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« June 2006 |
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Stocks closed lower to cap a mixed month for the markets as a largely solid second-quarter earnings season and rising hopes of an end to interest rate increases were offset by concerns over slowing economic growth and the conflict in the Middle East. Investors are stepping back amid concerns about rising oil prices and how much longer the Federal Reserve will keep raising interest rates.
Today, the Dow Jones industrial average closed down 34.02 or 0.3% to 11,185.68, the broader Standard & Poor's 500 index closed down 1.89 or 0.1% to 1,276.66, and the tech heavy Nasdaq composite closed down 2.68 or 0.1% to 2,091.46. For July, the DOW rose about 0.3%, the S&P gained around 0.5%, and the Nasdaq fell 3.7%. This is the fourth straight month of loss for the Nasdaq.
Market breadth was negative. On the New York Stock Exchange, losers beat winners nearly 17 to 14 on volume of 900 million shares. On the Nasdaq, decliners topped advancers by 15 to 13 on volume of 970 million shares.
Rising oil prices and comments by two Fed officials that suggested an end to interest-rate hikes may not happen as soon as had been hoped led to the slide today. I nvestors now await the next week's Federal Reserve policy-setting meeting to wait and see what the Fed does. St. Louis Fed president William Poole, said there is still a 50-50 chance of a rate hike at the central bank's policy meeting. Janet Yellen, president of the San Francisco Federal Reserve Bank, forecast that the economy will grow at a slower pace in coming quarters, which should ease inflation pressures. She also cautioned that it was important that the central bank be careful not to raise borrowing costs so much so that it hurts the economy. Fed funds futures on the Chicago Board of Trade are now pricing in a 32% probability of a hike.
On the data front, factory activity in the Chicago region accelerated in July, with the Chicago purchasing managers index rising to 57.9% from 56.5% in June. Economists had been expecting the index to fall to 55.8%. This stronger than expected read added to concerns that the Fed's two-year old rate hiking campaign is not yet done.
Shares of Apple Computer Inc. (Nasdaq: AAPL) closed up $2.37 or 3.5% to $67.96, after it was upgraded to "buy" from "neutral" at Bank of America. It also raised its price target to $79 from $68, citing strong demand for MacBooks and iPod digital music players. The broker stated that it sees upside potential to earnings from iPods of 8 cents to 12 cents a share.
J.P. Morgan Chase upgraded oil giant Exxon Mobil Corp. (NYSE: XOM) to overweight from neutral, citing an improved outlook for production growth and the stock's defensive characteristics in the face of downside risks surrounding crude prices. This lead to the shares of Exxon Mobil closing up $0.74 or 1% to $67.74. At the same time, J.P. Morgan downgraded Chevron Corp. (NYSE: CVX) to neutral from overweight due to concerns over relative valuation, "disappointing" earnings over the last few quarters and continued production decline. Shares of Chevron dipped 0.1% to $65.78.
Shares of Scottish RE (NYSE: SCT) closed down $12.01 or 75% to $3.99, after the re-insurer said its CEO quit and it expects a loss in the second quarter. It also forecast sluggish results for the second half. Additionally, the company also said it was suspending its dividend and has hired Goldman Sachs and Bear Stearns to help it look at "strategic alternatives."
Stock of Bristol-Myers Squibb (NYSE: BMY) closed down $0.50 or 2% to $23.97, after being dealt a regulatory setback in its efforts to block a generic version of its biggest drug. A group of state attorneys general rejected a deal that the drug maker had made with generic drug maker Apotex that would have seen the competitor holding off on selling a cheaper version of Bristol's anti-clotting drug Plavix in exchange for a payment.
Shares of SanDisk (Nasdaq: SNDK) closed down $0.48 to $46.66, after announcing that it is buying Israeli competitor M-Systems (Nasdaq: FLSH) Flash Disk Pioneers for around $1.35 billion in stock. Shares of M-Systems closed up $4.21 or 13% to $36.00. This is the bid by SanDisk to accelerate its push in the market for NAND flash, a fast-growing memory-chip technology used in portable electronics. The deal values the company at $36 a share and is a 26% premium over the average close for M-Systems shares over the last 30 days. The CFO Judy Bruner said the deal will also boost SanDisk's earnings by the end of next year.
U.S. light crude oil for September delivery gained $1.21 to $74.45 a barrel on the New York Mercantile Exchange after Israel's prime minister said that a cease-fire was not going to happen in the next few days between the nation and Hezbollah militants in Lebanon. Additionally, a leak on Russia's largest oil pipeline to Europe and ongoing concerns about Iran and Syria's nuclear capability also had an adverse effect. The natural-gas contract closed up $1.03 at $8.211 BTU. On the month, crude dipped 0.5% but natural gas futures chalked up a 35% gain.
Shares of Apple Computer Inc. (Nasdaq: AAPL) closed up $2.37 or 3.5% to $67.96, after it was upgraded to "buy" from "neutral" at Bank of America. It also raised its price target to $79 from $68, citing strong demand for MacBooks and iPod digital music players. The broker stated that it sees upside potential to earnings from iPods of 8 cents to 12 cents a share.
Stock of Bristol-Myers Squibb (NYSE: BMY) closed down $0.50 or 2% to $23.97, after being dealt a regulatory setback in its efforts to block a generic version of its biggest drug. A group of state attorneys general rejected a deal that the drug maker had made with generic drug maker Apotex that would have seen the competitor holding off on selling a cheaper version of Bristol's anti-clotting drug Plavix in exchange for a payment.
Shares of SanDisk (Nasdaq: SNDK) closed down $0.48 to $46.66, after announcing that it is buying Israeli competitor M-Systems (Nasdaq: FLSH) Flash Disk Pioneers for around $1.35 billion in stock. Shares of M-Systems closed up $4.21 or 13% to $36.00. This is the bid by SanDisk to accelerate its push in the market for NAND flash, a fast-growing memory-chip technology used in portable electronics. The deal values the company at $36 a share and is a 26% premium over the average close for M-Systems shares over the last 30 days. The CFO Judy Bruner said the deal will also boost SanDisk's earnings by the end of next year.
The Dow is back up to happier levels, gaining a whopping 351.32 this week to close the day at 11219.70. Wall Street breathed a sigh of relief after last week's sub-11000 levels soured investors' moods. The Nasdaq also climbed 73.75 this week, ending at 2094.14, despite mixed results on the tech front; and the S&P500 closed at 1278.55, up 38.26 for the week.
Gold was also up, closing the week at 647.80, up 27.60 for the week; but crude lost a little ground, closing at 73.24, down 1.19 on the week.
Texas Instruments (NYSE: TXN) reported that earnings for the quarter increased nearly fourfold over the year-ago quarter, with higher sales attributed to demand for the company's cell phone chips. Sun Microsystems (Nasdaq: SUNW) didn't have such good news, posting a quarter's loss of $301 million compared to a $50 million profit in the year-ago quarter, despite rising sales. Also, Internet giant Amazon (Nasdaq: AMZN) was hurt during the quarter with profits dropping by more than half. Like Sun, sales are up at the giant dotcom retailer, but profitability sunk due to increased operating expenses and its shipping promotions. Like many of the smaller dotcoms that fell during the boom, Amazon is being hurt by a simple and inescapable fact of online retailing: It costs money to put things in boxes and send them to customers.
Nobody expects American auto companies to turn a profit any more, so the Street was surprised when General Motors (NYSE: GM) reported a non-GAAP profit (excluding restructuring costs) for the quarter for the first time since 2004. The company didn't divulge any details in it quarterly report on the possibility of an alliance with Nissan and Renault, although speculation has investors giddy with anticipation.
It should come as no surprise that Exxon (NYSE: XOM) pulled in a profit of over 10 billion on revenue of $99 billion during the quarter. The oil giant had its best ever second quarter, well exceeding expectations and shooting share prices to new highs. Chevron (NYSE: CVX), on the other hand, missed expectations, despite seeing an 18 percent rise in profit. We wish all of our stocks would have such disappointing results.
Stocks ended sharply higher, with the S&P 500 Index posting its best weekly point gain in over three years, on hopes the Federal Reserve will stop raising interest rates after economic growth slowed more than expected in the second quarter. This strong finish comes after a week of volatile trading due to a mixed set of quarterly reports.
Today, the Dow industrial average closed up 119.27 or 1.07% to 11,219.70, the broader Standard & Poor's 500 index closed up 15.35 or 1.22% to 1,278.55, and the tech-heavy Nasdaq composite index closed up 39.67 or 1.93% to 2,094.14. For the week, the Dow gained 3.2%, the S&P rose 3.1% and the Nasdaq soared 3.7%.
Market breadth was positive. On the New York Stock Exchange, winners topped losers four to one on volume of 1.3 billion shares. On the Nasdaq, advancers topped decliners two to one on volume of 1.4 billion shares.
Before the opening bell, a report on the GDP confirmed a slower economy and raised the possibility of a pause from the Fed. In the second quarter, the GDP grew at a 2.5% annual rate, down from the 5.6% in the first quarter. Economist had expected a growth of 3%. This increases the chances that the Federal Reserve will pause in their long string of interest-rate increases when they meet next in August. At the same time, core inflation rose 2.9%, which could pressure the Federal Reserve to keep lifting rates. The employment cost index rose 0.9%, outstripping analysts' expectations.
Shares of Wal-Mart (NYSE: WMT) rose $0.90 or 2.1% to $44.46, as it announced it is pulling out of Germany and taking a $1 billion charge related to the move. Investors welcomed its decision to pull out of Germany, with the sale of all its 85 hypermarkets to Metro AG. Wal-Mart lost as much as $250 million a year from the German operations. It acknowledged that it misunderstood German regulations, shopping habits and tastes, and that the unit remained unprofitable.
Shares of Chevron (NYSE: CVX) closed down $1.60 or 2.5% to $66.13, after the oil company reported that quarterly profit rose 18%, driven by a surge in crude oil prices. However, results fell short of expectations. Net income in the second quarter increased to $4.35 billion, from $3.68 billion in the year earlier quarter. The EPS was $2.10, against the expected $2.17; while revenue jumped 10.7% to $53.53 billion.
Shares of auto parts supplier Lear (NYSE: LEA) closed down $1.29 or 5% to $22.78, despite reporting a narrower quarterly net loss. The net loss for the second quarter narrowed to $6.4 million, from $44.4 million. For the second half of 2006, it expects North American production to be down 7%.
Shares of McAfee (NYSE: MFE) closed down $1.88 or 8% to $22.14, after the antivirus software maker reported a lower quarterly net profit and said it would likely restate past financial results. The company was also downgraded by WR Hambrecht to "hold" from "buy." Likewise, shares of Coventry Health Care (NYSE: CVH) closed down $2.10 to $51.81, on poor second quarter profit. Shares of Office Depot (NYSE: ODP) closed down $2.54 or 8% to $34.61, despite 18% rise in second-quarter earnings. However, sales at its stores opened more than a year softened.
Light, sweet crude oil for September delivery fell $1.30 to $73.24 a barrel on the New York Mercantile Exchange. Traders took some profits ahead of the weekend as the weaker than expected GDP report prompted them to review their outlook for U.S. demand for energy products.
Shares of auto parts supplier Lear (NYSE: LEA) closed down $1.29 or 5% to $22.78, despite reporting a narrower quarterly net loss. The net loss for the second quarter narrowed to $6.4 million, from $44.4 million. For the second half of 2006, it expects North American production to be down 7%.
Shares of Chevron (NYSE: CVX) closed down $1.60 or 2.5% to $66.13, after the oil company reported that quarterly profit rose 18%, driven by a surge in crude oil prices. However, results fell short of expectations. Net income in the second quarter increased to $4.35 billion, from $3.68 billion in the year earlier quarter. The EPS was $2.10, against the expected $2.17; while revenue jumped 10.7% to $53.53 billion.
Shares of Wal-Mart (NYSE: WMT) rose $0.90 or 2.1% to $44.46, as it announced it is pulling out of Germany and taking a $1 billion charge related to the move. Investors welcomed its decision to pull out of Germany, with the sale of all its 85 hypermarkets to Metro AG. Wal-Mart lost as much as $250 million a year from the German operations. It acknowledged that it misunderstood German regulations, shopping habits and tastes, and that the unit remained unprofitable.
Stocks closed lower in a market hemmed in by concerns over the economy and tensions in the Middle East. However, Exxon Mobil Corp.'s strong earnings results brightened a day in which technology shares tumbled. Investors took a step back near the end of an otherwise strong week on Wall Street.
Today, the Dow Jones industrial average closed down 2.08 to 11,100.43, the broader Standard & Poor's 500 index closed down 5.20 or 0.4% to 1,263.20, and the tech-heavy Nasdaq composite index closed down 15.99 or 0.8% to 2,054.47.
Market breadth was negative. On the New York Stock Exchange, losers topped winners 9 to 7 on volume of nearly 1.82 billion shares. On the Nasdaq, decliners topped advancers 18 to 11 on volume of almost 2.16 billion shares.
While stocks attempt to crawl out of the hole, the many economic and geopolitical worries make it difficult for investors to get excited about financial markets right now. The slowing economic growth at a time when the Federal Reserve has yet to clearly signal that its cycle of interest-rate hikes is at an end - has been frustrating. Investors fear that further rate increase could slow the economy to a point where it would fall into recession. Additionally, the low trading volume and increased volatility has been a cause for concern. In general, blue-chip, defensive and multinational stocks are doing better than the rest of the market right now.
Amongst economic news, sales of new home sales fell by 3% - more than expected in June, reflecting the ongoing slowdown in the housing market. Additionally, the inventory of unsold homes on the market rose by 0.7% to a record 566,000. Orders of durable goods jumped 3.1% in June, against the expected 2%. Excluding transportation, orders rose a larger than expected 1%. There was a surprise drop in weekly jobless claims as they fell to their lowest level in more than a month in the week ended July 22. Therefore, the signals on the data front are very mixed.
Shares of Microsoft Corp. (Nasdaq: MSFT) closed down $0.50 or 2.1% to $23.87. CEO Steve Ballmer told shareholders at its annual meeting that the company needs to embrace an industry-wide shift toward software delivered over the Internet as a service, while continuing to drive advances in technology. The decline gave investors an incentive to back out of other tech stocks as well.
Stock of Exxon Mobil (NYSE: XOM) closed down $0.13 to $66.47, despite reporting quarterly earnings that surged 36% to more than $10 billion. The rise is fueled by historically high oil prices and strong refining margins. Exxon earned $10.36 billion, up from a year-ago profit of $7.64 billion. Revenue for the quarter came in at $99.03 billion, up from $88.57 billion a year earlier.
Stock of Bristol-Myers Squibb (NYSE: BMY) closed down $1.95 or 7.5% to $24.04, as the company stated that it is the target of a criminal antitrust probe by the federal government regarding a patent settlement with a generic competitor. The drug maker also reported quarterly earnings that fell from a year ago yet edged estimates.
Comcast Corp. (Nasdaq: CMCSK) saw its shares rally more than 4% as the cable-TV giant posted 7 % growth in second-quarter profit and as revenue increased on greater demand for broadband, phone and digital video services.
Shares of Aetna Inc. (NYSE: AET) closed down $6.71 or 17% to $33.25 - an 18-month low. The health insurer's second-quarter profit slipped, hurt by increased competition and higher than expected claims, and the company cut its membership forecast for the year
U.S. light crude oil for September delivery gained 60 cents to settle at $74.54 a barrel on the New York Mercantile Exchange. Concerns over production outages in Nigeria and a sizable decline in U.S. gasoline supplies have taken some of the spotlight off the Israel-Hezbollah conflict.
Disappointing results from Amazon.com Inc. (Nasdaq: AMZN) and a weak profit outlook from Boeing Co. (NYSE: BA) prompted the stocks to end lower. However, a Federal Reserve survey on the economy kept investor hopes alive that the central bank may stop raising interest rates soon.
Today, the Dow Jones industrial average closed down 1.2 or 0.01% to 11,106.20, the broader Standard & Poor's 500 index closed down 0.48 or 0.04% to 1,268.43, and the Nasdaq composite index closed down 3.44 or 0.17% to 2,070.46.
Market breadth turned positive after being negative through the morning. On the New York Stock Exchange, winners beat losers by a margin of 9 to 7 on volume of 1.4 billion shares. On the Nasdaq, advancers edged out decliners 16 to 13 as 1.7 billion shares changed hands.
This daily volatility is a trend that is likely to continue over the next couple of months until the Federal Reserve offers a clearer outlook on the economy and interest rates. The Federal Reserve, in its Beige Book read on the economy, said it saw signs of a slowdown in some regional markets but that the overall economy grew in the June through mid-July period. It is evident that upward pressure from energy and other inputs is persisting, despite reports that the pace of growth in the U.S. economy has slowed. Monetary policy makers are worried that the stubbornly high energy prices will spill over into a more general increase in prices unless interest rates are raised further.
Shares in Black & Decker (NYSE: BDK) fell $5.22 or 6.8% at $71.15 after the power tool manufacturer missed Wall Street profit targets for the second quarter and forecast lower earnings for the third amid rising commodity costs and disappointing orders. It reported that the net profit rose 0.9% to $152.2 million, while sales slipped 0.1% to almost $1.7 billion.
Stock of General Motors (NYSE: GM) closed up $1.39 or 5.5% to $32.05, as it reported a large operating profit and made money from its core auto operations for the first time since 2004. The company reported a net loss of $3.2 billion, due to charges it took to trim staff using buyouts and early retirement bonuses, as well as loss related to the pending sale of 51% of GMAC. It also reported income excluding special items of $1.2 billion, compared to the loss of $231 million in the year earlier period. Its global automotive operations earned $362 million on an adjusted basis, excluding special items, compared to a $899 million loss on that basis a year earlier.
Shares of Amazon (Nasdaq: AMZN) closed down 21.8% to a low of $26.26 after the online retail pioneer posted sharply lower second quarter profit. The company has been hurt by the cost of employee stock options and higher operating expenses. Additionally, broker Piper Jaffray has downgraded Amazon to under perform from market perform, citing concerns about gross-profit margins.
Boeing (NYSE: BA) tumbled $3.77 or 4.6% to $79.90, after reporting a quarterly loss versus a year ago that was nonetheless in line with estimates. The aerospace giant also lowered its 2006 EPS forecast, although it increased its outlook for 2007. It reported a second quarter loss of $160 million, compared with a year-ago profit of $566 million.
Shares of Corning (NYSE: GLW) closed down $3.10 or 12% to $18.55, after reporting quarterly earnings that rose and beat estimates. While revenue rose from a year ago, it missed analysts' estimates. Additionally, the company has also forecast third quarter earnings and sales that are shy of current expectations.
Shares of GlaxoSmithKline (NYSE: GSK) slipped 1.5% to $56.04. The company reported a 14% profit improvement to $2.45 billion, with revenue up 11% to 5.81 billion pounds. The rise was helped by sales of diabetes and asthma drugs. Sales of its Avandia family for diabetes rose 32% to 477 million pounds, and Seretide/Advair asthma drug sales rose 12% to 822 million pounds. Sales of drugs to treat HIV edged up 1% to 393 million pounds. Sales of vaccines, rose 17% to 387 million pounds.
Stock of Hewlett Packard (NYSE: HPQ) closed up $0.43 or 2% to $31.76, after it announced that it would buy Mercury Interactive, a software and business services firm in a bid to expand the computer maker's business software operations. The deal is for about $4.5 billion in stock, or $52 per share. This purchase also puts HP in closer competition with other major systems management software providers.
U.S. light crude oil for September delivery rose 19 cents to settle at $73.94 a barrel on the New York Mercantile Exchange after the government's weekly oil inventory report showed a bigger than expected decline in U.S. gasoline inventories.
Stock of Hewlett Packard (NYSE: HPQ) closed up $0.43 or 2% to $31.76, after it announced that it would buy Mercury Interactive, a software and business services firm in a bid to expand the computer maker's business software operations. The deal is for about $4.5 billion in stock, or $52 per share. This purchase also puts HP in closer competition with other major systems management software providers.
Boeing (NYSE: BA) tumbled $3.77 or 4.6% to $79.90, after reporting a quarterly loss versus a year ago that was nonetheless in line with estimates. The aerospace giant also lowered its 2006 EPS forecast, although it increased its outlook for 2007. It reported a second quarter loss of $160 million, compared with a year-ago profit of $566 million.
Shares of Amazon (Nasdaq: AMZN) closed down 21.8% to a low of $26.26 after the online retail pioneer posted sharply lower second quarter profit. The company has been hurt by the cost of employee stock options and higher operating expenses. Additionally, broker Piper Jaffray has downgraded Amazon to under perform from market perform, citing concerns about gross-profit margins.
Stock of General Motors (NYSE: GM) closed up $1.39 or 5.5% to $32.05, as it reported a large operating profit and made money from its core auto operations for the first time since 2004. The company reported a net loss of $3.2 billion, due to charges it took to trim staff using buyouts and early retirement bonuses, as well as loss related to the pending sale of 51% of GMAC. It also reported income excluding special items of $1.2 billion, compared to the loss of $231 million in the year earlier period. Its global automotive operations earned $362 million on an adjusted basis, excluding special items, compared to a $899 million loss on that basis a year earlier.
Shares in Black & Decker (NYSE: BDK) fell $5.22 or 6.8% at $71.15 after the power tool manufacturer missed Wall Street profit targets for the second quarter and forecast lower earnings for the third amid rising commodity costs and disappointing orders. It reported that the net profit rose 0.9% to $152.2 million, while sales slipped 0.1% to almost $1.7 billion.
Stocks closed higher on the back of better than expected consumer confidence data and lower oil prices. However, investors voiced fresh worries about the strength of corporate profits. Stocks staged a comeback at the end of a volatile session in which investors struggled with uncertainties.
Today, the Dow Jones industrial average closed up 52.66 or 0.5% to 11,103.71, the broader Standard & Poor's 500 index closed up 7.97 or 0.6% to 1,268.88, and the tech-fueled Nasdaq composite index closed up 12.06 or 0.6% to 2,073.90.
Market breadth was positive. On the New York Stock Exchange, winners beat losers by two to one as 1.74 billion shares changed hands. On the Nasdaq, advancers beat decliners 18 to 11 on volume of 1.96 billion shares.
It is apparent that investors feel that the market is undervalued and is not headed toward a hard landing for the economy. Also, the Feds will not make a mistake of raising interest rates too high. However, corporate profits remain a concern. While investors are trying to keep their toes in the water, we are really at this crossroads on a technical level and that's been stalling the markets. The market is likely to continue see-sawing in the short term, amid the typically mild summer trading volume.
A strong read on consumer confidence led the data news. U.S. consumer confidence strengthened a bit with the index rising to 106.5 in July from a revised 105.4 in June. This was an unexpected gain since economists were expecting it to slip to 103.9. Sales of existing U.S. homes fell by a smaller-than-expected 1.3% in June, and the inventory of unsold homes rose to a record 3.725 million. However, the slowing of existing home sales was not as much as economists had expecting.
Stock of AT&T (NYSE: T) closed up $1.17 or 4.2% to $28.95, after reporting a bigger-than-forecast rise in quarterly profit, thanks in part to its Cingular Wireless joint venture. The net income climbed 80% in the second quarter and the profit was driven by wireless gains, cost reductions and the acquisition of old Ma Bell, and AT&T Corp.
Shares of McDonald's (NYSE: MCD) fell 8 cents to $34.76. The company reported a nearly 60% increase in quarterly profit, due to across the board growth in the U.S. and the best European results in more than a decade. The earnings climbed to $834.1 million from $530.4 million last year. Revenue jumped 9% to $5.6 billion, and global same store sales rose 5.5%.
Chemical maker DuPont (NYSE: DD) closed up $0.10 to $40.67, after reporting quarterly earnings and revenue that were short of estimates, due to higher energy and ingredient costs. In addition to rising raw material costs, it also faced a weaker market for its agricultural products. However, the company affirmed its full-year outlook and said it expects a significantly better second half.
Stock of Altria Group Inc. (NYSE: MO) rose 56 cents to $80.05, on reporting a higher second-quarter profit, helped by an increase in domestic tobacco market share and strength in its food business. It also raised its annual profit projection. The company is the parent of cigarette maker Philip Morris and majority shareholder of Kraft Foods Inc (NYSE: KFT). Revenue rose 4% to $25.77 billion, the earning to $2.71 billion, and the EPS came to $1.41 against the expected $1.37.
Conglomerate 3M Co. (NYSE: MMM) closed down $3.58 or 5% to $68.11, after posting quarterly earnings that rose from the prior year, but missed forecasts. The manufacturer has affirmed its yearly outlook but expressed concern about margins in some of its divisions.
Stock of United Parcel Service Inc. (NYSE: UPS) tumbled down $8.20 or 10.3% to $71.80, after reporting quarterly earnings that rose from a year earlier, but were short of analysts' forecasts. The company also issued a current quarter forecast that was shy of estimates.
U.S. light crude oil for September delivery fell $1.30 to settle at $73.75 a barrel on the New York Mercantile Exchange on hopes for progress in the conflict between Israel and Hezbollah militants in Lebanon. Traders are also focusing on a potential build in inventories and the slowing down of the economy which will lead to less consumption.
Stock of AT&T (NYSE: T) closed up $1.17 or 4.2% to $28.95, after reporting a bigger-than-forecast rise in quarterly profit, thanks in part to its Cingular Wireless joint venture. The net income climbed 80% in the second quarter and the profit was driven by wireless gains, cost reductions and the acquisition of old Ma Bell, and AT&T Corp.
Stock of United Parcel Service Inc. (NYSE: UPS) tumbled down $8.20 or 10.3% to $71.80, after reporting quarterly earnings that rose from a year earlier, but were short of analysts' forecasts. The company also issued a current quarter forecast that was shy of estimates.
Stock of Altria Group Inc. (NYSE: MO) rose 56 cents to $80.05, on reporting a higher second-quarter profit, helped by an increase in domestic tobacco market share and strength in its food business. It also raised its annual profit projection. The company is the parent of cigarette maker Philip Morris and majority shareholder of Kraft Foods Inc (NYSE: KFT). Revenue rose 4% to $25.77 billion, the earning to $2.71 billion, and the EPS came to $1.41 against the expected $1.37.
Shares of McDonald's (NYSE: MCD) fell 8 cents to $34.76. The company reported a nearly 60% increase in quarterly profit, due to across the board growth in the U.S. and the best European results in more than a decade. The earnings climbed to $834.1 million from $530.4 million last year. Revenue jumped 9% to $5.6 billion, and global same store sales rose 5.5%.
Stocks ended higher with the Dow Jones Industrial Average posting a triple-digit gain and the Nasdaq Composite up over 2%, after a diplomatic push in the Middle East, a flurry of merger-and- acquisition activity and strong results from Merck (NYSE: MRK) and Schering-Plough (NYSE: SGP) boosted sentiment. Investors eyed the big deals, upbeat earnings and decided to scoop up recently battered shares.
Today, the Dow industrials average closed up 182.67 or 1.68% to 11,051.05, the broader Standard & Poor's 500 index closed up 20.62 or 1.66% to 1,260.91, and the Nasdaq composite index closed up 41.45 or 2.05% to 2,061.84.
Market breadth was positive. On the New York Stock Exchange, winners beat losers 5 to 1 on volume of almost 1.29 billion shares. On the Nasdaq, advancers beat decliners nearly 3 to 1 on volume of 1.63 billion shares.
The market sentiment received a boost as U.S. Secretary of State Condoleezza Rice arrived in the Middle East. Her diplomatic offensive raised hopes that a cease-fire between Israel and the Lebanon could be brokered. The brokering for peace, the announcement of mergers and better quarterly results will continue to be key for the market to recover. Inherently, the market continues to be volatile and shall remain so for some time. Since there is paucity of investor confidence, it doesn't take much to trigger a big move one way or the other. In addition to good results, there are also technical factors that support gains, and that could help bring in more buyers over the short term.
American Express (NYSE: AXP earnings that declined, but topped expectations. It stated that its second-quarter net income fell 7% from a year earlier, but it expanded its customer base and increased revenue. The net income dropped to $945 million, from $1 billion in the year-ago period. Income from continuing operations rose 13% to $972 million, from $860 million and revenue climbed to $6.88 billion from $6 billion. Analysts had forecast revenue of $6.64 billion.
Shares of hospital operator HCA Inc. (NYSE: HCA $21 billion leveraged buyout by a private equity group and members of the company's founding family and current management. The deal is valued at $51 a share, or $33 billion, including the assumption of about $11.7 billion in debt. However, HCA may solicit superior proposals from third parties during the next 50 days. The company also reported second-quarter earnings of $295 million, down from $405 million, in the year-earlier period. Revenue rose to $6.36 billion form $6.07 billion.
Shares in Merck & Co. (NYSE: MRK) closed up $1.49 to $38.95, after the company reported higher quarterly earnings that beat estimates and also boosted its outlook for the full year. Fellow drug maker Schering-Plough Corp. (NYSE: SGP) also closed up $1.22 or 5.7% to $20.67, after reporting higher quarterly earnings that topped forecasts. The company swung to a second-quarter profit, helped by sales of its rheumatoid drug Remicade and Nasonex.
Advanced Micro Devices Inc. (NYSE: AMD) closed down $0.87 to $17.39, after it announced a deal to buy Canada's ATI Technologies Inc. (Nasdaq: ATYT) for $5.4 billion. This move would open a new front in its rivalry with Intel Corp. Shares of ATI shot up $3.02 or 18.8% to $19.67.
On being upgraded, shares of Dell Computers (NYSE: DELL) closed up $0.89 or 3% to $20.80. Citigroup upgraded it to "buy" from "hold," and this follows Dell's profit warning Friday, with Citigroup saying that any slowdown is already fully reflected in analysts' earnings estimates on Dell.
U.S. light crude oil for September delivery rose 72 cents to $75.15 a barrel on the New York Mercantile Exchange. Oil prices rose on concerns about a hurricane heading toward the Gulf Coast and comments from U.S. officials casting doubt on the enforceability of any cease-fire in the Middle East.
On being upgraded, shares of Dell Computers (NYSE: DELL) closed up $0.89 or 3% to $20.80. Citigroup upgraded it to "buy" from "hold," and this follows Dell's profit warning Friday, with Citigroup saying that any slowdown is already fully reflected in analysts' earnings estimates on Dell.
Advanced Micro Devices Inc. (NYSE: AMD) closed down $0.87 to $17.39, after it announced a deal to buy Canada's ATI Technologies Inc. (Nasdaq: ATYT) for $5.4 billion. This move would open a new front in its rivalry with Intel Corp. Shares of ATI shot up $3.02 or 18.8% to $19.67.
Shares of hospital operator HCA Inc. (NYSE: HCA) closed up $1.61 or 3% to $49.48, after it agreed to a $21 billion leveraged buyout by a private equity group and members of the company's founding family and current management. The deal is valued at $51 a share, or $33 billion, including the assumption of about $11.7 billion in debt. However, HCA may solicit superior proposals from third parties during the next 50 days. The company also reported second-quarter earnings of $295 million, down from $405 million, in the year-earlier period. Revenue rose to $6.36 billion form $6.07 billion.
American Express (NYSE: AXP) rose 4 cents to close $50.66 after reporting earnings that declined, but topped expectations. It stated that its second-quarter net income fell 7% from a year earlier, but it expanded its customer base and increased revenue. The net income dropped to $945 million, from $1 billion in the year ago period. Income from continuing operations rose 13% to $972 million, from $860 million and revenue climbed to $6.88 billion from $6 billion. Analysts had forecast revenue of $6.64 billion.
This week, Fed chief Bernanke told Congress that the economy is slowing down to an acceptable level, and inflationary pressures will ease off as a result. Most investors took this to mean that the regular interest rate hikes have come to an end. The market rallied on the news and the Dow gained 122 points on Wednesday, ending the week up 129.03 over last Friday, closing at 10868.38. Still short of the 11,000 level that makes everybody happy, but a few good earnings reports next week will push the Dow back over that threshold.
The S&P500 gained 4.09 for the week to close at 1240.29. Gold was down 47.60, finishing at 620.20, and crude lost 4.28, closing out today at 74.43.
The Nasdaq, after initially gaining on Wednesday on the news from the Fed, gave up those gains and closed at 2020.39, down 16.96 for the week, a shocking 14 month low. Tech earnings reports this week were fairly tepid. Microsoft (Nasdaq: MSFT) and Apple (Nasdaq: AAPL) both did well for themselves, with Apple reporting a nearly 50 percent rise in third quarter income and exceeding expectations. Microsoft's fourth quarter revenues, also released this week, were record-breaking, marking a 16 percent year-on-year increase. Google (Nasdaq: GOOG) reported that it second quarter profit more than doubled. But despite this trio of good news, the week was also marked by bad news in the tech field, with Yahoo! (Nasdaq: YHOO) reporting a steep drop in year-on-year profits, moving from last year's quarterly EPS of 51 cents to an 11 cent level this quarter. Dell (Nasdaq: DELL) also took a nosedive this week when it issued a profit and sales forecast that did not meet expectations, triggering the stock to drop to a five-year low.
Crude hasn't reached $80 yet, but that level is still a distinct short-term possibility, as tensions in the Mideast continue to rise and Israel continues a massive offensive against Lebanon. The spectre of a disruption in the Mideast oil flow is partially offset by the fact that U.S. crude supplies are growing. Nonetheless, growing demand overall, and continued hostilities point to a volatile crude market, and it's not likely we'll see those sub-$70 levels again any time soon.
Stocks closed lower once again with the Nasdaq Composite skidding to its lowest finish in 14 months and taking its third straight weekly loss. Profit warning from Dell (NYSE: DELL) and nervousness about slowing economic growth added fuel to the simmering fire. The worries about the economy overshadowed growing optimism that the Federal Reserve will stop raising interest rates soon.
Today, the Dow Jones Industrial average closed down 55.31 or 0.6% to 10,872.79, the broader Standard & Poor's 500 index closed down 8.55 or 0.7% to 1,240.58, and the tech-heavy Nasdaq composite closed down 18.84 or 0.9% to 2,020.58. For the week, the Dow gained 1.2%, the S&P rose 0.3% and the Nasdaq lost 1%.
Market breadth was negative. On the New York Stock Exchange, losers topped winners by more than 2 to 1 as 1.5 billion shares changed hands. On the Nasdaq, decliners beat advancers 3 to 1 as 1.9 billion shares changed hands.
In the wake of Bernanke's congressional testimony and release of the minutes of the last Federal Reserve meeting on interest rates, the federal-funds-futures market now sees an August increase in interest rates as unlikely.
The day belonged to Dell (NYSE: DELL) that led the downslide. Shares of Dell closed down $2.99 or 12% to $19.11, after warning that quarterly results will miss forecasts owing to its aggressive pricing in a slowing commercial market worldwide. The company announced that EPS would be 21-23 cents, on sales of about $14 billion. This is against the expected EPS forecast of 32 cents, and a revenue of $14.2 billion. Its weak outlook prompted three brokers to lower their recommendation on the company.
It was a torrid day for chip makers. Stock of Advanced Micro Devices (NYSE: AMD) closed down $3.42 or 13% to $18.23, after it reported higher quarterly earnings that were short of analysts' estimates. Its quarterly sales slipped from a year ago and missed forecasts, due to slower demand and its ongoing price war with Intel. Shares of Intel (Nasdaq: INTC) closed up $0.05 to $17.15. Shares of Broadcom (Nasdaq: BRCM) closed down $3.24 or 12% to $23.11, after warning that third- and fourth-quarter revenue will miss analysts' estimates because of slowing sales and rising inventories. Chipmaker PMC Sierra (Nasdaq: PMCS) also closed down $1.84 or 25% to $5.14, after warning that current-quarter revenue will miss expectations.
Stock of Google Inc. (Nasdaq: GOOG) closed up $3.01 or 0.7% to $390.13, on reporting that second-quarter profit more than doubled as it expanded its leading share of the market for online-search advertising. Google stock has been under pressure in 2006 after surging 115 percent in 2005.
Shares of Caterpillar Inc. (NYSE: CAT) saw choppy trading and finished down 1% at $68.35. The heavy-equipment maker, however, lifted its profit forecast for the year after reporting a 38% jump in second-quarter earnings. The company attributed the strong quarter to better prices for its products and higher sales volume.
Shares of Microsoft Corp. (Nasdaq: MSFT) closed up $1.00 or 4.9% to $23.85, after posting results that topped expectations. Additionally, the company unveiled plans to buy back up to $40 billion of its own stock via a $20 billion tender offer and a five-year share-repurchase program. It reported a net income of $2.83 billion, or 28 cents a share, well ahead of Wall Street expectations. It reported sales of $11.8 billion, a 16% increase, against the expected $11.6 billion. In the plan to buy back, the company shall buy $20 billion worth of shares by Aug. 17 and $20 billion more through June 2011.
U.S. light crude oil for September delivery rose 23 cents to $74.50 a barrel on the New York Mercantile Exchange. Crude-oil futures rose amid signs that Israel is preparing for a ground invasion of southern Lebanon.
Shares of Dell (NYSE: DELL) closed down $2.99 or 12% to $19.11, after warning that quarterly results will miss forecasts owing to its aggressive pricing in a slowing commercial market worldwide. The company announced that EPS would be 21-23 cents, on sales of about $14 billion. This is against the expected EPS forecast of 32 cents, and a revenue of $14.2 billion. Its weak outlook prompted three brokers to lower their recommendation on the company.
Stock of Google Inc. (Nasdaq: GOOG) closed up $3.01 or 0.7% to $390.13, on reporting that second-quarter profit more than doubled as it expanded its leading share of the market for online-search advertising. Google stock has been under pressure in 2006 after surging 115 percent in 2005.
Shares of Caterpillar Inc. (NYSE: CAT) saw choppy trading and finished down 1% at $68.35. The heavy-equipment maker, however, lifted its profit forecast for the year after reporting a 38% jump in second-quarter earnings. The company attributed the strong quarter to better prices for its products and higher sales volume.
Shares of Microsoft Corp. (Nasdaq: MSFT) closed up $1.00 or 4.9% to $23.85, after posting results that topped expectations. Additionally, the company unveiled plans to buy back up to $40 billion of its own stock via a $20 billion tender offer and a five-year share-repurchase program. It reported a net income of $2.83 billion, or 28 cents a share, well ahead of Wall Street expectations. It reported sales of $11.8 billion, a 16% increase, against the expected $11.6 billion. In the plan to buy back, the company shall buy $20 billion worth of shares by Aug. 17 and $20 billion more through June 2011.
Stocks closed lower amid fresh news of manufacturing weakness, uncertain outlook for interest rates, and disappointing sales forecast from Intel (Nasdaq: INTC). The bad news from Intel dragged the technical down and seemed to overshadow a raft of upbeat earnings from Apple Computer Inc. (Nasdaq: AAPL), Motorola Inc. (NYSE: MOT) and others.
Today, the Dow Jones Industrial average closed down 83.32 or 0.8% to 10,928.10, the broader Standard & Poor's 500 index closed down 10.68 or 0.85 to 1,249.13, and the Nasdaq composite index closed down 41.29 or 25 to 2,039.42.
Market breadth was negative. On the New York Stock Exchange, losers beat winners by a margin of 2 to 1 on volume of 1.67 billion shares. On the Nasdaq, decliners topped advancers by a margin of 3 to 1 as 2.07 billion shares changed hands.
Investors appear to be focused on the fact that inflation seems to be abating at a time when the economy may be slowing. Minutes from the Fed's June meeting echoed that view, saying that slowing economic growth should help inflation ease next year. However, the minutes also showed members saw "significant uncertainty" surrounding the rate outlook, and that the decision to raise the target federal funds rate at this meeting was a close call. Investors have been hoping for signs that the Fed may be ready to wind down its rate-hiking campaign, and right now it's just the battle of how much growth is going to slow and when the Fed is going to stop. A labor economist has suggested that the economy could cool even more in the third and fourth quarters of the year.
On the economic front, two reports offered further signs that economic growth is cooling. The Conference Board's Index of Leading Economic Indicators rose just 0.1%, below the expected 0.2%. The report is used to gauge future economic activity. The Philadelphia Federal Reserve Bank reported that mid-Atlantic factory activity slowed in July. The business activity index declined to 6 from 13.1 in June against the expected 12. While anything above Zero shows growth – this is an indicator of slowing down.
Shares of Pfizer (NYSE: PFE) closed up $0.41 or 1.8% to $23.71, after reporting earnings that beat Wall Street's estimates. It declared a net income of $2.42 billion, or 33 cents a share, compared with $3.46 billion, or 47 cents, earned in the second quarter last year. Total revenue for the quarter rose 3% to $11.74 billion from $11.45 billion last year.
Stock of Intel (Nasdaq: INTC) closed down $1.39 or 7% to $17.10. The world's largest chipmaker offered a weaker-than-expected sales forecast as current quarter profit tumbled 57% from a year ago on lower sales. Dow component Honeywell International Inc. (NYSE: HON) closed down $1.62 or 4.3% to $36.62, with upbeat quarterly results but reported weakness at its aerospace unit.
Shares of Ford Motor Co. (Nasdaq: F) closed down $0.14 or 2% to $6.19, after the company posted a surprise second-quarter loss. It stated that its business in North America was slammed by declining car sales.
Shares of Apple Computer Inc (Nasdaq: AAPL) surged 12% to $60.54 after |
