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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.
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.
Stocks ended mixed with the Nasdaq Composite logging a seventh session of gains. However, a rise in oil prices and cautious trading ahead of a mid-week Federal Reserve meeting on interest rates limited any significant move to the upside.
Today, the Dow Jones industrial average closed down 5.77 or 0.05% to 11,550.44, the broader Standard & Poor's 500 index closed up 1.31 or 0.10% to 1,320.65, and the Nasdaq composite index closed up 0.16 or 0.01% to 2,234.15.
Market breadth turned negative. On the New York Stock Exchange, losers beat winners 16 to 15 on volume of 1.5 billion shares. On the Nasdaq, decliners edged out advancers as 1.94 billion shares changed hands.
Investors are being cautious ahead of the Fed meeting on Wednesday. Additionally, with oil inching back up some investors also thought the decline in crude is over. The Federal Reserve is widely expected to keep short-term rates steady. But market observers are starting to wonder when the central bank might want to consider lowering rates as the economy starts to show signs of softness. Today, the market was also made nervous by a report that Greenwich, Conn. based hedge fund Amaranth Advisors LLC may report a year-to-date decline of up to 35% due to heavy losses in the natural gas market. Some analysts feel that the market may see a short-term pullback.
In data news, investors did not react to the Commerce Department report that showed the U.S. current account deficit widened to $218.4 billion in the second quarter from a revised $213.2 billion in the first quarter. This totals 6.6% of GDP and is the same as in the first quarter. This is against expectations of about $213 billion.
Shares of Intel (Nasdaq: INTC) moved up $0.14 or 0.7% to $19.65, after its researchers at the University of California said they've made a breakthrough in creating lasers on computer chips. This development could cut costs and improve the speed of communication networks and computers.
Stock of Applied Materials Inc. (Nasdaq: AMAT) closed up $0.58 or 3.4% to $17.78, after the company stated that it had recently bought back $2.5 billion in stock under an accelerated buyback plan. The board has also approved a new buyback plan for up to $5 billion in stock over the next three years.
Shares of Symbol Technologies Inc. (NYSE: SBL) shot up $1.96 or 15.4% to $14.67 on a Wall Street Journal report that the wireless-equipment firm is set to wrap up an auction that could see the sale of the $3.2 billion firm within days. The likely buyer is Motorola that closed up $0.10 or 0.4% to $24.95.
GM (NYSE: GM) and Ford (Nasdaq: F) briefly discussed an alliance before dropping the idea. This lead GM to close down $0.18 to $31.48, and Ford to lose $0.20 or 3% to $7.82. Both companies are trying to turnaround their businesses amid massive losses in North America. Additionally, Thomas Weisel has lowered its rating on Ford to under-perform.
U.S. light crude oil for October delivery rose 47 cents to $63.80 a barrel on the New York Mercantile Exchange. Ongoing risks to global production prompted the market to recover part of last week's loss. However, gains were capped by expectations for lower oil demand and strong production.
Stock of Applied Materials Inc. (Nasdaq: AMAT) closed up $0.58 or 3.4% to $17.78, after the company stated that it had recently bought back $2.5 billion in stock under an accelerated buyback plan. The board has also approved a new buyback plan for up to $5 billion in stock over the next three years.
Shares of Intel (Nasdaq: INTC) moved up $0.14 or 0.7% to $19.65, after its researchers at the University of California said they've made a breakthrough in creating lasers on computer chips. This development could cut costs and improve the speed of communication networks and computers.
Stocks closed higher on the day and week with the Nasdaq Composite posting a 3.2% five-day gain, after data showing moderating consumer inflation outweighed investor disappointment with the details of a Ford Motor Co. (Nasdaq: F) restructuring plan. The mild reading on inflation means the Federal Reserve won't have to raise rates when it meets again.
Today, the Dow Jones industrial average closed up 45.46 or 0.29% to 11,572.85, within striking distance of its record high of 11,722.98. The broader Standard & Poor's 500 index closed up 4.18 or 0.27% to 1,320.46, and the Nasdaq composite index closed up 6.65 or 0.31% to 2,235.38. For the week the Dow Industrials gained 1.4%, the S&P 500 advanced 1.6%, and the Nasdaq posted a rise of 3.2%.
Market breadth was positive. On the New York Stock Exchange, winners topped losers nearly 19 to 13 on volume of 2.18 billion shares. On the Nasdaq, advancers topped decliners by 15 to 13 on volume of 2.51 billion shares.
The market cheered that the CPI rose 0.2% in August, and the core CPI, which strips out volatile food and energy prices, also increased 0.2% as expected. The CPI moderated as gasoline and home ownership costs rose at a slower pace. These figures are right in the middle, and therefore, both inflation hawks and doves can feel happy. A mild report is welcome ahead of the Fed policy meeting next week. However, the Fed has its eye on core inflation, and that's still a concern, but the drop in energy prices in September has been good and as the Fed looks ahead to the September CPI, that drop should help counter inflation.
Manufacturing activity in the New York area held steady at a moderate rate in September and the NY Empire State index, rose to 13.8. This is of interest to traders as it's seen as an early forecast of the ISM factory survey due out in two weeks. In August, the ISM factory index inched lower to 54.5% from 54.7% in the previous month. The prices paid index fell to 41.0 from 44.3 in August. Rounding out Friday's data, the University of Michigan's preliminary September consumer sentiment index showed a reading of 84.4, up from 82.0 in late August.
Stock of Adobe Systems (Nasdaq: ADBE) closed up $3.35 or almost 10% to $37.00, after reporting quarterly earnings and revenue that topped estimates. The company also issued bullish current-quarter earnings and revenue guidance. The company reported that fiscal third-quarter profit fell to $94.4 million or by 35% as it booked charges related to its acquisition of Macromedia Inc. that helped the company boost its sales 24%. The company also had 18% more outstanding shares in the just-reported quarter, compared to the same period of last year. Revenue for the quarter climbed to $602.2 million against the expected $595.3 million. In the fourth quarter, it expects revenue of $655 million to $685 million against the expected $668.8 million.
In restructuring news, shares of Marsh & McLennan (NYSE: MMC) gained 1.8% to $27.69. The company said it would cut 750 jobs, as part of its plan to reduce costs by $350 million by the end of 2008. It also expects to take a $225 million charge as a result of this restructuring.
Shares of Ford Motor Company (Nasdaq: F) closed down $1.06 or 12% to $8.03, on announcing that it would cut thousands more jobs than previously announced. In a bid to save $5 billion, it is offering buyouts to all of its 75,000 hourly workers, speeding up plant closings and suspending its dividend. It accepted that it would not be able to restore its North American auto unit to profitability before 2009, and dropped its promise to reduce material purchase costs by $6 billion. Merrill Lynch has downgraded the stock to a "sell" from "neutral", saying the much-anticipated details of the restructuring fell short of expectations. Many analysts opine that the latest steps weren't enough to deal with the company's vastly weaker standing in the automobile industry.
Stock of Daimler Chrysler (NYSE: DCX) closed down $3.51 or 7% to $49.39, after it cut its 2006 profit forecast, citing tough market conditions and higher fuel costs. It has lowered its operating profit to roughly $6.4 billion, due to an expected loss of about $1.2 billion from its U.S. operations.
U.S. light crude oil for October delivery closed up 17 cents to $63.39 a barrel on the New York Mercantile Exchange. There was initial decline following the news that the OPEC cut its 2006 demand forecast.
Stock of Adobe Systems (Nasdaq: ADBE) closed up $3.35 or almost 10% to $37.00, after reporting quarterly earnings and revenue that topped estimates. The company also issued bullish current-quarter earnings and revenue guidance. The company reported that fiscal third-quarter profit fell to $94.4 million or by 35% as it booked charges related to its acquisition of Macromedia Inc. that helped the company boost its sales 24%. The company also had 18% more outstanding shares in the just-reported quarter, compared to the same period of last year. Revenue for the quarter climbed to $602.2 million against the expected $595.3 million. In the fourth quarter, it expects revenue of $655 million to $685 million against the expected $668.8 million.
Shares of Ford Motor Company (Nasdaq: F) closed down $1.06 or 12% to $8.03, on announcing that it would cut thousands more jobs than previously announced. In a bid to save $5 billion, it is offering buyouts to all of its 75,000 hourly workers, speeding up plant closings and suspending its dividend. It accepted that it would not be able to restore its North American auto unit to profitability before 2009, and dropped its promise to reduce material purchase costs by $6 billion. Merrill Lynch has downgraded the stock to a "sell" from "neutral", saying the much-anticipated details of the restructuring fell short of expectations. Many analysts opine that the latest steps weren't enough to deal with the company's vastly weaker standing in the automobile industry.
Stocks closed lower after downgrades of General Electric (NYSE: GE) and Boeing (NYSE: BA) and data showing unexpected inflation in import prices provided excuses to pull back from a recent rally. Worries about inflation and interest rate policy have again caused investors to retreat.
Today, the Dow Jones industrial average closed down 15.93 or 0.14% to 11,527.39, the broader Standard & Poor's 500 index closed down 1.79 or 0.14% to 1,316.28, and the Nasdaq composite index closed up 1.06 or 0.05% to 2,155.29.
Market breadth was negative. On the New York Stock Exchange, losers topped winners nearly 2 to 1 on volume of 1.20 billion shares. On the Nasdaq, decliners topped advancers by three to two on volume of 1.59 billion shares.
San Francisco Federal Reserve President Janet Yellen, suggested that the Fed may need to raise rates again to combat inflation. She stated that "Inflation is likely to stay above the comfort zone for some time, and it could take several years to come back." Therefore, the Federal Reserve must be biased toward additional interest rate increases. This has once again raised doubts in the mind of investors.
In data news, U.S. import prices rose 0.8% in August, against the expected Nil change. This has revived fears that interest rate increases may still be in the pipeline. Retail sales in August rose 0.2%, against the expected 0.2% decline. Excluding autos, retail sales were up 0.2%, just below the 0.3% expected by economists. This suggests that the consumer may be more resilient than thought. The number of new filings for state unemployment benefits fell by 5,000 to 308,000, returning to their lowest level since the week ended July 22. This is against the expected 314,000 claims. Both sales and inventories rose 0.6%, against the forecast 0.5% increase for inventories. Additionally, the IMF has raised its global economic growth forecast to 5.1% for 2006 and 4.9% for 2007. This growth in the world economy would be the strongest four year expansion since the early 1970s.
Amidst profit warning, shares of Palm (Nasdaq: PALM) closed down $1.22 to $14.31. The company announced that revenue in its just completed quarter will miss previous forecasts, due to lower shipments of its Treo smart phone.
Stock of Boeing (NYSE: BA) stock dropped 1.7% to $75.01, after UBS downgraded its rating to reduce from neutral, and its price target to $74 from $85. This is in the aftermath of the effect of likely economic slowdown and continued multiple compression.
Shares of Bear Stearns (NYSE: BSC) shares rose 2.5%, or $3.46, to close at $139.68. The company has reported fiscal third-quarter earnings and revenue that rose above year-earlier levels, and continued the pattern of investment bank results exceeding Wall Street forecasts. Its third-quarter profit rose 16%, as it generated a net profit of $437.6 million, up from $378.3 million. Revenue was $2.13 billion, better than the expected $2.05 billion.
On stock down-gradation, shares of General Electric (NYSE: GE) closed down 6 cents at $34.78. UBS has cut the stock to neutral from buy and cut its price target to $38 from $40. It believes that earnings growth will be negatively affected by the shape of the Treasury yield curve, higher tax rates and continued sluggish earnings at its NBC unit. However, GE is selling its GE Advanced Materials unit to private equity firm Apollo Management for $3.8 billion in cash and securities.
U.S. light crude oil for October delivery fell 18 cents to $67.32 a barrel on the New York Mercantile Exchange. The weekly oil inventory report shows a surprise triple-digit increase in gasoline supplies and a bigger-than-expected jump in distillates.
Stock of Boeing (NYSE: BA) stock dropped 1.7% to $75.01, after UBS downgraded its rating to reduce from neutral, and its price target to $74 from $85. This is in the aftermath of the effect of likely economic slowdown and continued multiple compression.
On stock down-gradation, shares of General Electric (NYSE: GE) closed down 6 cents at $34.78. UBS has cut the stock to neutral from buy and cut its price target to $38 from $40. It believes that earnings growth will be negatively affected by the shape of the Treasury yield curve, higher tax rates and continued sluggish earnings at its NBC unit. However, GE is selling its GE Advanced Materials unit to private equity firm Apollo Management for $3.8 billion in cash and securities.
Shares of Bear Stearns (NYSE: BSC) shares rose 2.5%, or $3.46, to close at $139.68. The company has reported fiscal third-quarter earnings and revenue that rose above year-earlier levels, and continued the pattern of investment bank results exceeding Wall Street forecasts. Its third-quarter profit rose 16%, as it generated a net profit of $437.6 million, up from $378.3 million. Revenue was $2.13 billion, better than the expected $2.05 billion.
Stocks rallied and pushed the major averages to new four-month closing highs, as investors cheered solid earnings from Lehman Brothers Holdings Inc (NYSE: LEH) and lower Treasury yields. There was a broad-based advance.
Today, the Dow Jones industrial average closed up 45.23 or 0.39% to 11,543.32, the broader Standard & Poor's 500 index closed up 4.96 or 0.38% to 1,318.07, and the Nasdaq composite index closed up 11.85 or 0.53% to 2,227.67. The Dow is now within striking distance of its record high close of 11,722.98.
Market breadth was positive. On the New York Stock Exchange, winners beat losers 11 to 5 on volume of 1.66 billion shares. On the Nasdaq, advancers topped decliners 9 to 5 on volume of almost 1.89 billion shares.
Some decent corporate news and the state of the economy have lead investors to believe that Federal Reserve will hold on rate increase. Treasury Secretary Henry Paulson, said that China's fixed-currency policy is in need of reform and is hindering that country's economy. He urged China to continue to move away from a managed economy.
Tomorrow sentiment will be controlled by the retail sales report and Friday's CPI report. Sales are expected to fall 0.2%. August import and export prices, July business inventories and the weekly jobless claims report are also all due tomorrow. Additionally, Wall Street is also being influenced by Friday's quadruple options expiration in which stock index futures and options and individual stock futures and options all expire simultaneously. This can contribute to increased volatility in the underlying stocks, in the days leading up to and the day of the expiration.
Stock in Ford Motor Co. (Nasdaq: F) closed up $0.13 or 1.4% to $9.19, on a report that the company may cut white-collar salary costs by a third, as part of a stepped-up restructuring plan to be presented to its board. The culling would hit the ranks of managers and supervisors hardest.
Shares of Hewlett-Packard (NYSE: HPQ) closed down $0.55 or 1.5% to $36.37, after California Attorney General Bill Lockyer said in a televised interview that his office has enough evidence for indictments inside and outside the company. The boardroom scandal continues to plague the company.
Shares of Merck (NYSE: MRK) closed down $1.06 or 2.5% to $41.09, after two studies to be published in the Journal of the AMA indicated that recalled pain reliever Vioxx carries an increased risk of kidney and heart arrhythmia problems. They show that the drug can be harmful even when taken for a short period of time. Merck has maintained that Vioxx can cause cardiovascular problems after only 18 months or more of use. While FDA has said that Vioxx, can return to the market with restrictions, Merck has yet to do so. These two studies strengthen the decision by Merck to delay its re-introduction.
Stock of Bristol-Myers Squibb (NYSE: BMY) gained 2% on speculation that it may be a takeover target, since its new interim CEO James Cornelius oversaw the acquisition of Guidant Corp by Boston Scientific Corp. (NYSE: BSX). Cornelius previously was Guidant's (NYSE: GDT) interim leader and things appear to follow a pattern.
Shares of Lehman Bros. (NYSE: LEH) closed up $2.04 or 3% to $70.06, on reporting higher quarterly earnings that topped estimates. The net income and revenue rose despite a tougher investment-banking environment and the company outlook remains strong. Net income rose 4% to $916 million, and the revenue totaled $4.18 billion compared to the expected $4.01 billion.
U.S. light crude oil for October delivery rose 21 cents to settle at $63.97 a barrel on the New York Mercantile Exchange. The weekly oil inventory report showed a bigger than expected drop in crude stocks and a smaller than expected jump in distillates, used in heating oil.
Shares of Lehman Bros. (NYSE: LEH) closed up $2.04 or 3% to $70.06, on reporting higher quarterly earnings that topped estimates. The net income and revenue rose despite a tougher investment-banking environment and the company outlook remains strong. Net income rose 4% to $916 million, and the revenue totaled $4.18 billion compared to the expected $4.01 billion.
Stock of Bristol-Myers Squibb (NYSE: BMY) gained 2% on speculation that it may be a takeover target, since its new interim CEO James Cornelius oversaw the acquisition of Guidant Corp by Boston Scientific Corp. (NYSE: BSX). Cornelius previously was Guidant's (NYSE: GDT) interim leader and things appear to follow a pattern.
Shares of Merck (NYSE: MRK) closed down $1.06 or 2.5% to $41.09, after two studies to be published in the Journal of the AMA indicated that recalled pain reliever Vioxx carries an increased risk of kidney and heart arrhythmia problems. They show that the drug can be harmful even when taken for a short period of time. Merck has maintained that Vioxx can cause cardiovascular problems after only 18 months or more of use. While FDA has said that Vioxx, can return to the market with restrictions, Merck has yet to do so. These two studies strengthen the decision by Merck to delay its re-introduction.
Stock in Ford Motor Co. (Nasdaq: F) closed up $0.13 or 1.4% to $9.19, on a report that the company may cut white-collar salary costs by a third, as part of a stepped-up restructuring plan to be presented to its board. The culling would hit the ranks of managers and supervisors hardest.
Stocks rallied and pushed the Dow Jones Industrial Average to its highest close since mid-May. The catalysts were, a sharp fall in crude oil prices, a drop in bond yields and strong earnings from Goldman Sachs (NYSE: GS). Additionally, Hewlett-Packard (NYSE: HPQ) and Bristol-Myers Squibb (NYSE: BMY) contributed to the cheer after the companies reshuffled their top managements.
Today, the Dow Jones industrial average closed up 102.85 or 0.9% to 11,499.69, the broader Standard & Poor's 500 index closed up 13.57 or 1% to 1,313.11, and the Nasdaq composite index closed up 42.57 or almost 2% to 2,215.82.
Market breadth was positive. On the New York Stock Exchange, winners beat losers three to one on volume of 1.79 billion shares. On the Nasdaq, advancers topped decliners by 11 to four as 2.04 billion shares changed hands.
Today's rally was sparked by a 3% slide in oil prices and a sharp fall in Treasury bond yields. Upbeat earnings from Goldman Sachs (NYSE: GS) and boardroom shakeups at Hewlett-Packard (NYSE: HPQ) and Bristol-Myers Squibb (NYSE: BMY) added to the positive news. On data news, the trade gap increased 5% to $68 billion in July, amid a jump in oil prices. This is against the expected rise to $65.5 billion. This is basically attributed to import of $20.8 billion worth of crude oil in July. However, many economists view this as temporary as oil prices are beginning to come down. The positive aspect is that the increasing trade deficit suggests that the American consumer continues to buy things and the economy is doing well.
Hewlett-Packard (NYSE: HPQ) stock closed up $0.63 or 1.5% to $36.99, as it fired Patricia Dunn after it emerged that an internal probe may have used illegal methods to spy on directors and some journalists. Dunn will be succeeded by CEO Mark Hurd, who took that post 17 months ago and has helped the company win fans on Wall Street. George Keyworth, who was discovered to be the source of company leaks, has resigned from the board immediately.
Shares of Bristol-Myers Squibb (NYSE: BMY) closed up $0.93 or 4% to $24.32, after firing its CEO and general counsel. Dolan had been under fire for a series of management lapses, including his failure to delay generic competition for a blood-thinning drug. Shares closed up also on speculation that the company could be up for sale. He will be replaced by board member James Cornelius, who until a few months ago headed Guidant Corp.
Stock of Goldman Sachs (NYSE: GS) closed up $7.29 or 4.8% to $158.29, after reporting higher-than-expected quarterly earnings and setting a new 60 million share buyback plan. The company earned a third-quarter profit of $1.59 billion, on revenue $7.46 billion. This is against the expected EPS of $2.97 on revenue of $7.17 billion.
Shares of Texas Instruments (NYSE: TXN) rose 72 cents to $31.50. The company tightened its third-quarter financial targets, saying it expects total sales in the range of $3.71 billion to $3.87 billion, compared with its previous estimate of $3.63 billion to $3.95 billion. It also pegged EPS between 44 cents and 46 cents, compared to its previous outlook of 42 cents to 48 cents.
Stock of Lucent Technologies (NYSE: LU) closed up $0.07 or 3% to $2.36, after announcing that it was buying software maker Mobilitec for an undisclosed sum. Lucent is being bought by French telecom Alcatel that closed up $0.44 to $12.29.
Shares of Apple Computer Inc. (Nasdaq: AAPL) closed up $0.13 to $72.63, after it announced that it will offer Disney movies for download through its iTunes store. The CEO also announced plans for a new wireless device that attaches to a television to allow consumers to manage and playback their digital-media files on their televisions. This device to be called iTV, would be available in the first quarter of next year for $299.
Shares of McDonald's Corp. (NYSE: MCD) closed up $1.08 or2.9% to $38.20, on news that August sales rose a higher than the expected 6%, buoyed by strength in Europe and the introduction of its new "snack wrap." Worldwide sales were up 8.6% for the month. In the US, monthly same-store sales grew 3.5%. In Europe, August same-store sales rose 8.8% against the 3.6% last year.
U.S. light crude oil for October delivery fell $1.85 to settle at $63.76 a barrel on the New York Mercantile Exchange.
Stock of Goldman Sachs (NYSE: GS) closed up $7.29 or 4.8% to $158.29, after reporting higher-than-expected quarterly earnings and setting a new 60 million share buyback plan. The company earned a third-quarter profit of $1.59 billion, on revenue $7.46 billion. This is against the expected EPS of $2.97 on revenue of $7.17 billion.
Shares of Bristol-Myers Squibb (NYSE: BMY) closed up $0.93 or 4% to $24.32, after firing its CEO and general counsel. Dolan had been under fire for a series of management lapses, including his failure to delay generic competition for a blood-thinning drug. Shares closed up also on speculation that the company could be up for sale. He will be replaced by board member James Cornelius, who until a few months ago headed Guidant Corp.
Shares of McDonald's Corp. (NYSE: MCD) closed up $1.08 or2.9% to $38.20, on news that August sales rose a higher than the expected 6%, buoyed by strength in Europe and the introduction of its new "snack wrap." Worldwide sales were up 8.6% for the month. In the US, monthly same-store sales grew 3.5%. In Europe, August same-store sales rose 8.8% against the 3.6% last year.
Hewlett-Packard (NYSE: HPQ) stock closed up $0.63 or 1.5% to $36.99, as it fired Patricia Dunn after it emerged that an internal probe may have used illegal methods to spy on directors and some journalists. Dunn will be succeeded by CEO Mark Hurd, who took that post 17 months ago and has helped the company win fans on Wall Street. George Keyworth, who was discovered to be the source of company leaks, has resigned from the board immediately.
Stocks ended slightly higher as a commodities sell-off led by oil eased inflation concerns, but also raised questions about the outlook for economic growth. Shares of Dell Inc (NYSE: DELL) fell after the computer maker said it would delay its second-quarter earnings filing. Technology shares advanced giving a boost to the Nasdaq composite, but the broader market drifted at the end of a choppy session.
Today, the Dow Jones industrial average closed up 4.73 or 0.04% to 11,396.84, the Standard & Poor's 500 index closed up 0.62 or 0.05% to 1,299.54, and the Nasdaq composite index closed up 7.46 or 0.34% to 2,173.25.
Market breadth was negative. On the New York Stock Exchange, decliners topped advancers 17 to 14 on volume of 1.67 billion shares. On the Nasdaq, losers edged winners 15 to 13 on volume of 1.72 billion shares.
Markets will probably take direction from the August consumer-price report. Retail inflation is expected to have ticked up 0.3% in August. However, broader concerns about the economy are unlikely to disappear in a hurry. The data reports due this week include trade balance data; retail sales, business inventories; consumer prices and manufacturing. Investors will look for clarity regarding the economy, specifically whether it is still growing but not so much so as to push up inflationary pressures. Additionally, stocks are bound to be volatile this week ahead of Friday's quadruple options expiration.
Boston Federal Reserve President Cathy Minehan, said that the risks of slower economic growth and higher pressure on inflation have both risen this summer, complicating the job of monetary policy makers. She expected underlying inflation to ease over the coming year as the economy softened to a growth rate a bit under 3%. Federal Reserve President William Poole stated that Federal Reserve officials should talk less about the current state of the economy and more about their goals. He also stated that the economy was not fragile.
Stock of Dell (NYSE: DELL) closed down $0.46 or 2.1% to $21.19, after stating that it would delay filing its quarterly results after a SEC probe revealed possible accounting errors in prior quarters. It also stated that it would suspend its share buyback program and has canceled, for the second time this year, a meeting with financial analysts. U.S. attorney's office in New York has subpoenaed documents related to Dell's financial reporting from 2002 to the present.
The European Commission has widened an antitrust review of Intel (Nasdaq: INTC) to see if it convinced an electronics retailer, German company Metro AG to exclude rival Advanced Micro Devices (NYSE: AMD). This led Intel shares to close down $0.05 to $19.40, and is an extension of an ongoing investigation into Intel that began in 2001.
Shares of Wal-Mart Stores Inc. (NYSE: WMT) rallied up $0.77 or 1.7% to $47.49, after Chicago Mayor Richard Daley vetoed the ordinance requiring "big-box" retailers to pay their employees substantially more than the minimum wage. This applied to companies with more than $1 billion in annual sales and stores of at least 90,000 square feet to pay at least $10 an hour plus $3 in benefits by 2010.
Shares in the Nasdaq Stock Market Inc. (Nasdaq: NDAQ) closed down 3.7% at $28.08 on a report that it is in preliminary talks to buy Scandinavian exchange operator OMX. Shares in OMX climbed 5.3% after the announcement. The Nasdaq, however, would continue to pursue a takeover of the London Stock Exchange, which it has been courting since early this year. After withdrawing a $4.2 billion takeover bid in March, Nasdaq has built a 25% stake in the LSE.
Shares in steelmaker Ipsco Inc. (NYSE: IPS) sank the steelmaker offered to pay $1.46 billion for steel-tube producer NS Group Inc. (NYSE: NSS). Ipsco shares fell 6.4% while shares of NS Group shares shot up 39% to $64.31. The offer of $66 a share represented a premium of 43% compared to share price on Friday. The new firm will have annual revenue of around $4 billion.
U.S. light crude oil for October delivery fell 64 cents to settle at $65.61 a barrel on the New York Mercantile Exchange. OPEC has agreed to keep pumping at 28 million barrels per day high. Iran's offer to halt temporarily its atomic work has pressured the market, as also robust fuel stocks and a sluggish hurricane season.
Stock of Dell (NYSE: DELL) closed down $0.46 or 2.1% to $21.19, after stating that it would delay filing its quarterly results after a SEC probe revealed possible accounting errors in prior quarters. It also stated that it would suspend its share buyback program and has canceled, for the second time this year, a meeting with financial analysts. U.S. attorney's office in New York has subpoenaed documents related to Dell's financial reporting from 2002 to the present.
Shares of Wal-Mart Stores Inc. (NYSE: WMT) rallied up $0.77 or 1.7% to $47.49, after Chicago Mayor Richard Daley vetoed the ordinance requiring "big-box" retailers to pay their employees substantially more than the minimum wage. This applied to companies with more than $1 billion in annual sales and stores of at least 90,000 square feet to pay at least $10 an hour plus $3 in benefits by 2010.
Shares in the Nasdaq Stock Market Inc. (Nasdaq: NDAQ) closed down 3.7% at $28.08 on a report that it is in preliminary talks to buy Scandinavian exchange operator OMX. Shares in OMX climbed 5.3% after the announcement. The Nasdaq, however, would continue to pursue a takeover of the London Stock Exchange, which it has been courting since early this year. After withdrawing a $4.2 billion takeover bid in March, Nasdaq has built a 25% stake in the LSE.
Stocks ended higher as a fresh drop in oil prices and a more upbeat assessment of Federal Reserve commentary on the economy helped the market narrow its losses for the week. Investors welcomed the soothing comments from a Federal Reserve official regarding inflation and interest rates.
Today, the Dow Jones industrial average closed up 60.67 or 0.54% to 11,392.11, the broader Standard & Poor's 500 index closed up 4.90 or 0.38% to 1,298.92, and the Nasdaq composite index closed up 10.50 or 0.49% to 2,165.79. For the week, the Dow fell 0.6%, the S&P lost 0.9%, and the tech-rich index posted a weekly loss of 1.25%.
Market breadth was positive and volume was moderate. On the New York Stock Exchange, winners beat losers five to three as 1.31 billion shares changed hands. On the Nasdaq, advancers beat decliners by 15 to 13 as 1.48 billion shares changed hands.
Cleveland Fed president Sandra Pianalto said that while inflation was worrisome, the slowing economy will help counter it. This echoed the Fed's comments from its most recent policy meeting. Investors took this well and the decline in oil added to the luster. The bottom line is that inflation is under control, growth is perking along and not accelerating on the downside, and interest rates are, if anything, a little soft.
In data news, U.S. consumer credit climbed by a less-than-expected $5.54 billion in July. This is against the expected rise to $7.5 billion. However, historically it has been seen that stocks tend to stumble coming into September, as it is often the worst month of the year for stocks.
Shares in Broadcom Corp. (Nasdaq: BRCM) closed down $0.34 or 1.3% to $26.09, after it said it uncovered more discrepancies tied to stock-option accounting and expects to record a compensation expense of at least $1.5 billion, more than double its previous estimate. The company also plans to restate its financial results for 1998 and 1999. The revelations build on the company's internal probe that began more than three months ago and fuel more uncertainty about the company's accounting methods for stock options.
Stock of AirTran Holdings Inc (Nasdaq: AAI) closed down $1.19 or 11% to $9.48, after the company trimmed its revenue outlook for the third quarter due to weakened travel demand. This is a setback for the low budget popular airline.
Stock of Hewlett-Packard Co (NYSE: HPQ) closed up $0.75 or 2.1% to $36.17, after announcing that Chairwoman Patricia Dunn, under fire for her role in an investigation that obtained the phone records of H-P board members and journalists without their knowledge, has no plans to resign but will do so if asked to by the board. Company spokesman also confirmed that the board is to hold a special meeting by phone this weekend to discuss the matter.
Shares of Lennar Corp. (NYSE: LEN) fell 1.3% to $42.71 after it became the latest residential builder to lower its profit outlook when it knocked down its third-quarter estimate because of a weakening market for residential homes. The CEO stated "the U.S. housing market has continued to deteriorate," and this warning comes just a day after Beazer Homes USA Inc. (NYSE: BZH) and KB Home (NYSE: KBH) cut their profit outlooks.
U.S. light crude oil for October delivery fell $1.07 to $66.25 a barrel on the New York Mercantile Exchange. On the week, the contract shed 4.2%. News that the biggest oil field in the U.S. is expected to resume full operations sooner than originally expected weighed on oil. The market is also looking ahead to Monday's meeting of the OPEC.
Stock of Hewlett-Packard Co (NYSE: HPQ) closed up $0.75 or 2.1% to $36.17, after announcing that Chairwoman Patricia Dunn, under fire for her role in an investigation that obtained the phone records of H-P board members and journalists without their knowledge, has no plans to resign but will do so if asked to by the board. Company spokesman also confirmed that the board is to hold a special meeting by phone this weekend to discuss the matter.
Shares in Broadcom Corp. (Nasdaq: BRCM) closed down $0.34 or 1.3% to $26.09, after it said it uncovered more discrepancies tied to stock-option accounting and expects to record a compensation expense of at least $1.5 billion, more than double its previous estimate. The company also plans to restate its financial results for 1998 and 1999. The revelations build on the company's internal probe that began more than three months ago and fuel more uncertainty about the company's accounting methods for stock options.
Stocks ended lower after a Federal Reserve official hinted at further interest rate hikes in a market worried that a string of rate increases has already brought about a sharper than expected slowdown in economic growth. Investors also took in a morning read on wholesale inventories that rose 0.8% against the expected 0.7%. Inflation and interest rate policy worries continue to plague investors.
Today, the Dow Jones industrial average closed down 74.76 or 0.66% to 11,331.44, the broader Standard & Poor's 500 index closed down 6.24 or 0.48% to 1,294.02, and the Nasdaq composite index closed down 12.55 or 0.58% to 2,155.29.
Market breadth was negative. On the New York Stock Exchange, losers topped winners nearly 2 to 1 on volume of 1.47 billion shares. On the Nasdaq, decliners topped advancers by 9 to 5 on volume of 1.86 billion shares.
Worries about inflation were sparked after San Francisco Federal Reserve President Janet Yellen, suggested that the Fed may need to raise rates again to combat inflation. She stated that until inflation pressures receded, we must be biased toward further rate hikes. She accepted that the U.S. economy appears to have entered a trend of slightly below-trend growth, which would "moderate any underlying inflationary pressures over time. However, the bottom line is that with inflation too high, policy must have a bias toward further firming.
With data showing unit labor costs rising much faster than expected, the Fed may be prompted to resume lifting interest rates in a bid to choke off inflation. The central bank has to decide whether to step on the brakes now to try to get inflation toward their comfort zone, or wait and let the slowdown in the economy do it naturally.
In data news, the averaged initial jobless claims hit a six-month high rising by 15,000 to 2.49 million in the week ending Aug. 26. New filings for state unemployment benefits fell by 9,000 to 310,000 in the week ending Sept. 2. It's the lowest in six weeks and reflects a modest level of layoffs. Additionally, inventories of U.S. wholesalers rose 0.8% in July, while sales at the wholesale level rose 0.4%.
Shares of Apple Computer Inc. (Nasdaq: AAPL) climbed 4% to $72.80. Apple has an event in San Francisco scheduled for Sept. 12, and analyst Benjamin Reitzes at UBS said he believes the company will use the proceedings to launch "a major move into the digital home." Reitzes said the move could lead to new sales outlets for Apple, and also result in higher sales of Mac computers. Reitzes also reiterated his buy rating on the stock, but raised his price target to $92 from $80.
Amidst profit warning, shares of Palm (Nasdaq: PALM) closed down $1.22 or 7.9% to $14.31. The company reported that revenue in its just-completed quarter will miss previous forecasts, due to lower shipments of its Treo smart phone. Palm faces stiff competition from companies such as Research In Motion (Nasdaq: RIMM) with its popular BlackBerry device and Motorola Inc. (NYSE: MOT), which recently launched a slim personal-digital assistant called Q.
Shares of Hovnanian Enterprises (NYSE: HOV) rallied 6.4% to $27.09, despite reporting a 34% drop in its third-quarter net income of $77 million, against the $116.1 million in the same period last year. Another home builder, KB Home (NYSE: KBH) lowered its earnings estimate for fiscal 2006 to a range of $8 to $8.50 a share. Shares of Beazer Homes (NYSE: BZH) fell 2.7% at $37.33, after it cut its 2006 profit view, citing the U.S housing slowdown. It stated that net home sales for the two months ended Aug. 31 fell 49% from the year earlier as the cancellation rate rose to 50% from 26%. It expects to close fewer homes in its fiscal fourth quarter than anticipated.
Shares of ATI Technologies (Nasdaq: ATYT) closed down $0.05 to $21.35, after the company warned that revenue in its just completed fiscal fourth quarter will miss forecasts, due to lower sales of its chipsets for Intel processors. The company is being bought by Intel rival Advanced Micro Devices which closed up $0.06 to $24.59.
U.S. light crude oil for October delivery fell 18 cents to $67.32 a barrel on the New York Mercantile Exchange. The weekly oil inventory report showed a surprise build in gasoline supplies and a bigger than expected jump in distillates.
Shares of Apple Computer Inc. (Nasdaq: AAPL) climbed 4% to $72.80. Apple has an event in San Francisco scheduled for Sept. 12, and analyst Benjamin Reitzes at UBS said he believes the company will use the proceedings to launch "a major move into the digital home." Reitzes said the move could lead to new sales outlets for Apple, and also result in higher sales of Mac computers. Reitzes also reiterated his buy rating on the stock, but raised his price target to $92 from $80.
Amidst profit warning, shares of Palm (Nasdaq: PALM) closed down $1.22 or 7.9% to $14.31. The company reported that revenue in its just-completed quarter will miss previous forecasts, due to lower shipments of its Treo smart phone. Palm faces stiff competition from companies such as Research In Motion (Nasdaq: RIMM) with its popular BlackBerry device and Motorola Inc. (NYSE: MOT), which recently launched a slim personal-digital assistant called Q.
A jump in labor costs sparked worries about inflation and the future of the Federal Reserve's interest-rate hiking campaign. This prompted a slide in the market with stocks closed lower. After last week's big run-up, stocks were vulnerable and the minor pullback is not surprising.
Today, the Dow Jones industrial average closed down 63.08 or 0.55% to 11,406.20, the broader Standard & Poor's 500 index closed down 12.99 or 0.99% to 1,300.26, and the tech-heavy Nasdaq composite index closed down 37.86 or 1.72% to 2,167.84.
Market breadth was negative. On the New York Stock Exchange, losers beat winners by four to one on volume of 1.44 billion shares. On the Nasdaq, decliners topped advancers by nearly three to one on volume of 1.85 billion shares.
The summary of economic conditions stated that the economy grew overall from mid-July to late August, but five of the 12 Fed districts reported slowing growth as residential construction slackened and energy costs rose. There has been widespread price increases for energy, metals and other commodities, but these did not appear to be triggering more general consumer inflation. This report will be used at Fed's next policy meeting on Sept. 20, where investors expect the rate will remain stagnant. There is no sign that inflationary pressures are heating up and the Fed policy will be based on the outlook for the economy and inflation.
The second-quarter productivity was revised up to 1.6% from the expected 1.1%. However, unit labor costs - an indicator for wage inflation - rose a greater-than-expected 4.9%, raising the red flag for pricing pressure. This has investors worried as Feds may eventually have to start raising rates again. The ISM index rose to 57 in the month from 54.8 previously; economists thought it would rise to 55.
Shares of Intel (Nasdaq: INTC) closed down $0.68 or 3.4% to $19.31, after announcing that it is cutting around 10% of its work force, or 10,500 jobs, by the middle of 2007. This is a part of a bigger restructuring planned to save the company about $2 billion. The reductions include some previously announced cuts, including the layoffs of 1,000 managers made in July and reductions related to the sale of its communications and media businesses. Cost savings are expected to grow to $3 billion annually in 2008. These savings will be slightly offset by about $200 million in severance costs. Additionally, Intel expects to reduce its 2008 capital expenditures by $1 billion.
Hewlett-Packard (NYSE: HPQ) said that the California attorney-general is conducting an informal investigation into how the company discovered that one of its board members leaked confidential information. This prompted the stock to close lower by 1.7% at $35.84. The board member, Keyworth has refused to resign, while fellow board member and key venture capitalist Thomas J. Perkins quit in May in protest over the investigation.
Ford Motor Co. (Nasdaq: F) named Alan Mulally, a senior executive at Boeing Co. (NYSE: BA), to take the reins from current CEO Bill Ford as the automaker works to quicken the pace of its massive overhaul. The stock closed up $0.16 or 1.5% to $8.55. On this announcement, shares of Boeing closed down $0.92 to $74.44, as Mulally is credited for reviving the commercial airline business of Boeing. Bill Ford, great-grandson of founder Henry Ford, will stay on as executive chairman of Ford.
General Motors (NYSE: GM) announced a five-year, 100,000-mile power-train limited warranty for all of its 2007 models, with the aim to ignite its sluggish sales. Its share closed up $0.73 or 2.4% at $31.17. This warranty includes expanded roadside assistance and courtesy transportation. The company has suffered from customer perception of producing lesser-quality cars than many import brands, even as some measures have shown that the quality gap has been closing.
U.S. light crude oil for October delivery fell $1.10 to $67.50 a barrel on the New York Mercantile Exchange. Crude futures fell as traders continued to weigh the state of U.S. oil supplies with the summer driving season now over, and to breathe a sigh of relief that no major hurricanes have formed yet this year. Additionally, the discovery of a deepwater well in the Gulf of Mexico has raised hopes about an increased source of domestic oil production.
Shares of Intel (Nasdaq: INTC) closed down $0.68 or 3.4% to $19.31, after announcing that it is cutting around 10% of its work force, or 10,500 jobs, by the middle of 2007. This is a part of a bigger restructuring planned to save the company about $2 billion. The reductions include some previously announced cuts, including the layoffs of 1,000 managers made in July and reductions related to the sale of its communications and media businesses. Cost savings are expected to grow to $3 billion annually in 2008. These savings will be slightly offset by about $200 million in severance costs. Additionally, Intel expects to reduce its 2008 capital expenditures by $1 billion.
Ford Motor Co. (Nasdaq: F) named Alan Mulally, a senior executive at Boeing Co. (NYSE: BA), to take the reins from current CEO Bill Ford as the automaker works to quicken the pace of its massive overhaul. The stock closed up $0.16 or 1.5% to $8.55. On this announcement, shares of Boeing closed down $0.92 to $74.44, as Mulally is credited for reviving the commercial airline business of Boeing. Bill Ford, great-grandson of founder Henry Ford, will stay on as executive chairman of Ford.
General Motors (NYSE: GM) announced a five-year, 100,000-mile power-train limited warranty for all of its 2007 models, with the aim to ignite its sluggish sales. Its share closed up $0.73 or 2.4% at $31.17. This warranty includes expanded roadside assistance and courtesy transportation. The company has suffered from customer perception of producing lesser-quality cars than many import brands, even as some measures have shown that the quality gap has been closing.
Stocks ended higher helped by strength in the technology sector. While the Nasdaq composite rose thanks to strength in technology and commodity shares, the Dow industrials struggled after hitting more than three month highs last week.
Today, the Dow Jones industrial average closed up 5.13 or 0.4% to 11,469.28, the broader Standard & Poor's 500 index closed up 2.24 or 0.17% to 1,313.25, and the Nasdaq composite index closed up 12.54 or 0.57% to 2,205.70.
Market breadth was positive. On the New York Stock Exchange, winners beat losers by more than 18 to 13 on volume of 1.34 billion shares. On the Nasdaq, advancers topped decliners by more than 18 to 11 on volume of 1.76 billion shares.
Investors appear excited about the prospect of an economy that shows strength and sustainable growth, but that isn't overly inflationary. However, they will be looking for more good news on the corporate front, as well as additional solid economic data and lower energy prices.
Tomorrow, investors shall look at second-quarter productivity, which is expected to have been revised up to 1.6%. Additionally, they will also look at the services index report from the ISM, the weekly oil inventories report and the Fed's beige book read on economic activity. Disheartening news for the home sector had that prices of U.S. homes grew at a 4.7% annual rate - their slowest pace in six and a half years during the second quarter. Prices had risen at an 8.8% annual rate in the first quarter and peaked at a 17.8% annual pace in the third quarter of 2004.
A group led by Chevron Corp (NYSE: CVX) has tapped into what could be one of the nation's biggest oil discoveries in decades. Chevron is operator on the well, with a 50% stake, while Oklahoma City-based Devon Energy Corp. (NYSE: DVN) and Norway's Statoil ASA (NYSE: STO) each own 25%. Shares of Chevron closed up $1.51 or 2.3% to $66.34, Devon Energy closed up $7.99 or 12.5% to $72.14, and Statoil closed up $0.66 or 2.4% to $28.17. The well, known as the No. 2 Jack Prospect well, was successfully drilled on Walker Ridge Block 758 to a depth of 28,175 feet, or more than five miles below sea level. The well is located about 175 miles off the Louisiana coast in 7,000 feet of water. While Chevron only tested about 40% of the well's hydrocarbon pay zones, it has yielded an impressive 6,000 barrels of oil a day, implying it has favorable reservoir geology and good pressure features.
Shares of Viacom (NTSE: VIA) closed down $2.08 or 5.6% to $34.89, on news that Tom Freston, its president and CEO, has resigned. He will be replaced by Philippe Dauman, a member of the Viacom board of directors. Tom Freston has been fired after only nine months on the job because the board was dissatisfied with the stock price and wanted the company to be more aggressive in pursuing acquisitions.
Stock of Bristol-Myers Squibb Co. (NYSE: BMY) closed down $0.17 to $22.78, and that of its partner Sanofi-Aventis (NYSE: SNY) closed down $0.58 to $44.79, after warning that earnings will be hurt this year by generic sales of their blood thinner Plavix. During the week a federal judge had halted shipments of generic versions of Plavix, but had refused to recall those that already have been distributed. The company cut its earnings projection based on an assumption that sales of a generic version of Plavix by Canadian drugmaker Apotex "satisfy substantially all market demand in the U.S. in 2006."
Shares of Caterpillar Inc. (NYSE: CAT) rose 3.6% to $69.68, after the heavy equipment maker said it would be raising machinery and engine prices beginning January 2007. This prompted Merrill Lynch to upgrade the company.
Inco Ltd. (NYSE: N) has terminated its merger agreement with Phelps Dodge Corp. (NYSE: PD), which will get a $125 million termination fee and another $350 million if Inco completes an alternative merger by Thursday. This break-up follows three months of courtship by multiple suitors for Inco amid record high prices for nickel, leaving Rio de Janeiro-based CVRD (NYSE: RIO) as the leading contender. Brazil's Companhia Valo de Rio Dolce SA has offered to buy Inco for $17 billion. This move has led shares of Inco to close down 0.8% at $77.12, while those of Phelps Dodge to climb 3% at $93.48.
U.S. light crude oil for October delivery sank 59 cents to settle at $68.60 a barrel on the New York Mercantile Exchange. Prices dipped after the discovery of a deepwater well in the Gulf of Mexico raised hopes about an increased source of domestic oil production. However, the nuclear standoff between Iran and Western nations and an Atlantic hurricane that is only now moving into full swing remained as concerns for energy traders.
A group led by Chevron Corp (NYSE: CVX) has tapped into what could be one of the nation's biggest oil discoveries in decades. Chevron is operator on the well, with a 50% stake, while Oklahoma City-based Devon Energy Corp. (NYSE: DVN) and Norway's Statoil ASA (NYSE: STO) each own 25%. Shares of Chevron closed up $1.51 or 2.3% to $66.34, Devon Energy closed up $7.99 or 12.5% to $72.14, and Statoil closed up $0.66 or 2.4% to $28.17. The well, known as the No. 2 Jack Prospect well, was successfully drilled on Walker Ridge Block 758 to a depth of 28,175 feet, or more than five miles below sea level. The well is located about 175 miles off the Louisiana coast in 7,000 feet of water. While Chevron only tested about 40% of the well's hydrocarbon pay zones, it has yielded an impressive 6,000 barrels of oil a day, implying it has favorable reservoir geology and good pressure features.
Stock of Bristol-Myers Squibb Co. (NYSE: BMY) closed down $0.17 to $22.78, and that of its partner Sanofi-Aventis (NYSE: SNY) closed down $0.58 to $44.79, after warning that earnings will be hurt this year by generic sales of their blood thinner Plavix. During the week a federal judge had halted shipments of generic versions of Plavix, but had refused to recall those that already have been distributed. The company cut its earnings projection based on an assumption that sales of a generic version of Plavix by Canadian drugmaker Apotex "satisfy substantially all market demand in the U.S. in 2006."
Inco Ltd. (NYSE: N) has terminated its merger agreement with Phelps Dodge Corp. (NYSE: PD), which will get a $125 million termination fee and another $350 million if Inco completes an alternative merger by Thursday. This break-up follows three months of courtship by multiple suitors for Inco amid record high prices for nickel, leaving Rio de Janeiro-based CVRD (NYSE: RIO) as the leading contender. Brazil's Companhia Valo de Rio Dolce SA has offered to buy Inco for $17 billion. This move has led shares of Inco to close down 0.8% at $77.12, while those of Phelps Dodge to climb 3% at $93.48.
Stocks closed the week with the major averages all at their best levels in three months, following news that wage inflation was tamer than expected last month. Additionally, other data showed that consumers stayed optimistic and factory activity remained healthy. However, the perception of economic strength was undercut by two new reports confirming the view that the housing sector's slowing.
Today, the Dow Jones industrial average index closed up 83.00 or 0.73% to 11,464.15, the broader Standard & Poor's 500 index closed up 7.19 or 0.55% to 1,311.01, and the Nasdaq composite index closed up 9.41 or 0.43% to 2,193.16. During the week, the Nasdaq Composite rose 2.5%, S&P 500 gained 1.2% and the Dow rose 1.6%.
Market breadth was positive. On the New York Stock Exchange, winners beat losers 21 to 10 on volume of 1.12 billion shares. On the Nasdaq, advancers topped decliners by 15 to 13 on volume of 1.39 billion shares.
The jobs report showed both a strong economy and less inflation pressure. This supports recent hopes that the economic slowdown will not be as bad as has been feared, while the mild read on inflation helped relieve concerns that the Federal Reserve will resume its recently paused interest-rate hike campaign. The consumer sentiment index shows that expectations for the economy over the next 12 months have worsened.
The Labor Department said the economy generated 128,000 new jobs in August, with the jobless rate falling to 4.7%. The hourly wages rose 0.1%, to $16.79, against the expected rise by 0.3%. The Federal Reserve's known to closely monitor wage inflation in setting monetary policy. The University of Michigan's consumer sentiment rose to 82 from 78.7, exceeding expectations of an increase to 79.3.
The factory activity held steady with the ISM index inching lower to 54.5% in August from 54.7% in July. The only blemish has been that the housing market is slowing, with spending on U.S. construction projects falling by 1.2% in July. The index of pending home sales fell 7% in July, putting this gauge at the lowest level seen since February 2003.
Shares of Intel (Nasdaq: INTC) closed up $0.28 or 1.1% to $19.85, on speculation
that it may reduce up to 10% of its work force. The company is expected to announce between 10,000 to 20,000 job cuts as early as next week. This has allowed the stock to continue to rally.
Shares of Auto makers were in focus today. General Motors Corp. (NYSE: GM) closed up $1.07 to $30.25, despite overall sales that fell short of estimates. GM declared a 4% gain in U.S. sales, against the expected 10%. Shares of Ford Motors (Nasdaq: F) closed down $0.07 to $8.30, after declaring a 11.6% decline in August sales. DaimlerChrsyler (NYSE: DCX) reported a 7% rise in U.S. sales for its luxury Mercedes brand but its core Chrysler Group unit saw a 4%. There was a 3% overall drop in sales against the expected 12% decline.
Shares of Bristol-Myers Squibb Co. (NYSE: BMY) closed up $1.21 or 5.5% to $22.96, after a U.S. judge agreed to block the sale of a generic form of the Plavix blood thinner it markets with its French partner Sanofi-Aventis (NYSE: SNY). Shares of Sanofi closed up $0.44 to $45.39. However, the judge denied a motion to recall supplies of the generic version that have already been distributed by a Canadian company. That has caused Sanofi to cut its 2006 profit forecast.
Shares of Transocen (NYSE: RIG) closed up $4.21 or 5.7% to $70.96, after news that it won a five-year contract worth up to $862 million to build a drill ship for Chevron (NYSE: CVX). Stock of Chevron closed up $0.34 to $64.74.
U.S. light crude oil for October delivery fell $1.07 to settle at $69.19 a barrel on the New York Mercantile Exchange in a shortened session.
Shares of Intel (Nasdaq: INTC) closed up $0.28 or 1.1% to $19.85, on speculation that it may reduce up to 10% of its work force. The company is expected to announce between 10,000 to 20,000 job cuts as early as next week. This has allowed the stock to continue to rally.
Shares of Bristol-Myers Squibb Co. (NYSE: BMY) closed up $1.21 or 5.5% to $22.96, after a U.S. judge agreed to block the sale of a generic form of the Plavix blood thinner it markets with its French partner Sanofi-Aventis (NYSE: SNY). Shares of Sanofi closed up $0.44 to $45.39. However, the judge denied a motion to recall supplies of the generic version that have already been distributed by a Canadian company. That has caused Sanofi to cut its 2006 profit forecast.
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