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« August 2006 |
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| October 2006 »
Stocks closed lower today, although the major averages recorded solid quarterly gains due to lower oil prices, allowing the Dow Jones Industrial Average to give its best third-quarter performance in 11 years. A string of economic reports over the last three months also helped investors rally to the idea that U.S. economic growth will moderate, but remain at adequate levels to sustain corporate profits and job creation.
Today, the Dow Jones Industrial Average closed down 39.38 or 0.34% to 11,679.07, the broader S&P 500 closed down 3.30 or 0.25% to 1,335.85, and the tech-heavy Nasdaq composite closed down 11.59 or 0.51% to 2,258.43. For the quarter, the Dow gained 4.7%, the S&P rose 5.2% and the Nasdaq gained 4%.
Market breadth was negative. On the New York Stock Exchange, losers beat winners by 19 to 13 on volume of 1.463 billion shares. On the Nasdaq, advancers eclipsed decliners by 17 to 11 on volume of 1.878 billion shares.
Investors appear considering that the economy is slowing, but not contracting or turning lower. That's why the market is inching higher rather than striding higher. The quarter has been helped by a sharp fall in energy prices that has helped offset some of the concern over a slowing housing market and its impact on economic growth.
Amongst economic news today, the Chicago PMI rose more than expected and this reassured investors who were worried about a pronounced slowdown in manufacturing following the recent weak Philadelphia Fed index. The Chicago purchasing managers' index rose to 62.1% in September from 57.1% in August. It's the highest reading in a year. Personal spending rose 0.1% in August, and income rose 0.3%, as expected. The report's inflation component rose 0.2% to 2.5% - within acceptable limits of the Fed policymakers. Consumer prices rose 0.2% in August, and are up 3.2% in the past year.
Shares of Hewlett-Packard (NYSE: HPQ) closed up $0.72 or 2.5% to $36.69, as investors responded well to the information from the congressional probe into the boardroom leak investigation. The CEO Mark Hurd testified that ultimately is responsible for what goes on at HP. Hurd and former chairman Patricia Dunn both distanced themselves from the potentially illegal techniques used in the investigation.
Shares of Research in Motion (Nasdaq: RIMM) closed up $16.79 or 19% to $102.85, after the company reported higher-than-expected second quarter profits, despite announcing a review of stock option practices. Its revenue boosted 34% through addition of about 705,000 BlackBerry subscriber accounts. The company reported a net profit of $140.8 million, compared to $111 million last year. It reported revenue of $658.5 million, against the expected $643.63 million. This prompted Deutsche Bank to upgrade the company, while Citigroup cut the stock to a sell.
Shares in Ford Motor (Nasdaq: F) closed down $0.07 or 0.9% to $8.09, after the company declared it will cut one in four jobs at its Ford Credit unit and close its branch office network to cut costs. The planned job cuts would be made through a combination of attrition, early retirements, voluntary separations and, if necessary, involuntary separations. Ford Motor Co. is planning to cut 16 plants and shed 30,000 jobs in North America. Ford Motor Credit will distill its 59 U.S. branches into six existing service centers.
U.S. light crude oil for November delivery rose 15 cents to $62.91 a barrel on the New York Mercantile Exchange. However, the cost of crude slid 12% on the month.
Shares in Ford Motor closed down $0.07 or 0.9% to $8.09, after the company declared it will cut one in four jobs at its Ford Credit unit and close its branch office network to cut costs. The planned job cuts would be made through a combination of attrition, early retirements, voluntary separations and, if necessary, involuntary separations. Ford Motor Co. is planning to cut 16 plants and shed 30,000 jobs in North America. Ford Motor Credit will distill its 59 U.S. branches into six existing service centers.
Shares of Research in Motion closed up $16.79 or 19% to $102.85, after the company reported higher-than-expected second quarter profits, despite announcing a review of stock option practices. Its revenue boosted 34% through addition of about 705,000 BlackBerry subscriber accounts. The company reported a net profit of $140.8 million, compared to $111 million last year. It reported revenue of $658.5 million, against the expected $643.63 million. This prompted Deutsche Bank to upgrade the company, while Citigroup cut the stock to a sell.
Shares of Hewlett-Packard closed up $0.72 or 2.5% to $36.69, as investors responded well to the information from the congressional probe into the boardroom leak investigation. The CEO Mark Hurd testified that ultimately is responsible for what goes on at HP. Hurd and former chairman Patricia Dunn both distanced themselves from the potentially illegal techniques used in the investigation.
Stocks posted their fourth straight session of gains, though the Dow Jones Industrial Average stopped a bit short of reaching a fresh closing high. Stocks have continued to rally with investors welcoming falling oil prices, signs that the economy is slowing, not heading for a recession, and relief that the Federal Reserve has halted its interest-rate hiking campaign.
Today, the Dow Jones industrial average closed up 29.21 or 0.25% to 11,718.45. For a little while, the Dow briefly topped the record closing high of 11,722.98, hit on Jan. 14, 2000. The broader S&P 500 index closed up 2.56 or 0.19% to 1,339.15, and the Nasdaq composite closed up 6.63 or 0.29% to 2,270.02.
Market breadth was negative. On the New York Stock Exchange, losers beat winners by a narrow margin of 17 to 15 on volume of 1.485 billion shares. On the Nasdaq, decliners beat advancers 15 to 13 on volume of 1.859 billion shares.
The market is definitely moving higher on momentum, and the chances are that the Dow could reach a new record in the next day or two. Investors have been prodding stocks higher on the back of "lower energy prices and a refocus on the fact that earnings growth has been much stronger than expected. Investors have shown they're undeterred by nagging questions about economic growth.
In data news, second-quarter U.S. growth increased at a rate of 2.6%, slightly lower than previous estimates of a 2.9%. This is far lower than the 5.6% reported in the first quarter. Despite the weaker report, investors took it in their stride, as it further attesting to the ability of the Federal Reserve to keep interest rates unchanged.
Shares of General Motors (NYSE: GM) closed up $0.74 or 1.5% to $33.02, on news that billionaire investor Kirk Kerkorian's Tracinda Corp. is seeking to boost its holdings of the automaker's stock by about 12 million shares. Additionally, the CEO Rick Wagoner said that talks on joining the Renault-Nissan alliance may extend beyond a mid-October deadline set by the companies.
Shares of Hewlett-Packard Co (NYSE: HPQ) closed up $0.58 or 1.6% to $35.97, as executives invoked their right not to testify at a congressional hearing on the company's boardroom leak probe. Ex- Chairwoman Patricia Dunn testified that she did not know of any potential illegal tactics used by the company until late June.
Stock of Time Warner (Nasdaq: TWTC) closed down $0.39 or 2.1% to $18.20, after the company was downgraded to neutral from overweight at J.P. Morgan. They cited concerns over continued challenges for the company's AOL Internet unit, slowing movie revenue and relatively high valuation. The film and television studio is expected to see revenue growth of 3.8% over the next five year period, down from the 8.9% it experienced from 1995 to 2005.
U.S. light crude oil for November delivery rose 74 cents to $63.70 a barrel on the New York Mercantile Exchange.
Shares of General Motors (NYSE: GM) closed up $0.74 or 1.5% to $33.02, on news that billionaire investor Kirk Kerkorian's Tracinda Corp. is seeking to boost its holdings of the automaker's stock by about 12 million shares. Additionally, the CEO Rick Wagoner said that talks on joining the Renault-Nissan alliance may extend beyond a mid-October deadline set by the companies.
Stock of Time Warner (Nasdaq: TWTC) closed down $0.39 or 2.1% to $18.20, after the company was downgraded to neutral from overweight at J.P. Morgan. They cited concerns over continued challenges for the company's AOL Internet unit, slowing movie revenue and relatively high valuation. The film and television studio is expected to see revenue growth of 3.8% over the next five year period, down from the 8.9% it experienced from 1995 to 2005.
Stocks gained modestly as crude futures spiked above the $63-a-barrel level and Verizon Communications Inc. (NYSE: VZ) tumbled on the news that it plans to spend $18 billion over four years on fiber services. These issues offset the gain by Intel Corp. (Nasdaq: INTC), McDonald's Corp. (NYSE: MCD) and others, that had put the Dow Jones Industrial Average within striking distance of an all-time high.
Today, the Dow Jones Industrial average closed up 19.85 or 0.17% to 11,689.24, roughly 34 points short of its record closing high of 11,722.98, hit on Jan. 14, 2000. The broader S&P 500 index closed up 0.25 or 0.02% to 1,336.59, and the Nasdaq composite index closed up 2.05 or 0.09% to 2,263.39.
Market breadth was positive. On the New York Stock Exchange, winners beat losers 5 to 3 as 1.718 billion shares changed hands. On the Nasdaq, advancers topped decliners by a narrow margin of 4 to 3 as 2.054 billion shares changed hands.
Investors have been debating whether the Federal Reserve has gone too far in raising interest rates in a bid to slow economic growth and choke off inflationary pressures. However, receding oil prices and not too slow economic growth has meant the nation is not heading for a recession. Analysts think that the market should be able to continue rising, at least in the short term. The only counters could be inadequate employment growth or profit growth slow.
A surprisingly strong consumer confidence report gave stocks a leg up and offered some ammunition to those investors that were worried that the economy is slowing down at a far greater pace than initially anticipated. Orders for U.S.-made durable goods fell 0.5% against the expected 0.7% rise in August orders. While the report raises concern that the economy is not growing as much as anticipated, the data points to a soft landing for the economy. That is to say that the economic growth slows but is still solid enough to sustain job growth and corporate profits.
After a string of weak data on the housing market, the figures on sales of newly built housing offered some relief. Sales of new homes increased 4.1% in August, and is the first increase in new-home sales since March. Economist had been expecting sales to fall about 3.4% in August. However, overall sales are down 17.4% in the past year and are down 23% from the peak last July.
Stock of Merck & Co. (NYSE: MRK) was up 1.5% at $42.40 after a federal jury cleared it of responsibility for a Kentucky man's heart attack in the 10th Vioxx-related case to go to trial. The company has prevailed in its latest court case and has bought a substantial stake in cardiovascular device maker FoxHollow Technologies. The company announced that it was buying $95 million in newly-issued shares of FoxHollow (Nasdaq: FOXH) as part of the expansion of an existing collaboration agreement for atherosclerosis research. This lead shares of Foxhollow to jump more than 20% to close at $32.80
Shares of Red Hat Inc. (Nasdaq: RHAT) plunged 23.4% to $20.19, as its quarterly profit fell by one-third despite a 52% leap in revenue. The net profit sank to $12 million, from $18.1 million a year earlier. However, excluding the impact of options and other items, its profit would have been $25.1 million, up from $19.1 million. Revenue climbed to $99.7 million from $65.7 million, helped by its recent purchase of JBoss Inc. and on strong demand for open-source software. The company plans to continue making investments in its business and anticipates its cash flow for the year will be $210 million to $215 million. However, Jefferies & Co. downgraded the company to a hold rating, citing disappointment over its 2007 cash-flow forecast.
Shares of McDonald's (NYSE: MCD) closed up $0.76 or 2% to $39.82, after its board approved an increase of nearly 50% in its dividend. The company has lifted its quarterly dividend to $1 per share from 67 cents. The bard cited confidence in the ongoing strength of its business and the reliability of its cash flow, as shares moved to a new six-year high.
General Motors (NYSE: GM) is reportedly demanding a "multibillion" dollar payment from Renault and Nissan as the price to join their alliance. GM executives feel that they deserve a payment -- which would come on top of any share purchases made by the two companies. However, the CEO of Renault has expressed disappointment in this approach and this could be a deal breaker. However, shares of GM closed up $0.87 to $32.28.
Shares of Intel Corp. (Nasdaq: INTC) closed up $0.43 or 2.2% to $20.39, after a Federal Judge threw out substantial parts of an anti-trust lawsuit against the chipmaker. The judge ruled that alleged foreign anticompetitive practices didn't impact Advanced Micro Devices (NYSE: AMD) in the United States. AMD's stock closed down $0.67 or 2.6% to $25.32.
Shares of Verizon (NYSE: VZ) closed down $1.18 or 3.1% to $36.78, as investors took a "sell the news" response to the company's announcement that it will cost about $18 billion for it to upgrade its telephone network so it can sell cable television and high-speed Internet connections. Analysts opine that this strategy will ultimately generate positive returns for Verizon, and the competitive environment necessitates this type of capital deployment so as to force other companies to follow suit.
U.S. light crude oil for November delivery rose $1.95 to $62.96 a barrel on the New York Mercantile Exchange. There is heightened speculation that OPEC could cut production quotas.
Stock of Merck & Co. (NYSE: MRK) was up 1.5% at $42.40 after a federal jury cleared it of responsibility for a Kentucky man's heart attack in the 10th Vioxx-related case to go to trial. The company has prevailed in its latest court case and has bought a substantial stake in cardiovascular device maker FoxHollow Technologies. The company announced that it was buying $95 million in newly-issued shares of FoxHollow (Nasdaq: FOXH) as part of the expansion of an existing collaboration agreement for atherosclerosis research. This lead shares of Foxhollow to jump more than 20% to close at $32.80
Shares of Red Hat Inc. (Nasdaq: RHAT) plunged 23.4% to $20.19, as its quarterly profit fell by one-third despite a 52% leap in revenue. The net profit sank to $12 million, from $18.1 million a year earlier. However, excluding the impact of options and other items, its profit would have been $25.1 million, up from $19.1 million. Revenue climbed to $99.7 million from $65.7 million, helped by its recent purchase of JBoss Inc. and on strong demand for open-source software. The company plans to continue making investments in its business and anticipates its cash flow for the year will be $210 million to $215 million. However, Jefferies & Co. downgraded the company to a hold rating, citing disappointment over its 2007 cash-flow forecast.
Shares of McDonald's (NYSE: MCD) closed up $0.76 or 2% to $39.82, after its board approved an increase of nearly 50% in its dividend. The company has lifted its quarterly dividend to $1 per share from 67 cents. The bard cited confidence in the ongoing strength of its business and the reliability of its cash flow, as shares moved to a new six-year high.
Shares of Intel Corp. (Nasdaq: INTC) closed up $0.43 or 2.2% to $20.39, after a Federal Judge threw out substantial parts of an anti-trust lawsuit against the chipmaker. The judge ruled that alleged foreign anticompetitive practices didn't impact Advanced Micro Devices (NYSE: AMD) in the United States. AMD's stock closed down $0.67 or 2.6% to $25.32.
Shares of Verizon (NYSE: VZ) closed down $1.18 or 3.1% to $36.78, as investors took a "sell the news" response to the company's announcement that it will cost about $18 billion for it to upgrade its telephone network so it can sell cable television and high-speed Internet connections. Analysts opine that this strategy will ultimately generate positive returns for Verizon, and the competitive environment necessitates this type of capital deployment so as to force other companies to follow suit.
Stocks rallied and pushed the S&P 500 Index to a new 5-1/2 year high. The Dow Jones Industrial Average also reached its highest close of 2006, after lower oil prices and a better than expected consumer-confidence report eased economic worries.
Today, the Dow Jones Industrial Average closed up 93.58 or 0.81% to 11,669.39, just 50 points from its all-time high of 11,722.98 set Jan. 14, 2000. The broader S&P 500 index closed up 9.97 or 0.75% to 1,336.34, closing at its best point since Feb. 2001. The Nasdaq composite index closed up 12.27 or 0.55% to 2,261.34.
Market breadth was positive. On the New York Stock Exchange, winners beat losers nearly two to one on volume of 1.711 billion shares. On the Nasdaq, advancers edged out decliners 15 to 13 as 2.058 billion shares changed hands.
Investors feel that the slowing economy, the recent drop in energy prices and the decline in bond yields mean the Federal Reserve won't lift interest rates again any time soon. The strong read on the Consumer Confidence Report added support to this belief. The index rose to 104.5 against the expected rise to 102.5. While the report shows that the consumer is feeling better, it doesn't suggest consumer spending is likely to ramp up enough to recharge the economy and force the Fed to raise rates again. Additionally, the Conference Board said that inflation expectations also eased in September. Expectations of inflation in the next year fell to 4.9% in September from 5.5% in August.
Stock of Lennar (NYSE: LEN) closed up $0.07 to $46.95, despite informing that quarterly earnings fell from a year ago and warning that fourth-quarter earnings would miss analysts' estimates and its own earlier forecast. It reported a 39% drop in third-quarter net income to $206.7 million, from $337.3 million. However, its total revenue rose to $4.18 billion from $3.5 billion in the year-ago quarter. Its net orders in the third quarter fell 5% to 11,056 homes – which is better than most other home builders.
Stock of Lowe’s (NYSE: LOW) closed up $0.08 to $28.92, despite informing that its full-year earnings would be at or near the low end of its previous guidance. This is because of near-term pressures on consumers such as high energy costs, which are coming against a backdrop of a declining housing turnover. Its CFO is likely to provide an outlook, on the plan to add 155 and 150 stores in 2007 and 2008, respectively. The company sees its EPS to grow 10% to 14% in 2007, and 12% to 16% in 2008. It also expects the additional square to drive annual sales up 10% to 13% in 2007, and 11% to 13% in 2008.
In another warning, shares of PMC Sierra (Nasdaq: PMCS) closed down $0.55 or 8% to $6.00, after warning that third-quarter revenue will be in a range lower than it previously forecast due to weaker business activity.
Stock of Visteon Corp. (NYSE: VC) closed 10 cents lower at $8.35, as the auto-parts maker said that it doesn't expect to hit its Aug financial targets because of lower customer-production levels in the second half of the year. The company currently expects second-half product sales to be about 10% lower than the first half's $5.7 billion.
U.S. light crude oil for November delivery fell 44 cents to $61.01 a barrel on the New York Mercantile Exchange. Investors continued to try and gauge what the OPEC plans to do about production quotas, in light of sharp sell-off in oil over the last two months.
Stock of Lowe’s (NYSE: LOW) closed up $0.08 to $28.92, despite informing that its full-year earnings would be at or near the low end of its previous guidance. This is because of near-term pressures on consumers such as high energy costs, which are coming against a backdrop of a declining housing turnover. Its CFO is likely to provide an outlook, on the plan to add 155 and 150 stores in 2007 and 2008, respectively. The company sees its EPS to grow 10% to 14% in 2007, and 12% to 16% in 2008. It also expects the additional square to drive annual sales up 10% to 13% in 2007, and 11% to 13% in 2008.
Stock of Lennar (NYSE: LEN) closed up $0.07 to $46.95, despite informing that quarterly earnings fell from a year ago and warning that fourth-quarter earnings would miss analysts' estimates and its own earlier forecast. It reported a 39% drop in third-quarter net income to $206.7 million, from $337.3 million. However, its total revenue rose to $4.18 billion from $3.5 billion in the year-ago quarter. Its net orders in the third quarter fell 5% to 11,056 homes – which is better than most other home builders.
Stocks rallied and pushed the S&P 500 to a fresh five-and-a-half year closing high, as investors appeared optimistic that a decline in the price of oil over the last two months will suffice to sustain consumer spending and offset a slowing housing market. Investors are confident that the Federal Reserve won't lift interest rates again anytime soon. There was notable strength in the technology sector, but shares of Altria Group Inc. (NYSE: MO) sank as the company and other tobacco makers faced a new lawsuit.
Today, the Dow Jones industrial average closed up 67.71 or 0.59% to 11,575.81, the Standard & Poor's 500 closed up 11.59 or 0.88% to 1,326.37, and the Nasdaq composite closed up 30.14 or 1.36% to 2,249.07.
Market breadth was positive. On the New York Stock Exchange, winners topped losers 11 to 5 on volume of 1.748 billion shares. On the Nasdaq, advancers beat decliners 18 to 11 on volume of 1.871 billion shares.
Federal Reserve Bank of Dallas President Richard Fisher, reiterated the Fed's recent opinion that a slowing economy will take the edge off inflation, but that if this proves not to be the case, the Fed will take action. While there is a "serious correction" taking place in the housing sector, but outside of that, the economy is "healthy and robust".
Overall, the message of the market is that the Fed is going to start cutting interest rates early next year, and this would help ensure a so-called "soft landing". The steep decline in commodity prices, the moderate reads on inflation and the collapse in the housing market, all point in this direction. While the Federal Reserve continues to say publicly that it is concerned about inflation and could have to raise rates again, the financial markets see it differently.
In data news, existing home sales fell, but the decline for the month was not as steep as predicted. Home sales fell to an annual pace of 6.30 million and is down 12.6% from last year. The inventory of homes on the market is up 37% in August to 3.9 million. This report did little to dispel the view that the housing market is slowing down.
Shares of Walgreen Co. (NYSE: WAG) fell 5.2% to close at $44.47, despite reporting a 25% rise in fourth-quarter net income. The company's stock has lost about 10% of its value since when Wal-Mart Stores Inc. (NYSE: WMT) said it would slash prices on hundreds of generic drugs. The company profit rose to $412.3 million, from $329 million a year ago. Sales for the quarter rose 16% to $12.17 billion from $10.49 billion a year ago. Same-store sales rose 9.7%, and the total prescription sales rose 18%.
Stock of Altria Group Inc. (NYSE: MO) closed down $5.31 fell 6.4% to $77.01 after a federal judge granted class-action status to a racketeering lawsuit against Philip Morris USA and several other large makers of "light" and "low tar" cigarettes. Therefore, a potential $200 billion lawsuit against tobacco companies can proceed under class-action status. The suit accuses the companies of misleading consumers by labeling certain brands as light or low tar. Other tobacco makers cited in the lawsuit are Reynolds American (NYSE: RAI), Loews Corp. (NYSE: LTR), Vector Group (NYSE: VGR) and British American Tobacco (NYSE: BTI).
Shares of Hewlett-Packard Co. (NYSE: HPQ) rose $0.64 or 1.7% to $35.75 after CEO Mark Hurd said that he would immediately assume the role of chairman after Chairwoman Patricia Dunn resigned from the board over a spying scandal. Dunn, who initially had said she would step down in January, will be replaced immediately. Dunn has been under pressure because of questionable practices used in an investigation she authorized to discover who was leaking boardroom information to the media.
U.S. light crude oil for November delivery rose 90 cents to $61.45 a barrel on the New York Mercantile Exchange, after touching $59.65 - its lowest level in more than six months. OPEC has voiced concerns over the recent price decline, raising the prospect of a production cut.
Stock of Altria Group Inc. (NYSE: MO) closed down $5.31 fell 6.4% to $77.01 after a federal judge granted class-action status to a racketeering lawsuit against Philip Morris USA and several other large makers of "light" and "low tar" cigarettes. Therefore, a potential $200 billion lawsuit against tobacco companies can proceed under class-action status. The suit accuses the companies of misleading consumers by labeling certain brands as light or low tar. Other tobacco makers cited in the lawsuit are Reynolds American (NYSE: RAI), Loews Corp. (NYSE: LTR), Vector Group (NYSE: VGR) and British American Tobacco (NYSE: BTI).
Shares of Hewlett-Packard Co. (NYSE: HPQ) rose $0.64 or 1.7% to $35.75 after CEO Mark Hurd said that he would immediately assume the role of chairman after Chairwoman Patricia Dunn resigned from the board over a spying scandal. Dunn, who initially had said she would step down in January, will be replaced immediately. Dunn has been under pressure because of questionable practices used in an investigation she authorized to discover who was leaking boardroom information to the media.
Stocks closed lower on the day and the week. Markets were pressured by concern that the economy could be entering a major slowdown and about the potential impact of a congressional probe into Hewlett-Packard Co (NYSE: HPQ). The losses have been a major disappointment to many investors; as many analysts were predicting new record highs for the Dow Jones Industrials and the S&P 500.
Today, the Dow Jones industrial average closed down 25.13 or 0.22% to 11,508.10, the Standard & Poor's 500 lost 3.25 or 0.25% to 1.314.78, and the Nasdaq composite index closed down 18.82 or 0.84% to 2,218.93. For the week, the Dow lost 0.5%, S&P 500 fell 0.4% and the Nasdaq gave up 0.7%.
Market breadth was negative. On the New York Stock Exchange, losers beat winners 5 to 3 on volume of 1.43 billion shares. On the Nasdaq, decliners beat advancers almost 5 to 2 on volume of 1.67 billion shares.
The weak reading on manufacturing in the Philadelphia area have sparked worries about the economy, and has given investors a good reason to back track after the recent rally. Stocks have rallied over the last few weeks on lower oil prices, a belief that the economy is heading for a slowdown, not a recession and relief that the Federal Reserve Board seems to be set to keep interest rates unchanged for now. The news that revives the threat of the economy heading into recession, rather than a so-called 'soft landing, has got investors worried.' Additionally, corporate news including Boston Scientifics’ (NYSE: BSX) warning and the continued overhang of Hewlett-Packard (NYSE: HPQ), has not been helping matters.
Shares of Boston Scientific (NYSE: BSX) closed down $1.56 or 9.2% to $14.80, after warning that third-quarter sales and earnings will miss forecasts due to weakness across most of its businesses. The medical device maker also warned that sales of its top-selling drug-coated stent will fall from last quarter and miss estimates.
Stock of KB Home (NYSE: KBH) closed up $1.10 to $44.15, after reporting quarterly revenue that rose from a year earlier and topped estimates. However, home sales that slumped from the prior year. The company did not release quarterly earnings, due to an ongoing internal probe of its stock option grants. The company however stated that a difficult market was unlikely to improve in the future.
Shares of Nike Inc. (NYSE: NKE) moved up $3.84 or 4.5% to $86.30, after it reported quarterly earnings that declined less than expected. While its earnings that fell from a year earlier, they nonetheless beat estimates.
Hewlett-Packard (NYSE: HPQ) managed to close up 24 cents at $35.11. Its CEO Mark Hurd is to testify before a congressional committee next week over the company's "pretexting" scandal. Additionally, the SEC has requested records and information related to the resignation of a board member.
U.S. light crude oil for November delivery fell $1.04 to $60.55 a barrel on the New York Mercantile Exchange.
Hewlett-Packard (NYSE: HPQ) managed to close up 24 cents at $35.11. Its CEO Mark Hurd is to testify before a congressional committee next week over the company's "pretexting" scandal. Additionally, the SEC has requested records and information related to the resignation of a board member.
Stock of KB Home (NYSE: KBH) closed up $1.10 to $44.15, after reporting quarterly revenue that rose from a year earlier and topped estimates. However, home sales that slumped from the prior year. The company did not release quarterly earnings, due to an ongoing internal probe of its stock option grants. The company however stated that a difficult market was unlikely to improve in the future.
Shares of Boston Scientific (NYSE: BSX) closed down $1.56 or 9.2% to $14.80, after warning that third-quarter sales and earnings will miss forecasts due to weakness across most of its businesses. The medical device maker also warned that sales of its top-selling drug-coated stent will fall from last quarter and miss estimates.
Stocks closed with sharp losses after the Philadelphia Federal Reserve reported an unexpected contraction in manufacturing this month, fueling fears that the economic slowdown could be more painful than previously projected. This weak read on regional manufacturing gave investors an incentive to take profits following the recent rally.
Today, the Dow Jones industrial average closed down 79.96 or 0.69% to 11,533.23, the Standard & Poor's 500 index closed down 0.54% and the Nasdaq composite index closed down 15.14 or 0.67% to 2,237.75.
Market breadth was negative. On the New York Stock Exchange, losers beat winners 19 to 13 on volume of 1.67 billion shares. On the Nasdaq, decliners topped advancers 9 to 5 on volume of 2.03 billion shares.
Investors did not like the first negative reading from the Philadelphia Fed Reserve. The bank's headline index showed a negative 0.4 reading against the expected positive 14.3. This is the first reading below zero since April 2003, indicating a decline in regional manufacturing. While the report was a concern, investor response appears to be excessive. Its volatility does not show that this is a good indicator. What is more important is the ISM number that comes out at the turn of the month - which is a better indicator.
Additionally, jobless claims rose more than expected last week but remained at a level consistent with recent trends. While the claims rose, they have remained at a level that suggests stable labor market conditions. While weekly numbers rose, the four week moving average remained unchanged at 315,000.
Stock of Hewlett Packard (NYSE: HPQ) closed down $1.91 or 5.2% to $34.87, after media reports said CEO Mark Hurd had more involvement in the company's boardroom media leak probe than had previously been stated. The probe includes a review of the practice of "pretexting" to obtain the phone records of directors and journalists.
General Mills Corp. (NYSE: GIS) announced fiscal first-quarter income that rose past Wall Street's view. The company profit advanced to $267 million, from $252 million a year ago. Sales for the quarter increased to $2.86 billion from $2.68 billion, against the expected $2.76 billion. Worldwide unit volume grew 4%. The company has also affirmed its fiscal 2007 outlook for an EPS of $3.03 to $3.08.
Shares of Wal-Mart Stores Inc. (NYSE: WMT) closed down $0.41 to $48.46, after stating that it is cutting costs of 300 prescription drugs in Tampa area, with the intention of expanding the program nationally next year. The drugs would be available at $4 per prescription to insured and uninsured consumers. While Wal-Mart shares were pressured as investors worried that the plan could hurt already strained pharmacy margins, other retail drug stores are going to face stiff competition.
Stock of FedEx Corp. (NYSE: FDX) closed down $1.53 or 1.9% to $106.00, after reporting a bullish first-quarter earnings but also issuing a forecast for 2007 earnings that set the midpoint below the average forecast of analysts. Its first-quarter net income rose 40% to $475 million, despite poor showing from its Kinko's segment. Its outlook is in contrast to a gloomier economic growth forecast from rival UPS Inc (NYSE: UPS).
Shares of Tribune Co. (NYSE: TRB) surged up $1.36, or 4.4%, at $32.05, on a report that the newspaper company may consider going private. Its board may consider a leveraged buyout as well as several other options to deal with shareholder and employee dissent. Tribune has been feuding with its largest shareholder, the Chandler family trust, in a brawl over planned reductions at the Los Angeles Times.
U.S. light crude oil for November delivery jumped 85 cents to settle at $61.59 a barrel on the New York Mercantile Exchange. October natural-gas futures contract dropped 15 cents, or 3%, at $4.781 per million BTU. New data showed that the nation's supplies of gas in storage rose in the latest week.
General Mills Corp. (NYSE: GIS) announced fiscal first-quarter income that rose past Wall Street's view. The company profit advanced to $267 million, from $252 million a year ago. Sales for the quarter increased to $2.86 billion from $2.68 billion, against the expected $2.76 billion. Worldwide unit volume grew 4%. The company has also affirmed its fiscal 2007 outlook for an EPS of $3.03 to $3.08.
Shares of Wal-Mart Stores Inc. (NYSE: WMT) closed down $0.41 to $48.46, after stating that it is cutting costs of 300 prescription drugs in Tampa area, with the intention of expanding the program nationally next year. The drugs would be available at $4 per prescription to insured and uninsured consumers. While Wal-Mart shares were pressured as investors worried that the plan could hurt already strained pharmacy margins, other retail drug stores are going to face stiff competition.
Shares of Tribune Co. (NYSE: TRB) surged up $1.36, or 4.4%, at $32.05, on a report that the newspaper company may consider going private. Its board may consider a leveraged buyout as well as several other options to deal with shareholder and employee dissent. Tribune has been feuding with its largest shareholder, the Chandler family trust, in a brawl over planned reductions at the Los Angeles Times.
Stocks ended higher as a sharp drop in oil prices and a batch of strong earnings reports led by Oracle Corp. (Nasdaq: ORCL) and Morgan Stanley (NYSE: MS) helped the market overcome some mild disappointment over the Federal Reserve's decision to leave the door open to further interest-rate increases. Some investors also expressed concern that there may be some debate over the inflation outlook among Fed members after one central bank official dissented with the majority decision to keep short-term rates unchanged.
Today, the Dow Jones industrial average closed up 72.28 or 0.63% to 11,613.19, the broader Standard & Poor's 500 index closed up 6.87 or 0.52% to 1325.18, and the Nasdaq composite closed up 30.52 or 1.37% to 2,252.89. The S&P is just shy of its highest level.
Market breadth was positive. On the New York Stock Exchange, winners topped losers almost 2 to 1 on volume of 1.61 billion shares. On the Nasdaq, advancers beat decliners by roughly 9 to 5 as around 2.22 billion shares changed hands.
The central bank opted to hold the key short-term interest rate unchanged at 5.25% for the second straight meeting, as expected. In its statement, it reiterated that the economy is slowing and that this will help take the edge off upward pressure on inflation. It also acknowledged that energy prices have come down recently. It also acknowledged that the economy was slowing, and that is a sign that the central bank may not need to raise rates further anytime soon. However, it has left the door open for further increases if inflation does not come down.
In is clear that the statement cements the case for stocks to keep doing well, unless profits get hit. While corporate profits are at risk as the economy slows further, but the market looks reasonably priced relative to earnings. It is expected that stocks will be able to build on gains through the end of the year, notwithstanding periods of volatility and small declines.
The star of the day, Oracle (Nasdaq: ORCL) jumped up $1.80 or 11% to $17.93, after reporting quarterly earnings that rose from a year earlier and topped forecasts. The company also issued a current-quarter forecast that impressed investors. Net income for the first quarter rose 29% to $670 million, and revenue rose nearly 30% to $3.59 billion. The EPS is 18 cents against the expected 16 cents. Total software revenue rose 29% to $2.7 billion, led by an 80% gain in new license revenue from applications. The software giant has benefited from CEO Larry Ellison's $20 billion acquisition spree in a seasonally challenging period.
On reporting third-quarter profit that jumped from year-ago levels, shares of Morgan Stanley (NYSE: MS) closed up $0.50 to $72.35. The company has overcome a difficult summer trading environment, and has largely mirrored the performance of rivals such as Lehman Bros (NYSE: LEH), Goldman Sachs (NYSE: GS) and Bear Stearns (NYSE: BSC).
Shares in Circuit City Stores Inc. (NYSE: CC) closed down 3 cents at $26.26, despite reporting second-quarter profit that soared as flat-panel TVs and notebook computers flew off shelves. This also prompted the company to lift its full-year sales forecast. Its net income rose to $10 million, from $1.3 million a year ago. Net sales jumped 11% to $2.84 billion from $2.56 billion as same-store sales climbed 8.3%. Web-based sales also surged 74%.
Shares of Boeing Co. shares (NYSE: BA) closed up 1.8% at $76.19 on a report that a consortium it leads has emerged as the winner of a federal contract to provide infrastructure and monitoring systems aimed at bolstering U.S. border security. This contract is valued at about $2.5 billion over four years. Additionally, the company may also benefit from a report that Airbus is poised to announce new delays of upto six months, in deliveries of its A380 super-jumbo plane in the next few days.
U.S. light crude oil for October delivery sank $1.20 to settle at $60.46 a barrel on the New York Mercantile Exchange. The weekly oil inventories report, showed a rise in distillate supplies. Distillate supplies gain in importance as winter approaches because they include heating oil stocks.
The star of the day, Oracle (Nasdaq: ORCL) jumped up $1.80 or 11% to $17.93, after reporting quarterly earnings that rose from a year earlier and topped forecasts. The company also issued a current-quarter forecast that impressed investors. Net income for the first quarter rose 29% to $670 million, and revenue rose nearly 30% to $3.59 billion. The EPS is 18 cents against the expected 16 cents. Total software revenue rose 29% to $2.7 billion, led by an 80% gain in new license revenue from applications. The software giant has benefited from CEO Larry Ellison's $20 billion acquisition spree in a seasonally challenging period.
Shares in Circuit City Stores Inc. (NYSE: CC) closed down 3 cents at $26.26, despite reporting second-quarter profit that soared as flat-panel TVs and notebook computers flew off shelves. This also prompted the company to lift its full-year sales forecast. Its net income rose to $10 million, from $1.3 million a year ago. Net sales jumped 11% to $2.84 billion from $2.56 billion as same-store sales climbed 8.3%. Web-based sales also surged 74%.
Shares of Boeing Co. shares (NYSE: BA) closed up 1.8% at $76.19 on a report that a consortium it leads has emerged as the winner of a federal contract to provide infrastructure and monitoring systems aimed at bolstering U.S. border security. This contract is valued at about $2.5 billion over four years. Additionally, the company may also benefit from a report that Airbus is poised to announce new delays of upto six months, in deliveries of its A380 super-jumbo plane in the next few days.
Stocks ended lower as a sales warning from Yahoo Inc. (Nasdaq: YHOO) saw the Nasdaq Composite snap a seven-session winning streak. Fortunately, a sharp drop in oil prices helped the market recover from its lows. Additionally, a smaller than expected rise in producer prices for August eased inflation worries. However, another weak housing report raised new questions about the extent of the slowdown in the nation's economy.
Today, the Dow Jones industrial average closed down 14.09 or 0.12% to 11,540.91, the broader Standard & Poor's 500 index closed down 2.87 or 0.22% to 1.318.31, and the Nasdaq composite index closed down 13.38 or 0.6% to 2,222.37.
Market breadth was negative. On the New York Stock Exchanges, losers beat winners by 9 to 7 on volume of 1.5 billion shares. On the Nasdaq, decliners topped advancers by 18 to 11 on volume of 2.1 billion shares.
While the drop in oil prices is helping investors, nobody is willing to take a stand ahead of the Fed Meeting. Most analysts are expecting the Fed to pause in the tightening cycle for a second time in a row, following data reports showing that inflation is less of a threat and that economic growth is tamer. The latest producer price report also leaves many investors undecided on whether it points to an economy that is slowing down at a gradual pace or an economy where growth is coming to a grinding halt. The latest housing data only served to fuel this debate.
In data news, the producer prices rose 0.1% last month, against the expected 0.3% increase. The core rate dropped 0.4%, against the expected 0.2% gain. This benign inflation report was unexpected, and fits into the expectation that Fed will hold interest rates steady at 5.25% for the second straight meeting on Wednesday.
Housing industry has continued to ebb. Construction of new homes fell 6% to a seasonally adjusted annual rate of 1.665 million, against the expected decrease of 2.5%. Building permits fell 2.3% to a seasonally adjusted rate of 1.722 million. Permits are considered a leading indicator for the housing sector and the economy.
Shares of Yahoo Inc. (Nasdaq: YHOO) fell more than 11% after the CFO warned that a slowdown in auto and financial advertising spending will crimp third-quarter sales. Stock of Yahoo closed down $3.20 or 10.9% to $25.82. The slow down is attributed to the softness in online advertising. The company expects revenue to be from $1.115 billion to $1.225 billion, against the expected $1.18 billion. As a reaction, shares of Google (Nasdaq: GOOG) closed down $10.88 or 4% to $403.81.
Shares of Motorola (NYSE: MOT) closed down $0.02 to $24.93, after it stated that it would buy Symbol Technology (NYSE: SBL) for about $3.9 billion. Stock of Symbol closed up $0.08 to $14.75. Motorola shall pay $15 a share, for Symbol, which is a market leader in mobile-data computing and radio-frequency identification, or RFID, technology. Symbol is also known for its role in spearheading the development of barcode-scanning technology, which is especially popular in retail stores.
Shares of Target (NYSE: TGT) closed up $0.76 or 1.5% to $54.34, after raising its September sales forecast. The company is looking at same store sales to be 5% higher. However, the company did not offer any other information, such as whether apparel or grocery sales moved the mark or if higher transactions helped stalled traffic.
U.S. light crude oil for October delivery sank $2.14 to $61.66 a barrel on the New York Mercantile Exchange.
Shares of Yahoo Inc. (Nasdaq: YHOO) fell more than 11% after the CFO warned that a slowdown in auto and financial advertising spending will crimp third-quarter sales. Stock of Yahoo closed down $3.20 or 10.9% to $25.82. The slow down is attributed to the softness in online advertising. The company expects revenue to be from $1.115 billion to $1.225 billion, against the expected $1.18 billion. As a reaction, shares of Google (Nasdaq: GOOG) closed down $10.88 or 4% to $403.81.
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