the board," but that it "has received no offer or proposal from Renault/Nissan" about a potential linkage."
Stocks staged a major rally with the Dow Jones Industrial Average surging 217 points, after a Federal Reserve statement was seen as signaling that an end to the rate-tightening cycle is near. Blue chips scored their biggest gains in three years. The rally came despite the fact that the Federal Reserve raised the overnight bank lending rate to 5.25%. While the Feds have left the door open for future increases, investors see signs that the central bank may pause after its latest move.
Today, the Dow industrial average closed up 217.24 or 2% to 11,190.80, the broader Standard & Poor's 500 index closed up 26.87 or 2.2% to 1,272.87, and the tech-heavy Nasdaq composite closed up 62.54 or almost 3% to 2,174.38. This is the biggest point gain for the Dow since March 2003, and the best gain for the Nasdaq in over two years. For the year, the Dow has climbed 4.1% and the S&P is up 1.8%, but the Nasdaq is still down 1.7%.
Market breadth was positive. On the New York Stock Exchange, advancers topped decliners by a margin of 27 to 4 on volume of 1.9 billion shares. On the Nasdaq, winners beat losers by a margin of four to one as 2.2 billion shares changed hands.
Investors cheered as the committee removed the phrase that some further measured policy firming "may" be needed with "any additional firming that may be needed" will depend on the economic outlook. This does point to an end that is approaching. Feds too appear concerned that growth is moderating; and that cannot be great for the economy.
New data too pointed toward a healthy economy. First-quarter gross domestic product was revised for a final time to show a 5.6% increase, the fastest rate of growth in about three years and stronger than the 5.5% gain expected by economists. Core consumer-price inflation rose at a 2% annual rate during the quarter, down from 2.4% in the fourth quarter. Initial jobless claims in the latest week rose by 4,000 to 313,000, while the four-week average of new claims dropped by 6,000 to 305,500, the lowest since Feb. 25. This is against the expected a rise to 311,000 and suggests a healthy job market.
Shares of McDonald's Corp. (NYSE: MCD) closed up $1.59 or almost 5% to $33.56, after Merrill Lynch upgraded the burger chain to "buy" from "neutral". Merrill Lynch forecasts improved sales and margins, particularly in Europe.
Walt Disney Co. (NYSE: DIS) closed up $0.50 or 1.7% to $29.88, after naming ex-Procter & Gamble CEO and Disney director John Pepper as non-executive chairman, succeeding former Sen. George Mitchell.
Shares of Tenet Healthcare (NYSE: THC) closed down $0.13 or 2% to $7.10. The health-care provider has agreed to pay $725 million to settle U.S. Justice Department claims regarding its receipt of certain Medicare payments before 2003. The settlement also covers physician financial arrangements and Medicare-coding issues. Tenet also revealed a new plan to boost profitability. It will sell 11 hospitals and expand its capital investment program
Oil futures rose $1.33, or 1.8%, to $73.52 a barrel. In the past seven sessions, the price of crude has risen 6%.
Stock closed higher after adventurous investors shook up a complacent market late in the day by seeking out attractively priced shares. Warner Music Group (NYSE: WMG) managed a strong rise, after making a new offer to buy British recording company EMI. However, EMI has rejected the Warner Music offer, and has issued its own bid to buy Warner Music. Investors look forward to the Federal Reserve policy statement tomorrow.
Today, the Dow Jones Industrial average closed up 48.82 or 0.45% to 10,973.56, the broader Standard & Poor's 500 index closed up 6.80 or 0.55% to 1,246.00, and the Nasdaq composite index closed up 11.59 or 0.55% to 2,111.84.
Market breadth was positive. On the New York Stock Exchange, advancers beat decliners by a margin of 19 to 12 on volume of 1.487 billion shares. On the Nasdaq, winners narrowly beat losers by 15 to 14as 1.637 billion shares changed hands.
Many investors looked for bargains in the hope that the anticipated 0.25% rate increase has already been factored in. It is evident that there is no movement in any direction - only individual stories and stocks. The market continues to struggle to understand policymakers' monetary leanings under the leadership of new Chairman Ben Bernanke. There have been rumblings that the Fed could be more aggressive and raise by half a percentage point this time. The consensus is that the market already has forward-priced to adjust to the expected events. Investors will be focusing more on the Fed's statement and looking for clues about what the central bank intends to do with interest rates in the months ahead.
On data news, there was slight reaction to news from the Mortgage Bankers Association that mortgage applications fell 6.7% last week. This counteracted the impression of a booming housing market suggested by a 4.6% surge in monthly new home sales earlier in the week, but investors suspected it would have little influence on the Fed decision. Investors also scrutinized news from the Energy Department that crude supplies fell a bigger-than-expected 3.4 million barrels in the latest week. There also was a drop in gasoline supplies.
Shares of Warner Music (NYSE: WMG) rose 3.2% to close at $28.11 after the company's $4.6 billion bid for British music company EMI Group was rejected. Earlier in London trading, shares of EMI shot up 10% as the unusual tug-of-war takeover battle unfolded. EMI has also raised its offer for Warner Music to $4.6 billion, or $31 a share, a nearly 14% premium from Tuesday's close.
Shares of General Motors (NYSE: GM) closed up nearly 3% as the world's largest automaker had tumbled 7% the previous session on concerns of lower industry wide sales. GM shares have put in the best performance of the 30 stocks in the Dow industrials this year, up 43% as of Monday's close. The gain is prominently owing to reasons such as buyout option, reduced dividend, heath care costs and raising of cost cutting targets.
Shares of retailer J. Crew Group (NYSE: JCG) soared 27.8% up $5.42 to $25.55 to $25.42, in their market debut on the New York Stock Exchange. The stock debut price for the clothing retailer and catalog marketer was initially set in the $15 to $17 range.
Shares of Nike Inc. (NYSE: NKE) down $3.91 or 4.7% to $79.72, after the sneaker maker said its quarterly net income declined and profit margins fell below expectations. Heavy spending on the World Cup and other costs forced the company to miss quarterly earnings estimates.
Wendy's International (NYSE: WEN) closed off 2.3%. at $56.41. The fast-food restaurant operator late Tuesday said that second-quarter earnings per share will fall due to charges from its early-retirement plan, job cuts and other cost-cutting moves.
In the tech sector, shares of Texas Instruments (NYSE: TXN) fell 2.3% to $28.96 as RF Micro Devices (Nasdaq: RFMD) slid 4.3% to $5.76, after J.P. Morgan said there was downside risk for the earnings of the suppliers of components to Nokia (NYSE: NOK). According to the brokerage, Nokia could push out orders for handset components to future quarters, which could pinch on current profits. Nokia's U.S.-traded stock fell 2.4% to $19.13.
Crude for August delivery closed higher after news of the drop in weekly supply. The front-month contract closed at $72.19 a barrel, up 27 cents on the session on the New York Mercantile Exchange.
Shares of retailer J. Crew Group (NYSE: JCG) soared 27.8% up $5.42 to $25.55 to $25.42, in their market debut on the New York Stock Exchange. The stock debut price for the clothing retailer and catalog marketer was initially set in the $15 to $17 range.
Shares of Warner Music (NYSE: WMG) rose 3.2% to close at $28.11 after the company's $4.6 billion bid for British music company EMI Group was rejected. Earlier in London trading, shares of EMI shot up 10% as the unusual tug-of-war takeover battle unfolded. EMI has also raised its offer for Warner Music to $4.6 billion, or $31 a share, a nearly 14% premium from Tuesday's close.
Stocks ended sharply ahead of the Federal Reserve's highly anticipated two-day policy meeting. The technology sector bore the brunt of investor jitters over interest rates. Additionally, a sharp sell-off in shares of General Motors Corp. (NYSE: GM) and DuPont (NYSE: DD) contributed to the biggest one-day point drop in three weeks for the Dow Jones Industrial Average.
Today, the Dow Jones Industrial average closed down 120.54 or 1.1% to 10,924.74, the broader Standard & Poor's 500 closed down 11.36 or 0.9% to 1,239.20, and the tech-heavy Nasdaq composite closed down 33.42 or 1.6% to 2,100.25.
Market breadth was negative. On the New York Stock Exchange, losers topped winners by a margin of eight to three on volume of 1.55 billion shares. On the Nasdaq, decliners beat advancers by a margin of three to one as 1.82 billion shares changed hands.
Ongoing worries that the Federal Reserve is about to raise interest rates too high and make a very serious mistake, killing off the economy and earnings is something that’s bothering all investors. The Feds appear fixated on combating inflation by raising rates and are somewhat indifferent to indications of economic slowing. Some investors think that the increase may be as high as half percentage - however, this appears unlikely. While a quarter-percentage point increase is inevitable, investors will be scouring the central bank's policy statement for clues to how much further rates may rise.
On the data front, resale of U.S. homes fell 1.2% in May to a seasonally adjusted annual rate of 6.67 million, against a bigger decline, to 6.64 million. While sales didn't slow as much as expected, the report pointed to overall cooling in the housing sector. U.S. consumer confidence, meanwhile, rose to 105.7 in June from a revised 104.7 in May. This is against an expected dip to 103.1. These reports rattled investors already nervous the Fed will say there's reason to remain concerned about inflation and vigilant about interest rates.
General Motors (NYSE: GM) stock closed down $1.85 or 6.7% to $25.90, after stating that 35,000 union workers would take buyouts or early retirement, allowing the company to raise its cutting target by $1 billion annually to $8 billion. However, recent price actions by Daimler Chrysler (NYSE: DCX), sizable share loss at GM and significant excess capacity all highlight that GM fundamentals remain under severe pressure. GM's Group Vice President Mark LaNeve said the company is faced with brutal year-over-year sales comparisons this summer, after turning in record results last year on the back of its wildly successful employee discount program.
Shares of DuPont (NYSE: DD) closed down $1.16 or 2.8% to $40.88 after French conglomerate Vivendi (NYSE: V) sold its 16.4 million shares (1.8% of the company) of the chemicals giant for $671 million, or $40.82 a share. The sale was expected after Vivendi said earlier in the month that it had resolved a dispute with the U.S. Internal Revenue Service over a 1995 sale of DuPont shares.
Univision Communications Inc. (NYSE: UVN) closed up $1.97 or 6.2% at $34, after it agreed to be bought by a group of private equity firms and media mogul Haim Saban for $13.7 billion. The firms include Saban Capital Group, Madison Dearborn Partners, Providence Equity Partners, Texas Pacific Group and Thomas H. Lee Partners. Grupo Televisa S.A., which has been in the running for Univision has lost the race.
In another merger, Barr Pharmaceuticals Inc. (NYSE: BRL) agreed to buy Croatian drug manufacturer Pliva for $2.2 billion, edging out a competitive bid from Iceland's Actavis. Barr shares were off 1.7% at $47.93.
Stock of Intel (Nasdaq: INTC) closed down $0.23 to $18.05, after it stated that it would sell its phone chip unit to Marvell Technology Group. for $600 million in cash as it looks to focus on chips for personal computers and servers amid stiffer competition. Shares of Marvell closed down $7.76 or 15% to $44.14.
U.S. light crude oil for August delivery rose 12 cents to settle at $71.92 a barrel on the New York Mercantile Exchange. Traders have concerns linked to production setbacks in Louisiana and threats from Iran that it will use oil as a weapon in its battle with the United States and the European Union over its nuclear enrichment program.
Stock of Intel (Nasdaq: INTC) closed down $0.23 to $18.05, after it stated that it would sell its phone chip unit to Marvell Technology Group. for $600 million in cash as it looks to focus on chips for personal computers and servers amid stiffer competition. Shares of Marvell closed down $7.76 or 15% to $44.14.
Univision Communications Inc. (NYSE: UVN) closed up $1.97 or 6.2% at $34, after it agreed to be bought by a group of private equity firms and media mogul Haim Saban for $13.7 billion. The firms include Saban Capital Group, Madison Dearborn Partners, Providence Equity Partners, Texas Pacific Group and Thomas H. Lee Partners. Grupo Televisa S.A., which has been in the running for Univision has lost the race.
Shares of DuPont (NYSE: DD) closed down $1.16 or 2.8% to $40.88 after French conglomerate Vivendi (NYSE: V) sold its 16.4 million shares (1.8% of the company) of the chemicals giant for $671 million, or $40.82 a share. The sale was expected after Vivendi said earlier in the month that it had resolved a dispute with the U.S. Internal Revenue Service over a 1995 sale of DuPont shares.
General Motors (NYSE: GM) stock closed down $1.85 or 6.7% to $25.90, after stating that 35,000 union workers would take buyouts or early retirement, allowing the company to raise its cutting target by $1 billion annually to $8 billion. However, recent price actions by Daimler Chrysler (NYSE: DCX), sizable share loss at GM and significant excess capacity all highlight that GM fundamentals remain under severe pressure. GM's Group Vice President Mark LaNeve said the company is faced with brutal year-over-year sales comparisons this summer, after turning in record results last year on the back of its wildly successful employee discount program.
Merger Monday - Stocks ended higher as upbeat housing data and acquisition deals totaling around $90 billion pulled investors from the sidelines and distracted them from the Federal Reserve's upcoming two-day meeting.
Today, the Dow Jones Industrial average closed up 56.19 or 0.5% to 11,045.28, the broader Standard & Poor's 500 index closed up 6.06 or 0.5% to 1,250.56, and the Nasdaq composite index closed up 12.20 or 0.6% to 2,133.67.
Market breadth was positive. On the New York Stock Exchange, advancers topped decliners by a margin of five to three on volume of 1.34 billion shares. On the Nasdaq, winners beat losers by a margin of 18 to 11 as 1.41 billion shares changed hands.
Merger and acquisition deals combined with the growth in new home sales for the month May gave stocks a lift. For some time, investors were distracted from their focus and worry over the looming Federal Reserve FOMC meeting. Fed policy-makers are all but certain to raise interest rates another quarter-percentage point when they meet, but investors will be focusing on the central bank's statement for clues to how much further rates may rise. There is even some talk in the market about a possible half-point rise.
Investors cheered data showing an unexpected increase in sales of new homes for the month of May - against an expected decline. Sales rose 4.6% to annualized rate of 1.234 million from a revised 1.18 million. Sales were running at the fastest pace since December after three straight increases. Sales are down 5.9% in the past year.
Merger Monday started with Phelps Dodge (NYSE: PD) stating it would buy two major Canadian nickel miners, Inco (NYSE: N) and Falconbridge (NYSE: FAL), in a $40 million deal that would create the largest mining company in North America. Shares of Phelps Dodge closed down $6.72 or 8% to $76.23, while Inco closed up $5.95 or 10% to $64.21, and Falconbridge closed up $2.50 or 5% to $51.80.
Shares of Johnson & Johnson (NYSE: JNJ) closed down $1.11 or 1.8% to $60.21, after the company announced a $16.6 billion deal to buy the consumer products unit of Pfizer (NYSE: PFE). The unit includes such well-known brands as Listerine mouthwash, Nicorette anti-smoking treatments, Rolaids antacid, Benadryl allergy medicine, Rogaine baldness treatment and the antacid Zantac. Stock of Pfizer Inc. strengthened 1.6% to $23.01.
Arcelor bowed to a sweetened $32.2 billion takeover bid from Mittal Steel (NYSE: MT). This merger will create a world steel giant three times larger than its nearest rival. Shares of Mittal Steel dropped 2.4% to $31.40. The bid values each share at $50.77, a 7% improvement on Mittal's previous offer and a 43% premium on its original bid in January.
Shares of Warren Buffett's Berkshire Hathaway (NYSE: BRK/A) closed down $600.00 to $91,500.00, after the billionaire said he would give most of his $44 billion fortune to the Bill & Melinda Gates Foundation and other charities. This charitable giveaway shall start in Jul this year. Shares of Boston Scientific Corp. (NYSE: BSX) fell 6.6% to $17.06 after the company said it was recalling some pacemakers and defibrillators from its sales force and hospital inventories because of problems that could cause battery depletion or loss of operation.
Lennar Corp (NYSE: LEN) slashed its 2006 profit outlook as builders weather the deeper-than-expected pullback in the U.S. housing market. The company reported second-quarter earnings that topped analyst expectations, but it also lowered its fiscal-year forecast, saying activity in its markets is softening on "speculators exiting the market and changing homebuyer sentiment." The stock rose 2.6% at $45.68.
U.S. light crude oil for August delivery added 93 cents to settle at $71.80 a barrel on the New York Mercantile Exchange. Traders continued to eye developments in Iran and wait to see whether this year's hurricane season will be as devastating as last summer's.
Phelps Dodge (NYSE: PD) stating it would buy two major Canadian nickel miners, Inco (NYSE: N) and Falconbridge (NYSE: FAL), in a $40 million deal that would create the largest mining company in North America. Shares of Phelps Dodge closed down $6.72 or 8% to $76.23, while Inco closed up $5.95 or 10% to $64.21, and Falconbridge closed up $2.50 or 5% to $51.80.
Shares of Johnson & Johnson (NYSE: JNJ) closed down $1.11 or 1.8% to $60.21, after the company announced a $16.6 billion deal to buy the consumer products unit of Pfizer (NYSE: PFE). The unit includes such well-known brands as Listerine mouthwash, Nicorette anti-smoking treatments, Rolaids antacid, Benadryl allergy medicine, Rogaine baldness treatment and the antacid Zantac. Stock of Pfizer Inc. strengthened 1.6% to $23.01.
Arcelor bowed to a sweetened $32.2 billion takeover bid from Mittal Steel (NYSE: MT). This merger will create a world steel giant three times larger than its nearest rival. Shares of Mittal Steel dropped 2.4% to $31.40. The bid values each share at $50.77, a 7% improvement on Mittal's previous offer and a 43% premium on its original bid in January.
Wall Street is in a cautious holding pattern pending next week's meeting of the Fed on interest rates. All major indices took a small loss this week, but the fact that the drops were small indicates the market still has good overall strength. The Dow ended below 11,000 today, a big blow symbolically, but the index was down only 25.46 over last Friday's close which ended only a hair above the 11,000 milestone. The Nasdaq lost 8.48 on the week, finishing at 2121.47, and the S&P500 lost 7.04 this week, ending the week at 1244.50. Crude and gold held their own with small gains. Crude closed at 70.87, up 67 cents on the week, and gold gained 6.30 to end at 588.00.
In addition to concern over next week's probable rise in the interest rate, Wall Street also held back due to the Commerce Department's report issued today that orders for durable goods dropped by 0.3 percent last month, primarily driven by drops in orders for transportation equipment and automobiles.
In other big news, Six Flags (NYSE: SIX) said it might have some problems in meeting its obligations and will sell some of its properties. The stock dropped more than 25 percent, ending the day at $5.55 with its stock chart looking like one of the big drops on its roller coasters. In the tech business, Oracle (Nasdaq: ORCL) had good news this week with earnings coming in ahead of expectations, pushing the stock up to close today up 57 cents at 14.90.
Oil and gas stocks in general were up this week due in part to the $21 billion deal announced by Anadarko (NYSE: APC) to acquire Kerr-McGee and Western Gas Resources. Several oil and gas stocks not directly affected by the deal also gained in a coat-tail effect, causing the AMEX Natural Gas Index to close up today at 399.07, one of the few indexes that gained this week.
Stocks closed lower on the day and week with the S&P 500 logging a third straight week of declines, after a wary session spent marking time ahead of next week's Federal Reserve rates decision. However, the energy sector was a notable gainer after two major deals suggested a round of consolidation among oil and gas producers may be on the cards. Concerns about the economy, inflation and interest rates continue to unnerve investors.
Today, the Dow Jones Industrial average closed down 30.02 or 0.3% to 10,989.09, the broader Standard & Poor's 500 index closed down 1.10 or 0.1% to 1,244.50, and the tech-heavy Nasdaq composite index closed down 1.51 to 2,121.47. For the week, the Dow ended down 0.2%, the S&P lost 0.5% and the Nasdaq fell 0.4%.
Market breadth was negative and volume was light. On the New York Stock Exchange, decliners edged out advancers by 16 to 15 on volume of 1.4 billion shares. On the Nasdaq, losers narrowly beat winners by 15 to 14 as 1.6 billion shares changed hands.
There are new worries about just how hawkish the Fed is and whether it will over-tighten and whether investors will have a hard landing or a soft landing scenario for the economy. The market could instead focus on expectations that the second-quarter earnings season will prove solid. Investors are scared to buy and scared to sell - everyone is trapped in day-to-day volatility.
On the data front, orders for new U.S. made durable goods fell a more-than-expected 0.3% in May. It marked the second decline in a row, with orders now down 3.5% since a peak in December. The news heightened investors' nervousness before the Federal Reserve's policy meeting next week.
Additionally, the hedge-fund business came under scrutiny after the New York Times reported that Pequot, a $7 billion fund managed by Arthur Samberg, is being investigated by the SEC for possible insider trading. The probe has not resulted in any charges. Pequot, responding to the report, said all its trades have been proper and it has never received any insider information regarding impending mergers.
Blockbuster from the energy sector had news of a merger. Shares of Shares in Anadarko Petroleum Corp. (NYSE: APC) fell 7.2% down $3.49 to $44.90 after the company said it would spend $21.1 billion to acquire rivals Kerr-McGee Corp. (NYSE: KMG) that closed up $18.31 or 36% to $68.61: and Western Gas Resources Inc. (NYSE: WGR) that closed up $18.76 or 46% to $59.67. The merger would create one of the world's largest independent oil and gas producers. In another deal for the oil sector, Energy Partners Ltd. (NYSE: EPL) closed up $1.15 to $19.17and Stone Energy Corp. (NYSE: SGY) closed up $0.48 to $46.71, on a merge announcement in a $2.2 billion deal. The combined entity will create one of the most active drillers of operated oil and gas wells on the Gulf of Mexico.
Stock of Oracle Corp. (Nasdaq: ORCL) closed up $0.57 or 4% to $14.90, after the software maker posted a 27% jump in its quarterly profit and strong revenue growth, buoyed by strong sales of new software licenses, particularly in its applications segment. Safra Catz, the company's president and chief financial officer, predicted profit excluding acquisition and other one-time items for the current quarter that met analysts' average estimate. She forecast a stronger-than-expected rise in revenue for the current period.
Shares of Alcoa Inc. (NYSE: AA) closed up $0.19 to $30.18, on information that it has sealed a four-year labor contract with its United Steelworkers union. The company also expects to book a second-quarter charge of 4 cents a share on costs related to the ratification of the contract. The aluminum producer is also in talks to establish operations in other African countries besides Guinea and Ghana.
Shares of Six Flags Inc. (NYSE: SIX) closed down $1.90 or almost 26% to $5.55 after the theme-park company said that it was looking to shed six properties as part of its initiative to sell off non-core assets. The company also announced that reaching its prior outlook for adjusted earnings before interest, taxes, depreciation and amortization would be "extremely difficult," and Standard & Poor's downgraded its outlook to "negative" from "stable.
Stock of Qualcomm Inc. (Nasdaq: QCOM) fell 4.2% to $39.55 after J.P. Morgan cut the wireless-technology provider to neutral from overweight. The broker cited a likely stalemate in contract negotiations with Nokia Corp. (NYSE: NOK) over the Finnish handset maker's WCDMA license agreement.
Crude-oil futures maintained flat while traders continued to weigh a smaller-than-expected build in U.S. gasoline supplies, developments in Iran, and next week's Federal Reserve decision on interest rates. The August contract closed up 3 cents at $70.87 a barrel on the New York Mercantile Exchange.
Shares of Six Flags Inc. (NYSE: SIX) closed down $1.90 or almost 26% to $5.55 after the theme-park company said that it was looking to shed six properties as part of its initiative to sell off non-core assets. The company also announced that reaching its prior outlook for adjusted earnings before interest, taxes, depreciation and amortization would be "extremely difficult," and Standard & Poor's downgraded its outlook to "negative" from "stable.
Shares of Alcoa Inc. (NYSE: AA) closed up $0.19 to $30.18, on information that it has sealed a four-year labor contract with its United Steelworkers union. The company also expects to book a second-quarter charge of 4 cents a share on costs related to the ratification of the contract. The aluminum producer is also in talks to establish operations in other African countries besides Guinea and Ghana.
Shares of Shares in . (NYSE: APC) fell 7.2% down $3.49 to $44.90 after the company said it would spend $21.1 billion to acquire rivals Kerr-McGee Corp. (NYSE: KMG) that closed up $18.31 or 36% to $68.61: and Western Gas Resources Inc. (NYSE: WGR) that closed up $18.76 or 46% to $59.67. The merger would create one of the world's largest independent oil and gas producers.
Stock of Oracle Corp. (Nasdaq: ORCL) closed up $0.57 or 4% to $14.90, after the software maker posted a 27% jump in its quarterly profit and strong revenue growth, buoyed by strong sales of new software licenses, particularly in its applications segment. Safra Catz, the company's president and chief financial officer, predicted profit excluding acquisition and other one-time items for the current quarter that met analysts' average estimate. She forecast a stronger-than-expected rise in revenue for the current period.
Stocks closed lower after the yield on the benchmark 10-year note touched a more than four-year high and new data once again suggested that economic growth is slowing. Stocks erased nearly all of the previous session's gains, as inflation fears took hold of investors once again.
Today, the Dow Jones Industrial average closed down 60.35 or 0.5% to 11,019.11, the broader Standard & Poor's 500 index closed down 6.60 or 0.5% to 1,245.60, and the tech-heavy Nasdaq composite index closed down 18.22 or 0.9% to 2,122.98.
Market breadth was negative and volume was relatively light. On the New York Stock Exchange, decliners topped advancers by a margin of two to one on volume of 1.4 billion shares. On the Nasdaq, losers beat winners by a margin of 17 to 12 as 1.7 billion shares changed hands.
The market is likely to remain in a tight band till the Jun 28 meeting. Investors won't be surprised if the Fed lifts its key short-term interest rate to 5.25%. However, a very small number of companies have warned ahead of the second-quarter earnings season. Therefore, the tone for earnings looks very positive, and that's going to provide some support. The yield on the benchmark 10-year Treasury note ran up to 5.2%
The index of U.S. leading economic indicators fell 0.6% against the expected 0.4% drop. This suggests that the economy is likely to grow at a "slow to moderate" pace in the near term. The latest weekly jobless data brought out that first-time applications for state unemployment benefits rose by 11,000 to 308,000. Though the increase was bigger than expected, new claims near the 300,000 level are still a sign of a tight job market.
Shares of Johnson & Johnson (NYSE: JNJ) and Boston Scientific Corp. (NYSE: BSX) moved lower on a news report that several major cardiology centers are cutting back on their use of drug-coated coronary stents, using less expensive uncoated stents instead. Cardiologists at Los Angeles' Cedars-Sinai and Boston's Brigham and Women's report they are inserting fewer drug-coated stents into cardiac patients due to concerns that the devices can cause blood clots. J&J shares closed almost 1% lower at $61.18 while shares of Boston Scientific dropped 2.6%.
Investors today focused on the airline sector. Shares of British Airways PLC. (NYSE: BAB) tumbled 6% to $63.70 after the company disclosed U.K. regulatory authorities and the U.S. Department of Justice are probing the airline over ticket prices and fuel surcharges. United Airlines (Nasdaq: UAUA) confirmed that it's received an inquiry and is cooperating. American Airlines (NYSE: AMR) said it has been subpoenaed but is not a target. United Airlines' closed down 19 cents at $32.03 while AMR shares rose 1.4% to $25.97.
Shares of Bed, Bath & Beyond (Nasdaq: BBBY) fell $2.21 or 6% to $34.67 after the retailer's fiscal first-quarter profit edged up, roughly in line with expectations, but Bear Stearns downgraded the home goods retailer to "peer perform" from "outperform".
Shares in Novell Inc. (Nasdaq: NOVL) surged 8.7% to $6.52 after the computer-networking company ousted its chief executive and chief financial officer, saying new leadership may help lift its share price out of the doldrums. Yum Brands Inc. (NYSE: YUM), owner and operator of the KFC, Pizza Hut and Taco Bell fast-food chains, saw its shares fall more than 2.6% after investors expressed disappointment over its same-store sales performance in the U.S.
Brokerage action was behind a more than 10% drop in shares of RealNetworks Inc. (Nasdaq: RNWK) down $1.11 to $9.72. Goldman Sachs cut the provider of digital media services and software to under-perform from in-line, citing valuation. The broker also said revenue growth could be tempered by the lower-average revenue per user and profit generated by cable subscribers from the Comcast and Cox agreements as well as competition from well-funded players.
Cell phone maker Nokia (NYSE: NOK) has decided that it would stop making phones based on CDMA, which is a cell phone standard developed by the wireless technology company. This led to a drop in share price if Qualcomm that closed down $2.82 or over 6% to $41.38.
Crude-oil futures rose 51 cents to $70.84 a barrel on the New York Mercantile Exchange. Prices took their cue from data showing a smaller-than-expected increase in gasoline supplies in the latest week.
Brokerage action was behind a more than 10% drop in shares of RealNetworks Inc. (Nasdaq: RNWK) down $1.11 to $9.72. Goldman Sachs cut the provider of digital media services and software to under-perform from in-line, citing valuation. The broker also said revenue growth could be tempered by the lower-average revenue per user and profit generated by cable subscribers from the Comcast and Cox agreements as well as competition from well-funded players.
Cell phone maker Nokia (NYSE: NOK) has decided that it would stop making phones based on CDMA, which is a cell phone standard developed by the wireless technology company. This led to a drop in share price if Qualcomm that closed down $2.82 or over 6% to $41.38.
Shares of Bed, Bath & Beyond (Nasdaq: BBBY) fell $2.21 or 6% to $34.67 after the retailer's fiscal first-quarter profit edged up, roughly in line with expectations, but Bear Stearns downgraded the home goods retailer to "peer perform" from "outperform".
Shares of Johnson & Johnson (NYSE: JNJ) and Boston Scientific Corp. (NYSE: BSX) moved lower on a news report that several major cardiology centers are cutting back on their use of drug-coated coronary stents, using less expensive uncoated stents instead. Cardiologists at Los Angeles' Cedars-Sinai and Boston's Brigham and Women's report they are inserting fewer drug-coated stents into cardiac patients due to concerns that the devices can cause blood clots. J&J shares closed almost 1% lower at $61.18 while shares of Boston Scientific dropped 2.6%.
Stocks locked in strong gains after investors cheered Morgan Stanley (NYSE: MS) and FedEx Corp.'s (NYSE: FDX) strong earnings reports. They set aside recent worries about the Federal Reserve's interest-rate decision next week. News that crude-oil supplies hit an eight-year high last week also gave the market some relief. The Dow Jones industrial average rose over 100 points while the broader market posted solid gains.
Today, the Dow closed up 104.62 or 1% to 11,079.46, the broader Standard & Poor's 500 index closed up 12.08 or 1% to 1,252.20, while the tech-heavy Nasdaq composite closed up 34.14 or 1.6% to 2,141.20.
Market breadth was positive. On the New York Stock Exchange, advancers beat decliners by a margin of three to one on volume of 1.7 billion shares. On the Nasdaq, winners topped losers by more than two to one as 1.9 billion shares changed hands.
Investors have been concerned over rates, inflation and the slowing economy. The volatility in the markets is likely to persist until the Federal Reserve's policy meeting June 28-29. Investors remain convinced that the Fed almost certainly will again lift rates by a quarter-percentage point, which would lift the overnight rate to 5.25%.
The star of the day was DuPont (NYSE: DD) that closed up $1.70 or 4% to $41.94, after news of a partnership with BP Plc to develop a gasoline additive meant to compete with corn-based ethanol.. Stock of BP closed up $1.31 to $67.01. Development of transportation bio-fuels could help cut overall greenhouse gas emissions and reduce reliance on petroleum. The companies plan to roll out their first product next year.
Stock of Morgan Stanley (NYSE: MS) closed up 4.3% at $59.48. The brokerage reported a second-quarter profit that was more than double the year-earlier level and easily topped market expectations. It also chalked up a 48% improvement in revenue.
FedEx (NYSE: FDX) closed up $5.54 or 5.1% to $113.86, after reporting a 27% increase in its fourth-quarter profit. This is far better than market expectations. The company also gave first-quarter guidance above current analysts' forecasts.
Among technology stocks, Hewlett-Packard Co. (NYSE: HPQ) rose 2.7% to $33.74. The company said that it would grant more autonomy to its three business groups. Analysts at Robert Baird reiterated an outperform rating on the company, citing the company's plan to restructure some activities.
Oil prices jumped 99 cents to $70.33 a barrel on the New York Mercantile Exchange after the Energy Information Administration said that crude supplies rose by 1.4 million barrels reaching a total of 347.1 million barrels. However, motor-gasoline inventories rose a modest 300,000 barrels to total 213.4 million barrels. Additionally, concerns about nuclear tensions between the west and Iran and North Korea added fuel to fire.
FedEx (NYSE: FDX) closed up $5.54 or 5.1% to $113.86, after reporting a 27% increase in its fourth-quarter profit. This is far better than market expectations. The company also gave first-quarter guidance above current analysts' forecasts.
Hewlett-Packard Co. (NYSE: HPQ) rose 2.7% to $33.74. The company said that it would grant more autonomy to its three business groups. Analysts at Robert Baird reiterated an outperform rating on the company, citing the company's plan to restructure some activities.
Stock of Morgan Stanley (NYSE: MS) closed up 4.3% at $59.48. The brokerage reported a second-quarter profit that was more than double the year-earlier level and easily topped market expectations. It also chalked up a 48% improvement in revenue.
The star of the day was DuPont (NYSE: DD) that closed up $1.70 or 4% to $41.94, after news of a partnership with BP Plc to develop a gasoline additive meant to compete with corn-based ethanol.. Stock of BP closed up $1.31 to $67.01. Development of transportation bio-fuels could help cut overall greenhouse gas emissions and reduce reliance on petroleum. The companies plan to roll out their first product next year.
Blue-chip stocks closed slightly higher as upbeat reports on the housing industry and strong sales from Caterpillar (NYSE: CAT) helped overshadow inflation jitters on Wall Street. However, investors continue to be worried about next week's Federal Reserve policy meeting and as a result, the broader market couldn't hold early gains.
Today, the Dow Jones industrial average closed up 32.73 or 0.3% to 10,974.84, the broader Standard & Poor's 500 index closed down 0.02 to 1,240.12, and the Nasdaq composite index closed down 3.36 or 0.2% to 2,107.06.
Market breadth was negative. On the New York Stock Exchange, decliners edged out advancers 9 to 7 on volume of 1.5 billion shares. On the Nasdaq, losers narrowly beat winners by 16 to 13 as 1.6 billion shares changed hands.
The Commerce Department data showed a stronger-than-expected 5% rise in the construction of new homes in May. Despite this slight relief from the housing numbers, the path of least resistance appears to be a downside. The investors are continuing to drift and will do so till the Fed meet on June 28 and 29 to review the economy and monetary policy. The Fed is widely expected to raise its short-term rate target to 5.25%, and some investors say that they could push that to near 6%. The overriding issue for investors is how to reconcile what appears to be slowing growth with the Fed's concern about inflation and the need to raise interest rates.
Caterpillar (NYSE: CAT) was the star of the day. The share closed up $1.04 or 1.5% to $70.99, after the heavy equipment maker reported strong dealer retail sales. The company stated that the sale of engines to dealers rose in the March-through-May period, with demand especially noteworthy in the marine and oil and gas industries.
Kroger Co. (NYSE: KR) posted a 4% rise in first-quarter profit, although the supermarket operator said charges related to legal proceedings at its Ralph's unit cut earnings by 3 cents a share in the 2006 first quarter. The stock closed up $1.01 or 5% to $20.47. Shares of Target Corp. (NYSE: TGT) closed down $0.06 to $49.04, after the re |
