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A weblog about stocks, technical analysis, the market and other things that pop into the mind of Manuel Backus, founder and head trader of Portfolio Crafter and First Hour Trading. Contact
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« September 2006 |
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| November 2006 »
Stocks ended mixed after an otherwise strong month for the market as a decline in energy prices and a better-than-expected third-quarter earnings season offered investors their best October in three years. There have been continued worries about the health of the economy to dampen investor sentiment.
Today, the Dow Jones industrial average closed down 5.77 or 0.05% to 12,080.73, the broader S&P 500 index closed up 0.01 to 1,377.94, and the tech-fueled Nasdaq closed up 2.94 or 0.12% to 2,366.71. On the month, the Dow gained 3.4%, the S&P 500 climbed 3.2%, and the Nasdaq rose 4.8%.
Market breadth was mixed. On the New York Stock Exchange, winners barely edged out losers on volume of 1.75 billion shares. On the Nasdaq, decliners beat advancers by a margin of 15 to 14 on volume of 1.95 billion shares.
U.S. employment costs rose a slightly bigger-than-expected 1% in the third quarter, the largest increase in more than two years, as wages, salaries and benefits advanced during the quarter. The increase in the Employment Cost Index, edged up from the second quarter's 0.9% and was larger than the 0.9% rise economists had forecast. This provided little comfort for those investors worried about inflation and consumer sentiment heading into the important holiday shopping season. U.S. consumer confidence dipped in October on growing pessimism about the job market and the economy. consumer confidence index fell to 105.4 in October from 105.9 in September. Business activity grew at a slower pace in October. The Chicago PMI fell to 54.1% from 62.1% in September. Economists were expecting the index to fall to 58.7%. The PPI fell to 62.5% from 69.8%, the lowest since June 2005.
Shares of Pfizer (NYSE: PFE) closed down 55 cents, or 2%, to $26.55, following the release of mixed preliminary clinical data for a proposed follow-on product to its blockbuster cholesterol drug Lipitor. Phase III data for torcetrapib/atorvastatin shows that patients using the drug combination experienced slightly higher systolic blood pressure than those who took Lipitor alone. On the upside, data also showed the combination significantly raised HDL while lowering LDL when compared to Lipitor alone. Lipitor is the world's best-selling branded prescription drug, with 2005 sales of $12.9 billion.
Stock of Procter & Gamble (NYSE: PG) closed down $0.43 or 1% to $63.39, despite posting higher quarterly earnings and boosting its full-year earnings outlook. Its first-quarter income rose 33%, helped by strong sales and volume gains from Gillette Fusion razors and new products such as Crest Pro Health toothpaste. Profit rose to $2.7 billion, from $2.03 billion a year ago. Sales for the quarter rose 27% to $18.79 billion from $14.79 billion, while unit volume expanded 23%.
Shares of MetLife Inc. (NYSE: MET) closed down 3.1% at $57.13 on concern about weak sales growth. While the company reported a 34% increase in third-quarter net income, the profit at auto and home insurance unit offset a stagnate performance from its institutional retirement and savings business. Third-quarter net income came in at $1.03 billion, up 34% from a year earlier.
Shares in Eastman Kodak (NYSE: EK) climbed 2.7% or 11% to $24.40 as the company reported a narrower third-quarter loss, with increased profit from digital imaging outpacing a decline from traditional film sales. Its loss shrank to $37 million, from $914 million in the year-earlier period. However, sales fell 10% to $3.2 billion, under the $3.29 billion expected by analysts. Profit from its digital products surged to $105 million from $7 million in the year-earlier quarter thanks to results in its graphic-communications and consumer portfolio.
Shares in Martha Stewart Living Omnimedia (NYSE: MSO) climbed 5.1% to $21.20 after the company reported a narrower third-quarter loss as print and broadcast advertising sales picked up considerably to help power a 48% boost in revenue. The company lost $25.2 million, compared with last year's loss of $26.1 million.
U.S. light crude oil for December delivery added 37 cents to settle at $58.73 a barrel on the New York Mercantile Exchange.
Shares of Pfizer (NYSE: PFE) closed down 55 cents, or 2% to $26.55, , following the release of mixed preliminary clinical data for a proposed follow-on product to its blockbuster cholesterol drug Lipitor. Phase III data for torcetrapib/atorvastatin shows that patients using the drug combination experienced slightly higher systolic blood pressure than those who took Lipitor alone. On the upside, data also showed the combination significantly raised HDL while lowering LDL when compared to Lipitor alone. Lipitor is the world's best-selling branded prescription drug, with 2005 sales of $12.9 billion.
Stock of Procter & Gamble (NYSE: PG) closed down $0.43 or 1% to $63.39, despite posting higher quarterly earnings and boosting its full-year earnings outlook. Its first-quarter income rose 33%, helped by strong sales and volume gains from Gillette Fusion razors and new products such as Crest Pro Health toothpaste. Profit rose to $2.7 billion, from $2.03 billion a year ago. Sales for the quarter rose 27% to $18.79 billion from $14.79 billion, while unit volume expanded 23%.
Shares in Eastman Kodak (NYSE: EK) climbed 2.7% or 11% to $24.40 as the company reported a narrower third-quarter loss, with increased profit from digital imaging outpacing a decline from traditional film sales. Its loss shrank to $37 million, from $914 million in the year-earlier period. However, sales fell 10% to $3.2 billion, under the $3.29 billion expected by analysts. Profit from its digital products surged to $105 million from $7 million in the year-earlier quarter thanks to results in its graphic-communications and consumer portfolio.
Stocks ended mixed after a tepid sales forecast from Wal-Mart Stores Inc. (NYSE: WMT) added to concerns about slowing economic growth. However, some investors took comfort from a sharp drop in the price of oil and a buoyant tech sector to boost the Nasdaq.
Today, the Dow Jones industrial average closed down 3.76 or 0.03% to 12,086.50, the broader S&P 500 index closed up 0.59 or 0.04% to 1,377.93, and the tech-fueled Nasdaq closed up 13.15 or 0.56% to 2,363.77, after touching a 5-1/2 year high last week.
Market breadth was positive. On the New York Stock Exchange, winners beat losers 9 to 7 on volume of 1.43 billion shares. On the Nasdaq, advancers edged decliners 4 to 3 on volume of 1.76 billion shares.
There is plenty to suggest the advance can keep going. We have got strong earnings, stable and lower energy prices, a friendly Fed, a lot of people who missed the third-quarter move up and who are now going to have to try to make up for it in the fourth quarter.
In economic news, September personal income rose 0.5%, which is more than what Wall Street economists were expecting. Personal spending rose a smaller-than-expected 0.1% in the month. The core-PCE deflator, was up 0.2% as expected. Dampener was the comments from Federal Reserve Bank of Richmond President Jeffrey Lacker, who said that on a long-term basis, core inflation was unacceptably high. He also said the economy could withstand a few more rate hikes. However, investors are learning to disregard the comments of this lone dissenter.
Shares of Yahoo (Nasdaq: YHOO) closed up $0.61 or 2.4% to $25.95, after Merrill Lynch upgraded it to "buy" from "neutral," saying that it's at a good entry point for investors ahead of a seasonally strong holiday period.
Stock of Wal-Mart (NYSE: WMT) closed down $1.20 or 2.4% to $49.53, on reporting October sales increased 0.5% against the expected 1%. This is its weakest result in nearly six years in October as its bid to provide cheap, chic apparel to women faltered and a store remodeling program inconvenienced shoppers. Analysts expect the decline to trigger aggressive price-cutting beginning this week that could pressure profit margins.
Stock of Verizon Communications (NYSE: VZ) closed down $1.19 or 3% to $37.65, despite reporting quarterly earnings and revenue that topped forecasts. Analyst were no happy with the projected growth in non-traditional businesses, such as broadband. The company reported a third-quarter profit of $1.92 billion, compared with $1.87 billion last year. Revenue rose 26% to $23.25 billion from $18.49 billion. This is against the expected revenue of $23.03 billion.
Shares of American Power (OTC: APTH) jumped over 26% as it accepted a $6.1 billion buyout offer from French electric gear-maker Schneider Electric.
U.S. light crude oil for December delivery fell $2.39 to $58.36 a barrel on the New York Mercantile Exchange. This fall came as concerns about a possible attack on oil facilities in the Persian Gulf eased, and concerns about a softening world economy and lower energy demand resurfaced.
Hey everybody,
Incidentally, I got an email this weekend from my friend Michael, a long-time Portfolio Crafter and First Hour member.
“Manny: There is a class action suit being filed against MRVL for some untoward financial reporting related to their recent disappointing results. You might want to pass the attorney's info on to all Model Portfolio members who were vested in MRVL around the time of their last financial reports' release…”
Here’s the attorney’s info:
Sarah Weber
Hulett Harper Stewart LLP
550 W. C Street, Ste. 1600
San Diego, CA 92101
619.338.1133
619.338.1139 (fax)
sweber@hulettharper.com
I’m passing you the attorney’s info in case you want to join the class action suit. For full disclosure, I’m not associated with this law firm in any form. I’m just passing you the information.
All the best,
Manny
Shares of Yahoo (Nasdaq: YHOO) closed up $0.61 or 2.4% to $25.95, after Merrill Lynch upgraded it to "buy" from "neutral," saying that it's at a good entry point for investors ahead of a seasonally strong holiday period.
Stock of Verizon Communications (NYSE: VZ) closed down $1.19 or 3% to $37.65, despite reporting quarterly earnings and revenue that topped forecasts. Analyst were no happy with the projected growth in non-traditional businesses, such as broadband. The company reported a third-quarter profit of $1.92 billion, compared with $1.87 billion last year. Revenue rose 26% to $23.25 billion from $18.49 billion. This is against the expected revenue of $23.03 billion.
Stock of Wal-Mart (NYSE: WMT) closed down $1.20 or 2.4% to $49.53, on reporting October sales increased 0.5% against the expected 1%. This is its weakest result in nearly six years in October as its bid to provide cheap, chic apparel to women faltered and a store remodeling program inconvenienced shoppers. Analysts expect the decline to trigger aggressive price-cutting beginning this week that could pressure profit margins.
Stocks ended lower after a weaker-than-expected economic growth report caused investors to break from a recent rally, with the technology sector hard hit by a Goldman Sachs note saying demand for mother boards "is falling off a cliff." However, the prospect that continued weak economic data will prompt the Federal Reserve to lower interest rates kept losses in check.
Today, the Dow Jones industrial average closed down 73.40 or 0.6% to 12,090.26, the broader S&P 500 index closed down 11.74 or nearly 0.9% to 1,377.34, and the tech-fueled Nasdaq closed down 28.48 or 1.2% to 2,350.62. For the week, the Dow rose 0.8%, the S&P 500 gained 0.7% and the Nasdaq ran up 0.4%.
Market breadth was negative. On the New York Stock Exchange, losers beat winners nearly 21 to 11 on volume of 1.551 billion shares. On the Nasdaq, decliners topped advancers 20 to 9 on volume of 2.265 billion shares.
Despite more positive news from the earnings front, the markets were pressured by news that the GDP grew at a 1.6% seasonally adjusted annual rate in the third quarter, down from 2.6% in the second quarter. Economists had been expecting growth of 2.1%. Core consumer prices increased 2.3% during the latest quarter, down from 2.7% in the second quarter, but the year-over-year increase grew to 2.4% from 2.2%. The annual inflation rate thus stands above the Federal Reserve's 1.5%-to-2% comfort zone.
The GDP report confirmed we are in the midst of a mid-cycle slowdown, while the inflation component was very positive and that's offsetting it. Overall, it continues to point toward the Fed not raising rates again and ultimately lowering them. However, in the short term, the market could be vulnerable to a pullback.
Shares of Chevron (NYSE: CVX) closed up $0.18 to $67.68, as it posted better-than-expected third-quarter earnings on improved refined-product margins and high oil prices. Its net income rose to $5.02 billion from $3.59 billion last year. However, total revenue dipped to $54.21 billion from $54.46 billion last year.
Shares of Microsoft (Nasdaq: MSFT) closed down $0.01 to $28.34, despite reporting higher quarterly earnings and revenue that topped analysts' estimates. While most Wall Street analysts were upbeat on the results, Morgan Stanley analyst Mary Meeker expressed some concern over narrowing operating margins. Its profit and revenue both rose 11%, on continued strong demand for its server software and a sharp jump in sales at the Xbox video-gaming unit. Its fiscal first-quarter profit increased to $3.48 billion, from $3.14 billion a year ago. Revenue for the period, increased to $10.81 billion from $9.74 billion, exceeding the $10.75 billion expected by analysts.
Stock of Sun Microsystems (Nasdaq: SUNW) closed up $0.14 to $5.50, after reporting a smaller quarterly loss that was narrower than what analysts were expecting. Its loss narrowed by 55% last quarter as revenue continued to improve amid its attempts at restructuring and regaining its position among the elite of the business-computing industry. It lost $56 million, compared to a loss of $123 million last year, and its revenue grew to $3.19 billion from $2.73 billion. The CEO's attempt to restructure the company have put it back in favor with investors to a degree.
Shares of Ingersoll-Rand (NYSE: IR) slumped 3.7% to $37.45, after declaring third-quarter profit that fell due to disappointing results at its North American markets for compact equipment, and as demand for road machinery fell. Its net income fell 4% to $243.8 million, from $254.2 million in the year-earlier period. Analysts had forecast sales of $2.85 billion. The revenue of the company rose 6% to $2.77 billion from $2.62 billion.
U.S. light crude oil for December delivery jumped 39 cents to settle at $60.75 a barrel on the New York Mercantile Exchange. The December crude contract took a weekly gain of 2.4%.
Stock of Sun Microsystems (Nasdaq: SUNW) closed up $0.14 to $5.50, after reporting a smaller quarterly loss that was narrower than what analysts were expecting. Its loss narrowed by 55% last quarter as revenue continued to improve amid its attempts at restructuring and regaining its position among the elite of the business-computing industry. It lost $56 million, compared to a loss of $123 million last year, and its revenue grew to $3.19 billion from $2.73 billion. The CEO's attempt to restructure the company have put it back in favor with investors to a degree.
Shares of Microsoft (Nasdaq: MSFT) closed down $0.01 to $28.34, despite reporting higher quarterly earnings and revenue that topped analysts' estimates. While most Wall Street analysts were upbeat on the results, Morgan Stanley analyst Mary Meeker expressed some concern over narrowing operating margins. Its profit and revenue both rose 11%, on continued strong demand for its server software and a sharp jump in sales at the Xbox video-gaming unit. Its fiscal first-quarter profit increased to $3.48 billion, from $3.14 billion a year ago. Revenue for the period, increased to $10.81 billion from $9.74 billion, exceeding the $10.75 billion expected by analysts.
Shares of Chevron (NYSE: CVX) closed up $0.18 to $67.68, as it posted better-than-expected third-quarter earnings on improved refined-product margins and high oil prices. Its net income rose to $5.02 billion from $3.59 billion last year. However, total revenue dipped to $54.21 billion from $54.46 billion last year.
Stocks closed higher after a fresh batch of earnings reports from Exxon Mobil Corp. (NYSE: XOM), Comcast Corp (Nasdaq: CMCSA) and others carried the S&P 500 Index to its highest close in about six years. Additionally, falling oil prices and rallying tech shares recharged the rally and pushed the Dow to another record high, and the Nasdaq to its highest point in 5-1/2 years.
Today, the Dow Jones industrial average closed up 28.98 or 0.24% to 12,163.66, the broader S&P 500 index closed up 6.86 or 0.5% to 1,389.08, and the tech-fueled Nasdaq composite index closed up 22.51 or 0.96% to 2,379.10. This took the Nasdaq to its highest point since February 2001.
Market breadth was positive. On the New York Stock Exchange, winners beat losers 11 to 5 on volume of 1.733 billion shares. On the Nasdaq, advancers beat decliners by 2 to 1 on volume of 2.397 billion shares.
With oil prices falling and technology leading, the consensus is that the upward trend should continue. The fundamentals are good and indications are that the economy is growing at a good pace to sustain earnings, but not push inflation higher. There appears to be a bullish sentiment regarding the economy, with investors betting that as long as a so-called soft landing is on tap, stocks can handle it. Investors are perhaps considering that if the economy is slowing, interest rates will go down, and that will push up stock valuations. Alternately, if the economy is strong, rates will increase a bit more, but so will earnings. However, the third-quarter GNP growth report due tomorrow poses the biggest near-term threat.
The latest report on the housing sector offered a mixed picture. While the sales of new homes unexpectedly rose 5.3% in September, the median sales price of a new home fell 9.7% in the 12 months ending in September, the fastest price decline in nearly 36 years. This shows that the gains in overall sales were likely reflective of builders having to offer big price cuts.
Demand for U.S. made durable goods soared 7.8% in September, the biggest jump in six years. However, the bulk of the gain came from a tripling in orders for new aircraft. Outside transportation, new orders rose just 0.1% - which is the first increase in three months. Core capital-equipment orders, considered the best monthly gauge of business investment, increased a healthy 1.1% in September, the biggest increase since May.
The star of the day, Exxon Mobil Corp. (NYSE: XOM) closed up $0.61 about 0.9% at $71.62, after it reported the second largest profit ever for a U.S. company. The company made $10.5 billion in the third quarter, on revenue of $99.6 billion. It was a 26% increase in earnings for the company and this trounced Wall Street estimates.
Stock of Sprint Nextel (NYSE: S) closed up $1.05 or 6% to $18.77, despite reporting lower third-quarter profit and weaker-than-expected subscriber growth. Investors focused on the company's improved quarterly revenue and its pledge to turn around its wireless business. Its net income fell to $247 million, from $516 million a year earlier. Sales rose 34% to $10.5 billion, in line with analyst estimates, lifted by wireless gains and the acquisition of Nextel.
Shares of Boeing Co (NYSE: BA) closed down $1.72 or 2.1% to $79.14, with investors continuing to express disappointment after it reported quarterly profit that fell from a year earlier, and raised its 2007 earnings forecast to a range that was still shy of analysts' forecasts. Additionally, rival Airbus also won an order for 150 A320 aircraft from China. The agreement also included an option for China to buy an additional 20 of Airbus' new wide-body A350 plane.
Shares of Red Hat Inc. (Nasdaq: RHAT) closed down $4.73 or 28% to $14.78, after the Linux open source software distributor was rear-ended by Oracle (Nasdaq: ORCL). Oracle Corp. said it would offer full technological support for Red Hat's Linux operating system at a much lower price than Red Hat currently charges for its support services.
Shares of Symantec (Nasdaq: SYMC) closed down $1.38 or 7% to $19.40, after it posted earnings and issued an outlook that missed estimates. Likewise, shares of Renovis (Nasdaq: RNVS) closed down $10.76 or 74% to $3.44, after the biotech said a late-stage trial of its experimental stroke medicine had failed. This news prompted licensing partner AstraZeneca (NYSE: AZN) to halt development of the drug.
U.S. light crude oil for December delivery fell $1.04 to $60.36 a barrel on the New York Mercantile Exchange. Traders were reluctant to extend the previous session's rally on a surprise decline in inventories of oil and its products in the latest week.
The star of the day, Exxon Mobil Corp. (NYSE: XOM) closed up $0.61 about 0.9% at $71.62, after it reported the second largest profit ever for a U.S. company. The company made $10.5 billion in the third quarter, on revenue of $99.6 billion. It was a 26% increase in earnings for the company and this trounced Wall Street estimates.
Shares of Boeing Co (NYSE: BA) closed down $1.72 or 2.1% to $79.14, with investors continuing to express disappointment after it reported quarterly profit that fell from a year earlier, and raised its 2007 earnings forecast to a range that was still shy of analysts' forecasts. Additionally, rival Airbus also won an order for 150 A320 aircraft from China. The agreement also included an option for China to buy an additional 20 of Airbus' new wide-body A350 plane.
Shares of Red Hat Inc. (Nasdaq: RHAT) closed down $4.73 or 28% to $14.78, after the Linux open source software distributor was rear-ended by Oracle (Nasdaq: ORCL). Oracle Corp. said it would offer full technological support for Red Hat's Linux operating system at a much lower price than Red Hat currently charges for its support services.
Stocks closed higher as investors found relief in the Federal Reserve's decision to leave interest rates unchanged and its assessment that the economy continues to expand at a moderate pace. Optimism over the quarterly reports from Altria (NYSE: MO) and Amazon (Nasdaq: AMZN) offset disappointment with numbers from Boeing (NYSE: BA) and General Motors (NYSE: GM), and helped send the Dow Jones Industrials Average to yet another all-time high.
Today, the Dow Jones industrial average closed up 6.80 or 0.06% to 12,134.68, the broader S&P 500 index closed up 4.84 or 0.35% to 1,382.22, and the tech-fueled Nasdaq composite index closed up 11.75 or 0.5% to 2,356.59
Market breadth was positive. On the New York Stock Exchange, winners beat losers 22 to 11 as 1.82 billion shares changed hands. On the Nasdaq, advancers beat decliners 16 to 13 on volume of 2.2 billion shares.
The Federal Reserve decided to keep interest rates steady but left the door open for further increases if inflation does not behave. This decision seemed to please investors. The wording of the announcement from the FOMC was little changed from the September statement. The Fed also discussed the threat of sustained upward pressure on inflation, but tempered it by saying that such pressures are likely to ease over time. The committee added a forward-looking phrase and took out language suggesting that high energy and commodity prices had the potential to add to inflationary pressures. Economist think the markets will finish the year higher from here, but we certainly aren't going to see a new Dow high everyday.
On the data front, sales of U.S. existing homes fell for the sixth month in a row in September, while median sales prices fell for the second straight month. Inventories of unsold homes fell for the second straight month, a sign that the market is correcting.
Shares of General Motors (NYSE: GM) closed down $1.48 or 4.4% to $34.71, after reporting better-than-expected results from its ongoing turnaround plan. Third-quarter operating profit was nearly double of Wall Street's expectations. The company earned $529 million, compared with a loss of $1.1 billion last year. Revenue from auto sales also topped forecasts, rising to $39.5 billion from $38.4 billion a year earlier. The company said it is on track to reach $6 billion in annual cost savings from moves this year.
Stock of Boeing (NYSE: BA) closed down $2.73 or 3.3% to $80.86, as its quarterly profit that fell from a year earlier. The aerospace giant said that third-quarter sales from its commercial-airplane division climbed 45%, but overall revenue was lower than expected. The company also forecast slower growth in its defense business
Shares of Colgate-Palmolive Co. (NYSE: CL) finished up 2.8% at $62.17, despite reporting lower third-quarter income because of restructuring charges. Its sales and volume gains, as well as increased spending on marketing helped it to surpass Wall Street's forecast. Its profit fell to $344.1 million, from $347.2 million a year ago while the EPS remained constant. Sales for the quarter rose 8% to $3.14 billion from $2.91 billion, against the expected $3.08 billion.
Shares of Amazon.com (Nasdaq: AMZN) closed up $4.05 or 12% to $37.68, on reporting quarterly earnings and revenue that rose from a year earlier and beat estimates. This prompted more than five brokerages to lift price targets on the stock.
Shares of Altria Group Inc. (NYSE: MO) rose 2.9% following a raised earnings forecast and a more specific timetable for an eventual spinoff of its stake in Kraft Foods Inc. (NYSE: KFT). The company reported a small drop in third-quarter profit, as its market share in the domestic tobacco business increased slightly but international volume slumped. Altria earned nearly $2.88 billion, off from more than $2.88 billion in the year-ago period. Its revenue rose 3.7% to $25.9 billion.
U.S. light crude oil for December delivery rose $2.05 to settle at $61.40 a barrel on the New York Mercantile Exchange, after the report on weekly crude oil supplies showed a surprise decline.
Shares of General Motors (NYSE: GM) closed down $1.48 or 4.4% to $34.71, after reporting better-than-expected results from its ongoing turnaround plan. Third-quarter operating profit was nearly double of Wall Street's expectations. The company earned $529 million, compared with a loss of $1.1 billion last year. Revenue from auto sales also topped forecasts, rising to $39.5 billion from $38.4 billion a year earlier. The company said it is on track to reach $6 billion in annual cost savings from moves this year.
Shares of Colgate-Palmolive Co. (NYSE: CL) finished up 2.8% at $62.17, despite reporting lower third-quarter income because of restructuring charges. Its sales and volume gains, as well as increased spending on marketing helped it to surpass Wall Street's forecast. Its profit fell to $344.1 million, from $347.2 million a year ago while the EPS remained constant. Sales for the quarter rose 8% to $3.14 billion from $2.91 billion, against the expected $3.08 billion.
Shares of Altria Group Inc. (NYSE: MO) rose 2.9% following a raised earnings forecast and a more specific timetable for an eventual spinoff of its stake in Kraft Foods Inc. (NYSE: KFT). The company reported a small drop in third-quarter profit, as its market share in the domestic tobacco business increased slightly but international volume slumped. Altria earned nearly $2.88 billion, off from more than $2.88 billion in the year-ago period. Its revenue rose 3.7% to $25.9 billion.
Stocks closed mixed with investors awaiting an upcoming Federal Reserve decision on interest rates, as the Dow set a new closing high amid strong gains for some of its components.
Today, the Dow Jones industrial average closed up 10.97 or 0.09% to 12,127.88, closing at a fresh all-time high; its 11th closing record in 16 sessions. The broader S&P 500 index closed up 0.36 or 0.03% to 1,377.38, and the tech-fueled Nasdaq composite index closed down 10.72 or 0.46% to 2,344.84.
Market breadth was mixed. On the New York Stock Exchange, winners narrowly edged losers as 1.691 billion shares changed hands. On the Nasdaq, decliners topped advancers three to two as 1.913 billion shares traded.
Investors are visibly concerned on how the Fed is going to word its statement and about some mixed earnings news. Fed is expected to announce it will hold its key fed-funds rate steady at 5.25%. Investors will be closely watching what the bankers hint at in their statement regarding the health of the economy, inflationary pressures and the future direction of interest-rate policy. However, the overall message is unlikely to change much from the last meeting.
Wall Street has been sprinting lately, as investors have responded to the drop in commodity prices, strong earnings and what appears to be the end of the Fed's more than two-year rate-hiking campaign. On balance, the earnings picture is strong, the Fed is not expected to surprise us tomorrow and investors are going to try to keep moving the market higher through the end of the month.
Stock of Texas Instruments (NYSE: TXN) closed down $1.36 or 4.3% to $30.52, after reporting third-quarter revenue that missed Wall Street estimates and issuing a disappointing outlook for the fourth quarter. The company forecast an EPS of 40 cents to 46 cents, on revenue of $3.46 billion to $3.75 billion. This is against the expected 45 cents on revenue of $3.8 billion. Its third-quarter revenue rose to $3.76 billion from $3.59 billion, which was less than the $3.796 billion forecast by analysts.
Shares of Pfizer Inc. (NYSE: PFE) fell about 1.7% to $27.26 after UBS downgraded the pharmaceutical group to neutral from buy, citing a number of setbacks including the further delay in the U.S. launch of its diabetes drug Exubera, uncertainty over a FDA filing for Asenapine, a treatment for bipolar disorder, as well as pricing pressures and access challenges in the EU.
Stock of Lucent Technologies (NYSE: LU) closed up $0.15 or 6.4% to $2.49, as it reported earnings that beat estimates. Lucent earned $371 million in the quarter ending Sept. 30. Revenue rose 5% to $2.56 billion from $2.43 billion in the year-ago. These results are much better than expected by analysts.
Shares of DuPont (NYSE: DD) closed up $0.55 or 1.2% to $46.00, as the company reported higher quarterly earnings that topped expectations, thanks to higher sales and lower fixed costs. It posted earnings of $485 million, compared to a year-ago loss of $82 million. Revenue rose 7.5% to $6.31 billion from last year's $5.87 billion. Analysts had expected $6.13 billion in sales.
U.S. light crude oil for December delivery added 54 cents to $59.35 a barrel on the New York Mercantile Exchange. Traders feel that U.S. data due this week will show a third-weekly decline in distillate supplies, which include winter heating oil.
Shares of DuPont (NYSE: DD) closed up $0.55 or 1.2% to $46.00, as the company reported higher quarterly earnings that topped expectations, thanks to higher sales and lower fixed costs. It posted earnings of $485 million, compared to a year-ago loss of $82 million. Revenue rose 7.5% to $6.31 billion from last year's $5.87 billion. Analysts had expected $6.13 billion in sales.
Shares of Pfizer Inc. (NYSE: PFE) fell about 1.7% to $27.26 after UBS downgraded the pharmaceutical group to neutral from buy, citing a number of setbacks including the further delay in the U.S. launch of its diabetes drug Exubera, uncertainty over a FDA filing for Asenapine, a treatment for bipolar disorder, as well as pricing pressures and access challenges in the EU.
Stock of Texas Instruments (NYSE: TXN) closed down $1.36 or 4.3% to $30.52, after reporting third-quarter revenue that missed Wall Street estimates and issuing a disappointing outlook for the fourth quarter. The company forecast an EPS of 40 cents to 46 cents, on revenue of $3.46 billion to $3.75 billion. This is against the expected 45 cents on revenue of $3.8 billion. Its third-quarter revenue rose to $3.76 billion from $3.59 billion, which was less than the $3.796 billion forecast by analysts.
Stocks rallied to a sharply higher close after plans by Wal-Mart Stores Inc. (NYSE: WMT) to improve profitability at its existing stores sparked a broader market rally, with gains for General Motors Corp(NYSE: GM), 3M Co (NYSE: MMM). and others lending further blue-chip support. The latest round of solid corporate earnings and perhaps some speculative buying, pushed the Dow Jones industrial average up more than 100 points to another record close.
Today, the Dow Jones Industrial Average closed up 114.54 points or 0.95% at 12,116.91, the S&P 500 Index closed up 8.42 points or 0.62% at 1,377.02, and the Nasdaq Composite Index rose 13.26 points or 0.57% to 2,355.56.
Market breadth was mixed. On the New York Stock Exchange, winners beat losers 19 to 13 on volume of 1.554 billion shares. On the Nasdaq market, decliners edged out advancers 15 to 14 as 1.869 billion shares changed hands.
Results so far show that companies are having a strong earnings season, and things look strong. It appears as if investors are moving from fixed income and going into equities, in a bid to chase profits going into the fourth quarter. However, they are nervous as to whether the economy can handle a cooling period without slipping into recession.
Investors now await the Federal Reserve decision on interest rates due Wednesday. With growth slowing and inflation worries easing a little, most economists expect the central bank to leave its key federal funds rate unchanged at 5.25%. Wednesday, will provide data on existing-home sales while new-home sales data and a report on durable-goods orders would come out Thursday. The initial forecast on third-quarter economic growth will be released on Friday. The pace of U.S. economic growth is expected to have slowed to 2% from 2.6% in the second quarter.
Stock of Wal-Mart (NYSE: WMT) closed up 3.9% at $51.28, after discussing its future plans. The company will slightly slow down new-store growth in fiscal 2008 while significantly reducing capital expenditures. It will increase new-store growth throughout the world by about 7.5% next year, compared with an average 8% increase of recent years. Capital spending will run about 2% to 4% higher next year, compared with a 15% to 20% increase in the current fiscal year.
Shares of AT&T Inc. (NYSE: T) closed up 27 cents at $34.71. The company reported third-quarter net income jumped nearly 74%, lifted largely by acquisitions and results at the Cingular Wireless joint venture. The company earned $2.17 billion in its third full quarter of operations since the former SBC Communications bought the old AT&T and adopted its name. Revenue jumped 52% to $15.64 billion from $10.3 billion.
Forest Laboratories (NYSE: FRX) and partner Replidyne Inc. (NYSE: RDYN) were hit hard by news that the FDA has given the thumbs down for their antibiotic candidate faropenem medoxomil. Shares of Replidyne plunged 45% to close at $5.59, while Forest shares skidded almost 6% to $48.54. The FDA has stated that it would not approve the antibiotic unless more clinical trials were conducted.
Shares of Ford (Nasdaq: F) declined 1.4% to close at $7.90 after the automaker reported a wider third-quarter loss, reflecting difficulties in its operations and restructuring costs, and said that it would restate earnings going back five years for derivatives accounting. It reported a $5.8 billion third-quarter loss compared to $284 million last year. It also said that the current quarter's operating results are shaping up to be even worse.
It is reported that Ripplewood Holdings LLC is preparing a likely $10 billion bid for Delphi Corp. (OTC: DPHIQ.PK). The stock of Delphi rose 8.7% to $2.62. This push is being led by Thomas Stallkamp, a Ripplewood partner and former president of Chrysler. The bid would likely surpass $10 billion, as Ripplewood would be joined by other interested parties such as Appaloosa Management, a hedge fund, and Cerberus Capital Management LP, a private-equity firm.
Oil prices fell 48 cents to $58.85 a barrel on the New York Mercantile Exchange despite an announcement from Saudi Arabia that it would cut production. Oil traders have strong doubts that the rest of OPEC will follow Saudi Arabia's lead and rein in production, regardless of what OPEC officially says.
Stock of Wal-Mart (NYSE: WMT) closed up 3.9% at $51.28, after discussing its future plans. The company will slightly slow down new-store growth in fiscal 2008 while significantly reducing capital expenditures. It will increase new-store growth throughout the world by about 7.5% next year, compared with an average 8% increase of recent years. Capital spending will run about 2% to 4% higher next year, compared with a 15% to 20% increase in the current fiscal year.
Shares of AT&T Inc. (NYSE: T) closed up 27 cents at $34.71. The company reported third-quarter net income jumped nearly 74%, lifted largely by acquisitions and results at the Cingular Wireless joint venture. The company earned $2.17 billion in its third full quarter of operations since the former SBC Communications bought the old AT&T and adopted its name. Revenue jumped 52% to $15.64 billion from $10.3 billion.
It is reported that Ripplewood Holdings LLC is preparing a likely $10 billion bid for Delphi Corp. (OTC: DPHIQ.PK). The stock of Delphi rose 8.7% to $2.62. This push is being led by Thomas Stallkamp, a Ripplewood partner and former president of Chrysler. The bid would likely surpass $10 billion, as Ripplewood would be joined by other interested parties such as Appaloosa Management, a hedge fund, and Cerberus Capital Management LP, a private-equity firm.
Stocks ended mixed after a profit warning from Caterpillar Inc. (NYSE: CAT) wrapped up an otherwise largely positive week for quarterly earnings reports. While, the Nasdaq and the S&P rose, Caterpillar dragged the Dow industrials down from record levels.
Today, the Dow Jones Industrial average closed down 9.36 or 0.08% to 12,002.37, the broader S&P 500 index closed up 1.64 or 0.12% to 1,368.6, and the tech-laden Nasdaq index closed up 1.36 or 0.06% to 2,342.3. On the week, the Dow rose 0.3% while the S&P 500 gained 0.2%. The Nasdaq Composite logged a weekly loss of 0.6%.
Market breadth was negative. On the New York Stock Exchange, losers beat winners 17 to 14 on volume of 1.63 billion shares. On the Nasdaq market decliners topped advancers 18 to 11 as 1.89 billion shares changed hands.
This week, the market has been able to overcome a little bit of adverse news in terms of data pointing to a slowdown in the economy, which has been somewhat balanced by benign PPI and CPI reports and an in-line earnings season so far. On balance there was no reason to go up and no reason to go down so the market chose the path of least resistance which at the moment is to move higher. The profit warning from Caterpillar fueled concerns that corporate earnings may be feeling the pinch of a slowing economy. It also caused investors to once again re-think the soft landing scenario for the economy. However, a further decline in oil prices helped limit market losses.
Shares of Caterpillar (NYSE: CAT) closed down $10.02 or 12% to $59, after profits rose but fell short of estimates. The company also warned of slower economic growth ahead. It said that a number of factors weighed on third-quarter results, costs related to settling a dispute with Navistar International Corp. and slowing machinery sales. Profits rose 15.3%, to $769 million, up from $667 million a year earlier. Sales rose 17% to $10.52 billion.
Shares of Google (Nasdaq: GOOG) closed up $33.61 or 7% to $459.67, as profits nearly doubled. The company reported sales of $2.69 billion, up 70% from a year earlier. It reported a net income of $733 million, up 92% from last year. These results beat all market expectations.
Stock of 3M (NYSE: MMM) closed up $1.94 or 3% to $78.34, on reporting results that beat forecast. It reported third-quarter net income of $894 million, or $1.18 a share, up from $840 million, or $1.08 a share, a year earlier. Sales rose nearly 9% to $5.86 billion, above the $5.77 billion expected by the market. The company forecast a fourth-quarter EPS of $1.10 to $1.16.
Shares of Merck & Co (NYSE: MRK) closed up $1.15 or 2.6% to $45.64. The company has set aside an additional $598 million to fight lawsuits over its withdrawn painkiller Vioxx. The company raised its full-year 2006 earnings guidance to an EPS range of $2.48 to $2.52.
U.S. light crude fell $1.68 to $56.82 a barrel on the U.S. Mercantile Exchange. OPEC agreed to curb its output by 1.2 million barrels per day to halt a precipitous fall in prices. This reduction was deeper than anticipated and trims OPEC output to 26.3 million bpd from Nov. 1.
Stock of 3M (NYSE: MMM) closed up $1.94 or 3% to $78.34, on reporting results that beat forecast. It reported third-quarter net income of $894 million, or $1.18 a share, up from $840 million, or $1.08 a share, a year earlier. Sales rose nearly 9% to $5.86 billion, above the $5.77 billion expected by the market. The company forecast a fourth-quarter EPS of $1.10 to $1.16.
Shares of Google (Nasdaq: GOOG) closed up $33.61 or 7% to $459.67, as profits nearly doubled. The company reported sales of $2.69 billion, up 70% from a year earlier. It reported a net income of $733 million, up 92% from last year. These results beat all market expectations.
Shares of Caterpillar (NYSE: CAT) closed down $10.02 or 12% to $59, after profits rose but fell short of estimates. The company also warned of slower economic growth ahead. It said that a number of factors weighed on third-quarter results, costs related to settling a dispute with Navistar International Corp. and slowing machinery sales. Profits rose 15.3%, to $769 million, up from $667 million a year earlier. Sales rose 17% to $10.52 billion.
Stocks ended higher with the Dow Jones Industrial Average closing above 12,000 for the first time after a raft of upbeat earnings reports led by Apple Computer Inc. (Nasdaq: AAPL), eBay Inc (Nasdaq: EBAY) and the Coca-Cola Co. (NYSE: KO) eased concerns about a slowing economy. This record close came on the 19th anniversary of the stock market crash of 1987, in which the Dow fell 508 points, or 22.6% to 1,738.40.
Today, the Dow Jones Industrial average closed up 19.05 or 0.16% to 12,011.73, the broader S&P 500 index closed up 1.00 or 0.1% to 1,366.96, while the Nasdaq composite index closed up 3.79 or 0.16% to 2,340.94.
Market breadth was positive. On the New York Stock Exchange, winners beat losers five to three on volume of 1.6 billion shares. On the Nasdaq market advancers topped decliners 17 to 12 as 2 billion shares changed hands.
The 12,000 mark signifies a good strong market, and is particularly important for investor confidence because it comes in the middle of earnings season amid concerns of a slowing U.S. economy. A lot of companies are beating expectations giving us the likelihood of double-digit earnings growth in the third quarter, and possibly another quarter of double-digit growth in the fourth. This suggests the economy is not weakening as much as people expected and that we may get something a little bit better than a soft landing which will help to power earnings.
The factory sector in the Philadelphia region was flat for a second straight month in October, with the index falling to negative 0.7 from negative 0.4 in September. The new orders index rose to 13.4 in October vs. negative 1.3 in September. The shipments index rose to 5.3 in October vs. negative 6.8 in September. The price paid index fell to 32.0 in October vs. 38.1 in September. The index of leading indicators, a gauge of future growth, rose 0.1% in September after falling in July and August. This suggests that economic growth should continue at the slow rate in the near term.
Stock of Apple Computer (Nasdaq: AAPL) closed up $4.46 to $78.99, on reporting earnings that topped Wall Street expectations. Its profit soared 27% on strong sales of its Macintosh computers and iPod digital music players. Its income rose to $546 million, from $430 million last tear. Revenue jumped nearly 32% to $4.84 billion.
Shares of eBay (Nasdaq: EBAY) closed down $0.29 to $28.49, despite better results that fell below expectations. The company also expects fourth-quarter revenue in a range from $1.62 billion to $1.68 billion, against the expected $1.60 billion to $1.73 billion. Net income during the third-quarter grew to $281 million, from the $255 million last year. Profit grew 30% to $332 million while net revenue rose 31% to $1.45 billion.
Stock of Advanced Micro Devices (NYSE: AMD) showed sign of the price war and closed down $3.22 or 13% to $21.01, on reporting improved earnings that fell short of expectations. Its third quarter net profit was $134.5 million, versus $76 million a year ago. These include a tax benefit of $21 million. Its average revenue rose 9% from the previous quarter while unit shipments were up 18%. This shows that the average selling price fell about 9%.
Shares of Citigroup (NYSE: C) closed down $0.32 to $49.87, despite reporting better-than-expected earnings. However, its revenue that fell short of forecasts. Its net income fell to $5.51 billion, from $7.14 billion last year. Income from continuing operations rose 6% to $5.3 billion, from $4.99 billion a year earlier.
Stock of Bank of America Corp (NYSE: BAC) closed down $0.55 to $53.26, despite reporting profits that topped estimate. Its third-quarter profit rose 41% to $5.42 billion, from $3.84 billion a year earlier. The EPS of $1.22 topped the average forecast of $1.16. Its revenue increased 32% to $18.65 billion. Card services revenue increased 137% to $5.33 billion. Fee income soared 57% to $10.07 billion, while lending income rose 11% to $8.59 billion.
Shares of Pfizer (NYSE: PFE) fell 1.5% to $27.48, despite reporting a dramatic jump in third-quarter earnings. It also announced that its top-line isn't expected to grow again until 2009. It plans to buyback $10 billion in its stock during 2007. For the quarter, it reported a net income of $3.36 billion, compared to $1.59 billion last year.
Shares of Nokia (NYSE: NOK) fell 2.6% to $19.35 after it reported a 4% drop in third-quarter profit as it booked a restructuring charge and margins eroded at its mobile-phone business. Nokia's results, nevertheless, topped expectations.
U.S. light crude gained 85 cents to settle at $58.50 a barrel on the New York Mercantile Exchange. Oil prices rose after Saudi Arabia said it supports a production cut of 1 million barrels a day.
Stock of Apple Computer (Nasdaq: AAPL) closed up $4.46 to $78.99, on reporting earnings that topped Wall Street expectations. Its profit soared 27% on strong sales of its Macintosh computers and iPod digital music players. Its income rose to $546 million, from $430 million last tear. Revenue jumped nearly 32% to $4.84 billion.
Shares of eBay (Nasdaq: EBAY) closed down $0.29 to $28.49, despite better results that fell below expectations. The company also expects fourth-quarter revenue in a range from $1.62 billion to $1.68 billion, against the expected $1.60 billion to $1.73 billion. Net income during the third-quarter grew to $281 million, from the $255 million last year. Profit grew 30% to $332 million while net revenue rose 31% to $1.45 billion.
Stock of Advanced Micro Devices (NYSE: AMD) showed sign of the price war and closed down $3.22 or 13% to $21.01, on reporting improved earnings that fell short of expectations. Its third quarter net profit was $134.5 million, versus $76 million a year ago. These include a tax benefit of $21 million. Its average revenue rose 9% from the previous quarter while unit shipments were up 18%. This shows that the average selling price fell about 9%.
Shares of Pfizer (NYSE: PFE) fell 1.5% to $27.48, despite reporting a dramatic jump in third-quarter earnings. It also announced that its top-line isn't expected to grow again until 2009. It plans to buyback $10 billion in its stock during 2007. For the quarter, it reported a net income of $3.36 billion, compared to $1.59 billion last year.
Stocks closed mixed with the Dow Jones Industrial Average failing to stay above 12,000, after it smashed through that barrier in early trade as IBM (NYSE: IBM) and Intel (Nasdaq: INTC) posted strong gains. The Dow soared after the latest reports on inflation and the housing market reassured investors. Corporate earnings and another drop in oil prices were also catalysts.
Today, the Dow Jones Industrial Average closed up 42.66 or 0.36% to 11,992.68, the broader S&P 500 index closed up 1.91 or 1% to 1,365.96, while the tech-fueled Nasdaq composite index closed down 7.80 or 0.33% to 2,337.15.
Market breadth was positive. On the New York Stock Exchange, winners edged out losers 9 to 7 on volume of 1.62 billion shares. On the Nasdaq market decliners edged out advancers 15 to 14 as 2.178 billion shares changed hands.
Investors bet that the economy, which is slowing, won't tip into recession, and that corporate earnings will keep growing. Worries about the slowdown in housing have also lessened. The economic numbers support the idea of a soft landing, and moderation is the word that the market really likes. The market has been going up in small steps that indicate god health.
The tame consumer-price report and better-than-expected housing data helped set the positive tone in the market. The CPI fell an unexpectedly steep 0.5% in September but the core CPI, which excludes food and energy prices, rose 0.2%, in line with estimates. Analysts had predicted a fall of 0.3% for overall CPI. The pace of home building unexpectedly strengthened in September as new housing starts rose 5.9%.
Stock of JPMorgan Chase & Co (NYSE: JP) closed down $0.78 or 2.3% to $47.21, despite reporting better than expected results. Its net income rose sharply on the back of record investment banking fees of $1.4 billion, up 44%. Third-quarter net income rose to $3.3 billion, from $2.5 billion last year. Net revenue increased 8% to $15.4 billion. However, analysts are worried about signs of weakness in traditional areas like credit cards, commercial banking and mortgage lending.
Shares of Intel (Nasdaq: INTC) closed up $0.25 or almost 1 % at $21.11 after its third-quarter earnings report showed signs of being past the worst of its problems. Intel reported a 35% profit decline to $1.3 billion, though compared with the second quarter, profit rose 47%. The EPS fell to 27 cents compared to the expected 18 cents. Its revenue declined 12% to $8.7 billion, a shade above the $8.6 billion expected.
Stock of IBM (NYSE: IBM) closed up $2.87 or 3% to $89.82, on beating forecast and on being upgraded by Goldman Sachs to a "buy" recommendation from neutral. The company reported a 47% rise in quarterly profit, after boosting software sales through acquisitions and improving hardware and services revenue. Net income in the third quarter rose to $2.22 billion, from $1.52 billion a year earlier. Revenue rose to $22.6 billion from $21.5 billion. Software revenue rose 8.5% to $4.4 billion. IBM Global services revenue rose 2.7% to $12 billion in the quarter and the company signed services contracts totaling $10.5 billion.
Shares of Yahoo (Nasdaq: YHOO) closed down $1.16 to $22.99, after reporting disappointing results. However, it also reported that its new search technology was now live. The company reported revenue of $1.12 billion, up 20% from a year ago, but below estimates of $1.14 billion. It also reported lower expectations in the next quarter. It has a net profit of $159 million, against $254 million a year earlier.
Shares of Motorola (NYSE: MOT) closed down $1.21 or 4.9% o $23.64, after the cell phone maker posted lower-than-expected quarterly revenues. While third-quarter revenue rose 17% to $10.6 billion, this was below the expected $11.06 billion. Net profit fell to $968 million, from $1.75 billion a year ago. Overall, there has been a 45% profit drop despite a 17% sales rise.
U.S. light crude for November delivery tumbled $1.28 to $57.65 a barrel on the New York Mercantile Exchange. Futures turned lower as traders mulled a mixed Energy Department report on weekly supplies of crude and its products.
Stock of JPMorgan Chase & Co (NYSE: JP) closed down $0.78 or 2.3% to $47.21, despite reporting better than expected results. Its net income rose sharply on the back of record investment banking fees of $1.4 billion, up 44%. Third-quarter net income rose to $3.3 billion, from $2.5 billion last year. Net revenue increased 8% to $15.4 billion. However, analysts are worried about signs of weakness in traditional areas like credit cards, commercial banking and mortgage lending.
Shares of Intel (Nasdaq: INTC) closed up $0.25 or almost 1 % at $21.11 after its third-quarter earnings report showed signs of being past the worst of its problems. Intel reported a 35% profit decline to $1.3 billion, though compared with the second quarter, profit rose 47%. The EPS fell to 27 cents compared to the expected 18 cents. Its revenue declined 12% to $8.7 billion, a shade above the $8.6 billion expected.
Stock of IBM (NYSE: IBM) closed up $2.87 or 3% to $89.82, on beating forecast and on being upgraded by Goldman Sachs to a "buy" recommendation from neutral. The company reported a 47% rise in quarterly profit, after boosting software sales through acquisitions and improving hardware and services revenue. Net income in the third quarter rose to $2.22 billion, from $1.52 billion a year earlier. Revenue rose to $22.6 billion from $21.5 billion. Software revenue rose 8.5% to $4.4 billion. IBM Global services revenue rose 2.7% to $12 billion in the quarter and the company signed services contracts totaling $10.5 billion.
Stocks ended lower after the latest producer price report reignited inflation fears. However, Johnson & Johnson (NYSE: JNJ) and Merrill Lynch (NYSE: MER) both outperformed the broader market on the back of strong quarterly results. A report showing an improvement in builders' sentiment eased concern about the housing market and helped stocks bounce off their lows for the session. However, troubling economic news overshadowed positive earnings reports and lead to the decline.
Today, the Dow Jones Industrial average closed down 30.58 or 0.26% to 11,950.02, the broader S&P 500 index closed down 5.00 or 0.37% to 1,364.05, while the tech-fueled Nasdaq composite index closed down 18.89 or 0.8% to 2,344.95.
Market breadth was negative. On the New York Stock Exchange, losers beat winners more than 5 to 3 on volume of 1.52 billion shares. On the Nasdaq, decliners topped advancers 9 to 5 volume of 2.16 billion shares.
The market was a little nervous on reports that North Korea may carry out another nuclear test. Further confusion was created by the producer-price report and a confusing industrial production report. However, a positive builders' sentiment report was a helping factor that helped the market bounce off its lows.
The latest producer-price report reignited concerns about inflation. Core producer prices, which excludes food and energy costs, rose a surprising 0.6% in September, while economist were looking at a rise of only 0.2%. The investors were worried about the implications of the producer-price report for consumer prices. There was further bad news as the U.S. industrial sector slowed sharply in September, with the industrial production from factories, mines and utilities dropping 0.6%. Economists had been looking for a much smaller decline of 0.1%. However, the capacity utilization rate for the industrial sector fell to 81.9% from 82.5%, an indication of lessening inflationary pressures from potential bottlenecks.
Yahoo Inc. (Nasdaq: YHOO) reported that third quarter profit fell 37%, as higher advertising sales at its collection of Internet sites weren't enough to offset stock options costs and higher expenses. Additionally, its board has authorized the company to repurchase up to $3 billion worth of its common stock over the next five years. Net Income for the quarter fell to $158.5 million, from $253.8 million last year. Net sales rose 20% to $1.12 billion, against the expected $1.14 billion.
Stock of United Tech (NYSE: UTX) closed down $1.47 to $65.32, despite reporting better than expected results. Its earnings rose 21% to $996 million, compared to $821 million last year. Revenue rose 11.5% to $12.16 billion from $10.91 billion. The company also lifted its earnings forecast for the year.
Shares of Merrill Lynch (NYSE: MER) closed up 41 cents at $84.52, after it reported a more than double increase in net income due to a one-time net benefit of $1.1 billion from its merger with asset-management firm BlackRock. It reported an EPS of $3.17 against the expected $1.47. Excluding the benefits from merger, the company's third-quarter earnings rose 43%.
Shares of J&J (NYSE: JNJ) closed up $1.12 to $66.05, after it posted forecast-beating third-quarter results, with performance spurred by solid growth in all three of its healthcare divisions. The company reported net income of $2.8 billion, compared with $2.5 billion last year. Revenue jumped 7.9% to $13.3 billion vs. $12.3 billion last year. This is against the expected growth of 7%.
Shares in the Chicago Mercantile Exchange (NYSE: CME) closed up $13.25 or 2.6% to $516.50 after it reached an agreement to buy the Chicago Board of Trade (NYSE: BOT) for about $8 billion in stock and cash in a bid to win more of the booming market for derivatives. Chicago Board of Trade share rallied $17.48 or 13% to $151.99. This deal would combine the two largest futures exchanges in the United States.
Shares of Eli Lilly and Co. (NYSE: LLY) closed down 3% at $54.65, on news that it is buying Icos Corp. (NYSE: ICOS) the maker of the erectile dysfunction drug Cialis for $2.1 billion in cash. Stock of Icos closed up 16% to $31.44. Additionally, Lilly reported second quarter earning of $822 million, against a loss of $252 million last year. Net sales rose to $3.87 billion from $3.67 billion.
U.S. light crude lost $1.01 to settle at $58.93 a barrel on the New York Mercantile Exchange. Prices fell on expectations that domestic supply data will show a rise in crude inventories for the latest week. Traders are also trying to second-guess the outcome of an OPEC emergency meeting to discuss ways to halt the recent slide in oil prices.
Shares of Eli Lilly and Co. (NYSE: LLY) closed down 3% at $54.65, on news that it is buying Icos Corp. (NYSE: ICOS) the maker of the erectile dysfunction drug Cialis for $2.1 billion in cash. Stock of Icos closed up 16% to $31.44. Additionally, Lilly reported second quarter earning of $822 million, against a loss of $252 million last year. Net sales rose to $3.87 billion from $3.67 billion.
Shares in the Chicago Mercantile Exchange (NYSE: CME) closed up $13.25 or 2.6% to $516.50 after it reached an agreement to buy the Chicago Board of Trade (NYSE: BOT) for about $8 billion in stock and cash in a bid to win more of the booming market for derivatives. Chicago Board of Trade share rallied $17.48 or 13% to $151.99. This deal would combine the two largest futures exchanges in the United States.
Stock of United Tech (NYSE: UTX) closed down $1.47 to $65.32, despite reporting better than expected results. Its earnings rose 21% to $996 million, compared to $821 million last year. Revenue rose 11.5% to $12.16 billion from $10.91 billion. The company also lifted its earnings forecast for the year.
Yahoo Inc. (Nasdaq: YHOO) reported that third quarter profit fell 37%, as higher advertising sales at its collection of Internet sites weren't enough to offset stock options costs and higher expenses. Additionally, its board has authorized the company to repurchase up to $3 billion worth of its common stock over the next five years. Net Income for the quarter fell to $158.5 million, from $253.8 million last year. Net sales rose 20% to $1.12 billion, against the expected $1.14 billion.
Stocks ended higher with the Dow Jones Industrial Average logging another record close as strong gains for Alcoa Inc (NYSE: AA), Exxon Mobil Corp. (NYSE: XOM) and Merck (NYSE: MRK) among others offset broker downgrades for General Electric Co. (NYSE: GE) and Home Depot Inc. (NYSE: HD). The Dow Jones industrial average came within three points of the 12,000 mark, and closed at a record high for the seventh time in the last 10 sessions. However, gains were modest as rising oil prices and trepidation ahead of a week packed with earnings and economic reports kept some investors on the sidelines.
Today, the Dow Jones Industrial Average closed up 20.09 or 0.17% to 11,980.60, and reached a record intraday high of 11,997.25. The broader S&P 500 index closed up 3.43 or 0.25% to 1,369.05, while the tech-laden Nasdaq composite closed up 6.55 or 0.28% to 2,363.84.
Market breadth was positive. On the New York Stock Exchange, winners beat losers nearly two to one on volume of 1.44 billion shares. On the Nasdaq, advancers topped decliners 19 to 10 on volume of 1.84 billion shares.
It is evident that the Dow is set to break through the 12,000 mark, barring any major bad news. The fact that a lot of people missed out on the recent rally, is leading to a sort of emotional stampede which has nothing to do with fundamentals. The point of discussion whether the economy is cooling off to quickly will continue as people are trying to figure out if growth is still happening. The market has everything going for it right now except the psychology. There could be lots of buying and selling if the Dow makes a strong push past 12,000, as hedge funds and money managers join mom-and-pop investors and try to profit from movement in either direction.
On the data front, the Empire State manufacturing survey showed that regional factory activity accelerated this month. The index rose to 22.9 in October from 13.8 in September. This is against the expected decline to about 12.6. It's the highest level since June. The report "points to decent underlying momentum in the New York factory sector.
Shares of General Electric (NYSE: GE) fell 1.2% to $35.56 after Merrill Lynch downgraded the group to neutral from buy. While Merrill still sees double-digit profit growing in the next couple of years but calls the shares "essentially defensive."
Stock of Home Depot Inc. (NYSE: HD) fell 1.5% to $36.35 after Goldman Sachs lowered its rating on the home-improvement retailer to neutral from buy, citing recent management departures. The broker prefers rival Lowe's Cos. (NYSE: LOW), which it upgraded to buy. Lowe's shares closed up 1.3% at $31.35.
Shares of Alcoa Inc. (NYSE: AA) rose 2.6% to $27.32 after Prudential Equity Group upgraded the aluminum maker and its Canadian counterpart, Alcan Inc., (NYSE: AL) to overweight from neutral. The broker raised its 2006 through 2009 aluminum-price targets, citing better-than-expected 5.5% demand growth for 2006 despite the soft auto climate, lower inventories, lower-than-expected interest rates and energy markets that may benefit 2007-08 global growth. Additionally, higher-than-previously-expected copper prices have also indirectly helped aluminum prices. Alcan shares closed up 3.9% at $42.79.
Stock of Merck & Co. (NYSE: MRK) rose 1.3% to $43.76, on news that it is expected to receive U.S. regulatory clearance as early as Monday for its breakthrough diabetes drug Januvia.
Shares of Mattel Inc. (NYSE: MAT) rose 2.9% to $21.30. The company reported third-quarter net rose 6%, bolstered by sales of Barbie. It reported a net income of $239 million, up from $225.3 million last year. Sales rose up 7% to $1.79 billion, against the expected $1.63 billion. Operating income for the latest quarter amounted to $322.2 million, up from $308.8 million a year earlier.
U.S. crude for light delivery gained $1.37 to settle at $59.94 a barrel on the New York Mercantile Exchange. OPEC announced that it would meet on Thursday to discuss ways to halt the slide in oil prices against the cartel's lowered forecast for 2006 world-oil demand.
Shares of Alcoa Inc. (NYSE: AA) rose 2.6% to $27.32 after Prudential Equity Group upgraded the aluminum maker and its Canadian counterpart, Alcan Inc., (NYSE: AL) to overweight from neutral. The broker raised its 2006 through 2009 aluminum-price targets, citing better-than-expected 5.5% demand growth for 2006 despite the soft auto climate, lower inventories, lower-than-expected interest rates and energy markets that may benefit 2007-08 global growth. Additionally, higher-than-previously-expected copper prices have also indirectly helped aluminum prices. Alcan shares closed up 3.9% at $42.79.
Shares of Mattel Inc. (NYSE: MAT) rose 2.9% to $21.30. The company reported third-quarter net rose 6%, bolstered by sales of Barbie. It reported a net income of $239 million, up from $225.3 million last year. Sales rose up 7% to $1.79 billion, against the expected $1.63 billion. Operating income for the latest quarter amounted to $322.2 million, up from $308.8 million a year earlier.
Stocks closed higher with the Dow Jones Industrial Average finishing at a fresh record high, capping off a solid week that saw the Nasdaq Composite post a 2.5% gain. Initially, the index was weighed down by uninspiring earnings from General Electric Co. (NYSE: GE) and a broker downgrade for Home Depot (NYSE: HD). However, investors shrugged off these reports and a weak retail sales report to keep the market's recent rally going.
Today, the Dow Jones Industrial average closed up 12.81 or 0.11% to 11,960.51, setting a new closing high for the sixth time in the last nine sessions. The broader S&P 500 index closed up 2.79 or 0.2% to 1,365.62, while the tech-fueled Nasdaq composite closed up 11.11 or 0.47% to 2,357.29. For the week, the Dow gained 0.9%, the S&P 500 advanced 1.2%, while the Nasdaq rose 2.5%.
Market breadth was positive. On the New York Stock Exchange, winners beat losers nearly 19 to 13 on volume of 1.507 billion shares. On the Nasdaq, advancers topped decliners 18 to 11 on volume of 1.978 billion shares.
The good week for the market is a result of cheering news from the Beige Book and the minutes of the last FOMA meeting. While there are indications of a solid economic growth going through into 2008, there are some concerns about inflation. Michael Moskow, the president of the Chicago Federal Reserve Bank stated that the risk of inflation remaining too high is greater than the risk of growth being too low. Therefore, some additional rate hikes may be necessary to bring inflation back into a range of stable prices.
In data news, retail sales fell 0.4% in September on a record 9.3% drop in gasoline sales, but were up 0.6% excluding gasoline. Analyst had predicted a 0.2% increase. This is in contrast to robust same-store sales readings issued earlier this month by some of leading retail chains. The University of Michigan's preliminary reading on consumer sentiment in October was 92.3, up from September's final reading of 85.4. This is against the expected rise to 86.5. While retail sales have set us up for good solid fourth quarter, the consumer sentiment came in as you would expect with energy prices falling. U.S. business inventories increased 0.6% in August, slightly slower than the 0.8% increase in sales. Therefore, its all a balance between the negative news and the positive news out there.
Shares of General Electric Co. (NYSE: GE) closed down 0.7% at $35.98, despite reporting earnings of 49 cents a share in the third quarter. The company narrowed its full-year earnings guidance to a range that includes the current consensus forecast. The company earned $5.1 billion, up from $4.6 billion in the year-earlier period. Its revenue rose 12% to $40.9 billion. However, broker Citigroup expressed some disappointment over operating margins, and this led to the decline.
Stock of Microsoft Corp. (Nasdaq: MSFT) closed up $0.14 to $28.36, after it stated it will not delay shipping its new Windows operating system, Vista, to Europe, after fears that it might do so because of disputes with regulators there. The software giant confirmed it plans to release Vista on schedule in both Europe and Korea following "constructive dialogue" with the trade commissions of both regions.
Shares of Home Depot Inc. (NYSE: HD) fell 2.6% to $36.90 after broker Raymond James downgraded the company to outperform from strong buy. The company has made some leadership changes and organizational shifts that were met with skepticism from some investors.
U.S. light crude for November delivery climbed 71 cents to settle at $58.57 a barrel on the New York Mercantile Exchange. Traders continued to weigh a sizeable decline in distillate supplies in the latest week as unseasonably cold weather, including record snowfalls, hit the northern U.S. Additionally, safety authorities in Norway have ordered a production shutdown at two offshore platforms.
Shares of General Electric Co. (NYSE: GE) closed down 0.7% at $35.98, despite reporting earnings of 49 cents a share in the third quarter. The company narrowed its full-year earnings guidance to a range that includes the current consensus forecast. The company earned $5.1 billion, up from $4.6 billion in the year-earlier period. Its revenue rose 12% to $40.9 billion. However, broker Citigroup expressed some disappointment over operating margins, and this led to the decline.
Stock of Microsoft Corp. (Nasdaq: MSFT) closed up $0.14 to $28.36, after it stated it will not delay shipping its new Windows operating system, Vista, to Europe, after fears that it might do so because of disputes with regulators there. The software giant confirmed it plans to release Vista on schedule in both Europe and Korea following "constructive dialogue" with the trade commissions of both regions.
Shares of Home Depot Inc. (NYSE: HD) fell 2.6% to $36.90 after broker Raymond James downgraded the company to outperform from strong buy. The company has made some leadership changes and organizational shifts that were met with skepticism from some investors.
Stocks rallied on stronger than expected earnings from McDonald's Corp. (NYSE: MCD), Costco Wholesale Corp. (Nasdaq: COST) and Yum Brands Inc (NYSE: YUM), with a batch of new orders for Boeing Co. (NYSE: BA) helping propel the Dow Jones Industrial Average to a new closing high. A favorable Federal Reserve Beige Book survey, showed few signs of increased price pressure, and this provided further support.
Today, the Dow Jones Industrial average closed up 95.57 or 0.81% to 11,947.70, blowing past the previous record closing high of 11,867.17 set Tuesday and notched its fifth record in little more than a week. It also marked a new record trading high of 11,959.63, coming about 40 points shy of 12,000 - the next major milestone for the market. The broader S&P 500 index closed up 12.88 or 0.95% to 1,362.83, and the tech-fueled Nasdaq composite index closed up 37.91 or 1.64% to 2,346.18.
Market breadth was positive. On the New York Stock Exchange, losers beat winners by nearly 13 to 3 on volume of 1.559 billion shares. On the Nasdaq, decliners topped advancers by 11 to 3 on volume of 2.02 billion shares.
The Beige Book summary of economic conditions, states that the economy kept growing since early September but certain sectors like real estate were showing weakness. Investors reacted positively to this report that the economy continued to grow despite cooling in the housing market. This positively supports a soft landing for the economy, and that's good news for the market.
The U.S. trade gap of goods and services set a new record high in August, driven up once again by a record price of crude oil. U.S. imports outstripped exports by $69.9 billion, up from the previous record $68.0 billion level set in July. The trade deficit widening by 2.7% and could force economists to trim their forecasts for third-quarter GDP, which have been coming down steadily to a rate below a 3.0% annual growth rate. A worsening trade deficit would be a further drag on economic growth. The jump in the deficit surprised analysts since they had been expecting the deficit to narrow to $66.4 billion.
Shares of McDonald's (NYSE: MCD) closed up $0.98 or 2.4% to $42.23, after the fast-food chain said third-quarter earnings would be better than analysts expected. It posted a 7.7% increase in September sales and said preliminary third-quarter EPS is expected to be 68 cents. System wide sales for the company worldwide was up 9.8% for the month and 8.4% for the quarter.
Stock of PepsiCo Inc. (NYSE: PEP) closed down $0.94 or 1.2% to $62.85, despite reporting higher earnings. The company reported 71% rise in third-quarter earnings and raised its full-year outlook. Its third quarter earnings rose to $1.48 billion, from the $864 million last year. Quarterly net revenue rose 9.4% to $8.95 billion from $8.18 billion a year ago. Results were helped by strength in its international business, non-carbonated drinks and salty snacks. However, operating margins were squeezed by increased spending and higher supply-chain costs.
Shares of Harley-Davidson Inc. (NYSE: HOG) closed up $1.80 or 3% to $64.95, after reporting better-than-expected results. Its earnings in the latest quarter rose 18% to $312.7 million, from $265 million last year. Revenue rose 14.3% to $1.64 billion, against the $1.58 billion expected by analysts.
Shares of Boeing Co. (NYSE: BA) rose almost 2.5% to close at $83.64, after the company said it's booked 30 new orders for its 787 Dreamliner plane in the last week, including 10 from an unidentified buyer. Twenty of the new 787 orders came from Singapore Airlines, with deliveries scheduled from 2011 through 2013.
Shares of Yum Brands (NYSE: YUM) surged 8.3% to $59.08 after it reported third-quarter earnings that beat forecasts thanks to double-digit profit gains in its international business, led by a 26% jump in China. The company reported a net income of $230 million, compared with the $205 million a year ago. Revenue was $2.28 billion vs. last year's $2.24 billion. The company expects to report full-year earnings of $2.89 a share, against the $2.84 estimated by analyst.
Shares of Costco (Nasdaq: COST) closed up 7.7% to $53.90, after it reported a 1% increase in fourth-quarter profit, beating its lowered forecast. The company also said it reviewed its stock-option program and doesn't expect to restate results. They expect that holiday shopping will be "promising" this year and forecast fiscal 2007 earnings to rise in a range of 9% to 15%.
Light, sweet crude for November delivery rose 27 cents to $57.86 a barrel on the New York Mercantile Exchange. The Energy Department said domestic distillate supplies, which include winter heating oil, fell for the first time in nine weeks. Crude inventories, however, rose for a second straight week while gasoline stocks were up for an eighth week in a row.
Shares of Yum Brands (NYSE: YUM) surged 8.3% to $59.08 after it reported third-quarter earnings that beat forecasts thanks to double-digit profit gains in its international business, led by a 26% jump in China. The company reported a net income of $230 million, compared with the $205 million a year ago. Revenue was $2.28 billion vs. last year's $2.24 billion. The company expects to report full-year earnings of $2.89 a share, against the $2.84 estimated by analyst.
Shares of Boeing Co. (NYSE: BA) rose almost 2.5% to close at $83.64, after the company said it's booked 30 new orders for its 787 Dreamliner plane in the last week, including 10 from an unidentified buyer. Twenty of the new 787 orders came from Singapore Airlines, with deliveries scheduled from 2011 through 2013.
Stock of PepsiCo Inc. (NYSE: PEP) closed down $0.94 or 1.2% to $62.85, despite reporting higher earnings. The company reported 71% rise in third-quarter earnings and raised its full-year outlook. Its third quarter earnings rose to $1.48 billion, from the $864 million last year. Quarterly net revenue rose 9.4% to $8.95 billion from $8.18 billion a year ago. Results were helped by strength in its international business, non-carbonated drinks and salty snacks. However, operating margins were squeezed by increased spending and higher supply-chain costs.
Shares of McDonald's (NYSE: MCD) closed up $0.98 or 2.4% to $42.23, after the fast-food chain said third-quarter earnings would be better than analysts expected. It posted a 7.7% increase in September sales and said preliminary third-quarter EPS is expected to be 68 cents. System wide sales for the company worldwide was up 9.8% for the month and 8.4% for the quarter.
Stocks fell in a session rocked by an aircraft crashing into a building in New York City, disappointment over the near-term interest rate outlook and an inauspicious start to the third-quarter earnings reporting season.
Today, the Dow Jones industrial average closed down 15.04 or 0.13% to 11,852.13, the broader S&P 500 index closed down 3.47 or 0.26% to 1,349.95, and the tech-fueled Nasdaq composite index closed down 7.16 or 0.31% to 2,308.27.
Market breadth was negative. On the New York Stock Exchange, losers beat winners by 19 to 13 on volume of 1.59 billion shares. On the Nasdaq, decliners edged out advancers by three to two on volume of 2.05 billion shares.
Stocks fell sharply after a small plane crashed into a high-rise building in New York City's Upper East Side, then rebounded as investors took a benign view of the crash. Yankees reliever Cory Lidle, was killed in the crash that rattled nerves in New York, where residents are acutely aware that their city remains high on the list of potential terrorist targets. The markets recovered as it became clear that terrorism apparently was not involved.
On the economic front, minutes from the Federal Open Market Committee meeting showed that Fed policy-makers remained "quite concerned" about inflation risks, but decided to keep rates on hold for a second straight time while renewing their commitment to ratcheting down inflation pressures. They persisted that the rate of core inflation was higher than consistent with price stability. This observation has got the investors worried.
On the data front, the federal deficit was trimmed to $248 billion in fiscal 2006. This is a decline of $71 billion from the $319 billion gap recorded in 2005. Investors will now be paying close attention to September's retail sales report, that is due out Friday.
Shares of Alcoa (NYSE: AA) closed down $1.44 or 5% to $26.85, despite reporting that its third-quarter profit almost doubled. The results missed estimates because of a steep drop in metals prices, and rising costs. Net income for the quarter surged 86% to $537 million, its revenue climbed 19% to $7.6 billion but also missed the $7.75 billion expected by analysts.
Shares of Gannett Co. Inc (NYSE: GCI) closed down $1.49 or 3.4% to $56.23, after the newspaper publisher reported a 12% decline in third-quarter earnings. While revenue rose 2.7% to $1.91 billion, it fell short of analyst expectations of upto $1.99 billion. Its income dropped to $261.4 million from $297 million a year ago. The EPS dropped 9% from $1.22 to $1.11.
Shares of Genentech Inc. (NYSE: DNA) fell 1.7% to $84.15, despite reporting a 58% rise in third-quarter net earnings. While sales of Lucentis reached $153 million, sales of its other drugs, Avastin, Herceptin and Rituxan failed to impress. The company reported net earnings of $568 million, and the revenue rose to $2.38 billion against the expected $2.32 billion.
Stock of CNET Networks (Nasdaq: CNET) closed down $0.76 or 7.7% to $9.14, after the company said Shelby Bonnie resigned as CEO after a special committee blamed him for backdating of stock options. The committee also found that its former CFO and its general counsel were partly to blame for the options problems.
Shares of McAfee Inc (NYSE: MFE) closed up $0.85 or 3% to $26.64, after the security software firm fired its president and said that CEO George Samenuk would step down after an internal probe into the company's stock options practices. The company will also restate historical financial results due to past stock option grants, and that the restatement will fall in the range of $100 million to $150 million.
Shares of Apple (Nasdaq: AAPL) closed down $0.58 or 1% to $73.23, on reports that two of its directors may have had conflict of interest when they conducted a investigation into the company's backdated stock options grants.
Bank of America (NYSE: BAC).stepped up the online trading war by offering 30 free online trades a month for customers with at least $25,000 in deposits or other accounts. Its share closed down $0.59 to $54.04, and is its bid to capitalize on its nationwide footprint and expand beyond its traditional retail banking operation.
It has been reported that Apollo Management and Texas Pacific Group have raised their bid for Harrah's Entertainment (NYSE: HET) to more than $15.5 billion. The offer has been raised from the initial $81 a share to almost $84 a share. This would be the fifth-largest leveraged buyout on record.
Oil Prices with the benchmark November contract closing down 42 cents at $58.10 a barrel. Traders weighed an agreement by OPEC to cut production against a monthly report that offered a lower oil-demand forecast and showed that world production fell in September. An OPEC minister said the oil cartel will soon announce a formal decision to cut 1 million barrels a day of production.
It has been reported that Apollo Management and Texas Pacific Group have raised their bid for Harrah's Entertainment (NYSE: HET) to more than $15.5 billion. The offer has been raised from the initial $81 a share to almost $84 a share. This would be the fifth-largest leveraged buyout on record.
Bank of America (NYSE: BAC).stepped up the online trading war by offering 30 free online trades a month for customers with at least $25,000 in deposits or other accounts. Its share closed down $0.59 to $54.04, and is its bid to capitalize on its nationwide footprint and expand beyond its traditional retail banking operation.
Shares of Genentech Inc. (NYSE: DNA) fell 1.7% to $84.15, despite reporting a 58% rise in third-quarter net earnings. While sales of Lucentis reached $153 million, sales of its other drugs, Avastin, Herceptin and Rituxan failed to impress. The company reported net earnings of $568 million, and the revenue rose to $2.38 billion against the expected $2.32 billion.
Shares of Gannett Co. Inc (NYSE: GCI) closed down $1.49 or 3.4% to $56.23, after the newspaper publisher reported a 12% decline in third-quarter earnings. While revenue rose 2.7% to $1.91 billion, it fell short of analyst expectations of upto $1.99 billion. Its income dropped to $261.4 million from $297 million a year ago. The EPS dropped 9% from $1.22 to $1.11.
Shares of Alcoa (NYSE: AA) closed down $1.44 or 5% to $26.85, despite reporting that its third-quarter profit almost doubled. The results missed estimates because of a steep drop in metals prices, and rising costs. Net income for the quarter surged 86% to $537 million, its revenue climbed 19% to $7.6 billion but also missed the $7.75 billion expected by analysts.
Stocks ended higher on a fresh drop in oil prices and cautious optimism over the upcoming third quarter earnings season. However, a rise in bond yields and lingering concerns over North Korea gave investors pause for thought. The Dow Jones Industrial average set a new closing record.
Today, the Dow Jones Industrial; average closed up 9.36 or 0.08% to 11,867.17, scratching out a record closing high less than a point above the previous record of 11,866.69 set last Thursday. The broader S&P 500 index closed up 2.76 or 0.2% to 1,353.42, while the tech-fueled Nasdaq composite closed up 3.66 or 0.16% to 2,315.43.
Market breadth was positive. On the New York Stock Exchange, winners barely beat losers 17 to 14 on volume of 1.51 billion shares. On the Nasdaq, advancers edged out decliners 15 to 13 on volume of 1.77 billion shares.
Tomorrow, investors will look forward to the Federal Reserve minutes from their Sept. 20 meeting. We need to pay heed to the fact that we are now at the cusp of earnings season, and you have a market that's looking to take a wait-and-see type of approach. Investors are reassessing a new set of risks, such as a pick-up in bond yields, oil stabilizing at around levels that are historically high and North Korea, which appears to be beyond the influence of the major world powers. The market is going to look very carefully for those companies which can sustain earnings growth and this may lead to a lot of volatility among individual stocks.
U.S. businesses' sales and inventories rose at the same pace in August. Inventories and sales each rose by 1.1%, keeping the inventory to sales ratio at 1.15. The report exceeded the expectations of economists who were forecasting wholesale inventories to rise by 0.6%, after climbing 0.8% in July. In the past year, sales were up 12.5%, while inventories were up 9.7%.
Shares of ImClone Systems Inc. (NYSE: IMCL) closed up $1.19 or 4% to $31.09, after the biotech said David Kies resigned as chairman in the face of severe criticism over his performance from activist shareholder Carl Icahn. Board member William Crouse has likewise stepped down. Since assuming a directorship in late September, Icahn, who has about a 14% stake in ImClone, has been vociferously demanding Kies' resignation, saying the company has been poorly managed.
Google Inc. (Nasdaq: GOOG) closed down $2.35 or 0.6% at $426.05 after the Internet search giant announced an agreement to acquire privately held YouTube Inc., the No. 1 video-sharing site on the Web, for $1.65 billion in stock. YouTube, has quickly become the most well-known of several online video sites. More than 100 million videos are downloaded a day on the site and it has 46% of the online video market. This gives Google the ability to tap into the online video and social networking markets.
U.S. light sweet crude oil sank $1.44 to $58.52 a barrel on the New York Mercantile Exchange.
Shares of ImClone Systems Inc. (NYSE: IMCL) closed up $1.19 or 4% to $31.09, after the biotech said David Kies resigned as chairman in the face of severe criticism over his performance from activist shareholder Carl Icahn. Board member William Crouse has likewise stepped down. Since assuming a directorship in late September, Icahn, who has about a 14% stake in ImClone, has been vociferously demanding Kies' resignation, saying the company has been poorly managed.
Google Inc. (Nasdaq: GOOG) closed down $2.35 or 0.6% at $426.05 after the Internet search giant announced an agreement to acquire privately held YouTube Inc., the No. 1 video-sharing site on the Web, for $1.65 billion in stock. YouTube, has quickly become the most well-known of several online video sites. More than 100 million videos are downloaded a day on the site and it has 46% of the online video market. This gives Google the ability to tap into the online video and social networking markets.
Stocks ended higher with the Nasdaq Composite at its best level in five months, as a Fed official's soothing remarks on inflation, a going-private offer for Cablevision Systems (NYSE: CVC) and a $6 billion deal in the banking sector placed news of North Korea's nuclear test on the back burner.
Today, the Dow Jones Industrial average closed up 7.60 or 0.06% to 11,857.81, the broader S&P 500 index closed up 1.08 or 0.08% to 1,350.66, and the tech-fueled Nasdaq composite index closed up 11.78 or 0.51% to 2,311.77.
Market breadth was positive. On the New York Stock Exchange, winners beat losers by 19 to 12 on volume of 1.26 billion shares. On the Nasdaq, advancers edged out decliners by 17 to 11 on volume of 1.52 billion shares.
Reports that North Korea claimed it conducted a successful underground nuclear test had an adverse affect on the markets. However, deals including PNC Financial's (NYSE: PNC) acquisition of Mercantile Bankshares Corp. (NYSE: MRBK), provided some market resiliency. Volumes on Columbus day remained relatively low.
San Francisco Federal Reserve President Janet Yellen said that holding interest rates steady "for a time" makes sense as Federal Reserve policymakers try to temper inflation pressures and scrutinize incoming economic data. She stated that inflation is likely to trend downward in the medium term, for several reasons including falling energy prices. These soothing remarks had a positive effect on the markets.
Shares of Google (Nasdaq: GOOG) closed up $8.50 or 2% to $429.00, on news that the Web search giant might acquire online video service YouTube Inc. YouTube has about a 46% share of the online video market and more than 100 million videos are downloaded a day on the site. The combination of Google and YouTube could further strengthen Google's dominance in online advertising.
Shares of Cablevision Systems (NYSE: CVC) closed up $2.57 or 10% to $26.50, after the Dolan family offered to buy the remaining shares it does not already own in a deal that value the company at $7.9 billion. This offer would give shareholders $27 per share in cash. This will give the company greater flexibility needed to undertake strategic initiatives and develop the next generation of products and services in a rapidly changing consumer marketplace. The deal would have an enterprise value of $19.2 billion, which includes debt.
Shares of PNC Financial Services (NYSE: PNC) closed down $3.20 or 4.4% to $70.40, after it agreed to buy Baltimore-based Mercantile Bankshares Corp. (NYSE: MRBK) for $6 billion in cash and stock. Shares of Mercantile Bankshares closed up $8.16 or22% to $44.94. The deal represents $47.24 a share.
Citigroup Inc. (NYSE: C) closed up 3 cents at $51.08, on news that it is considering acquisitions of banks in Taiwan, Turkey, Central America, China and Western Europe. This is a part of a plan to boost the proportion of earnings coming from outside the United States to 60% from 45%. The CEO Chuck Prince also said he expected "progress" before the end of the year on its international deals.
Light sweet crude oil for November delivery closed up 20 cents at $59.96 on the New York Mercantile Exchange. Traders continue to wait for OPEC to confirm a production cut, reportedly pegged at 1 million barrels a day. News of North Korea's test also supported higher prices.
Shares of Cablevision Systems (NYSE: CVC) closed up $2.57 or 10% to $26.50, after the Dolan family offered to buy the remaining shares it does not already own in a deal that value the company at $7.9 billion. This offer would give shareholders $27 per share in cash. This will give the company greater flexibility needed to undertake strategic initiatives and develop the next generation of products and services in a rapidly changing consumer marketplace. The deal would have an enterprise value of $19.2 billion, which includes debt.
Shares of PNC Financial Services (NYSE: PNC) closed down $3.20 or 4.4% to $70.40, after it agreed to buy Baltimore-based Mercantile Bankshares Corp. (NYSE: MRBK) for $6 billion in cash and stock. Shares of Mercantile Bankshares closed up $8.16 or22% to $44.94. The deal represents $47.24 a share.
Citigroup Inc. (NYSE: C) closed up 3 cents at $51.08, on news that it is considering acquisitions of banks in Taiwan, Turkey, Central America, China and Western Europe. This is a part of a plan to boost the proportion of earnings coming from outside the United States to 60% from 45%. The CEO Chuck Prince also said he expected "progress" before the end of the year on its international deals.
Stocks fell today after a mixed jobs report prompted some investors to lock in profits in a week where a slide in oil prices and increasing optimism over the economy propelled the Dow Jones Industrial Average to a new all-time high. The Dow industrials ending its three-day streak of record closes, as investors considered a weak September jobs report and a setback for General Motors (NYSE: GM).
Today, the Dow Jones Industrial average closed down 16.48 or 0.14% to 11,850.21, the S&P 500 index closed down 3.64 0.27% to 1,349.58, and the tech-fueled Nasdaq composite index closed down 6.35 0.28% to 2,299.99. For the week, the Dow posted a gain of 1.5%, the S&P 500 Index added 1%, while the Nasdaq Composite rose 1.8%.
Market breadth was negative. On the New York Stock Exchange, losers beat winners 2 to 1 on volume of 1.57 billion shares. On the Nasdaq, decliners edged out advancers by 4 to 3 on volume of almost 1.7 billion shares.
It appears that the market was looking for an excuse to go down a bit and the payrolls report provided that catalyst. However, considering the extent of the rally this week, the decline was pretty modest. While stocks could be at risk to drift or possible decline a bit in the short term, the market will ultimately push higher through the end of the year. Investors seem to believe that the fall in oil prices will bring down inflation pressure and that the economy is set to slow but not enter a recession. They also seem to be betting that the Fed is likely to start cutting rates as early as the first quarter of next year. Modest growth, constrained wages, steady interest rates and falling energy prices will be good for corporate profits and stock prices. The stock market rally should continue, and recent Big Cap stock gains should spread into the broader market.
In data news, U.S. firms cut back their hiring in September to the slowest pace since last year's terrible hurricane season. U.S. non-farm payrolls rose by an estimated 51,000 in September, and the increase in payrolls was lower than the 123,000 rise expected by economists. However, July and August payrolls were revised higher by a total of 62,000 jobs mitigating some of the weakness seen last month. The unemployment rate also fell to 4.6% from 4.7%. This pace of jobs growth is consistent with a soft land for the economy with second half growth in the range of 3%.
Shares in General Motors Corp. (NYSE: GM) closed down $2.08 or 6.3% to $31.05, a close adviser and ally of activist billionaire shareholder Kirk Kerkorian resigned from the auto maker's board of directors. This comes two days after GM broke off talks with Nissan-Renault concerning a possible strategic alliance. This partnership had been backed by York and Kirk Kerkorian's Tracinda Corp. Additionally, a regulatory filing showed that Kerkorian won't go through with his plan to add to his holdings of GM shares.
Shares in Micron Technology Inc. (Nasdaq: MU) closed down $2.40 or 13.7% to $15.14 after the company's third-quarter profits fell shy of analyst expectations. The company is also forecasting a significant rise in capital spending as it attempts to move into higher growth areas such as NAND flash and imaging chips for phones and cars. The company reported that the quarterly net income rose 48% to $63.5 million as sales of its memory chips increased. Its sales rose to $1.4 billion, which was shy of the expected $1.42 billion.
On the merger and acquisition front, Crown Castle International Corp. (NYSE: CCI) will acquire Global Signal Inc. (NYSE: GSL) in a deal valued at $5.8 billion including assumed debt. This will unite the second- and third-largest operators of wireless communications towers in the U.S. Crown Castle will assume estimated debt of $1.8 billion under the deal, and the total cash consideration will be capped at $550 million. Crown Castle would pay $3.9 billion in cash and stock for Global Signal, or the equivalent of $55.95 a share. That represents an 11.6 % premium over yesterday’s closing price. Global Signal's stock was up 7.7% at $53.94 while shares of Crown Castle fell 4.8% to $33.10.
U.S. light crude oil for November delivery fell 27 cents to settle at $59.76 a barrel on the New York Mercantile Exchange. The head of OPEC stated that there is still no agreement to hold an emergency meeting to discuss a production cut.
Shares in General Motors Corp. (NYSE: GM) closed down $2.08 or 6.3% to $31.05, a close adviser and ally of activist billionaire shareholder Kirk Kerkorian resigned from the auto maker's board of directors. This comes two days after GM broke off talks with Nissan-Renault concerning a possible strategic alliance. This partnership had been backed by York and Kirk Kerkorian's Tracinda Corp. Additionally, a regulatory filing showed that Kerkorian won't go through with his plan to add to his holdings of GM shares.
Shares in Micron Technology Inc. (Nasdaq: MU) closed down $2.40 or 13.7% to $15.14 after the company's third-quarter profits fell shy of analyst expectations. The company is also forecasting a significant rise in capital spending as it attempts to move into higher growth areas such as NAND flash and imaging chips for phones and cars. The company reported that the quarterly net income rose 48% to $63.5 million as sales of its memory chips increased. Its sales rose to $1.4 billion, which was shy of the expected $1.42 billion.
On the merger and acquisition front, Crown Castle International Corp. (NYSE: CCI) will acquire Global Signal Inc. (NYSE: GSL) in a deal valued at $5.8 billion including assumed debt. This will unite the second- and third-largest operators of wireless communications towers in the U.S. Crown Castle will assume estimated debt of $1.8 billion under the deal, and the total cash consideration will be capped at $550 million. Crown Castle would pay $3.9 billion in cash and stock for Global Signal, or the equivalent of $55.95 a share. That represents an 11.6 % premium over yesterday’s closing price. Global Signal's stock was up 7.7% at $53.94 while shares of Crown Castle fell 4.8% to $33.10.
Stocks ended higher for a third day as a more than 4% gain for Caterpillar Inc. (NYSE: CAT) lifted the Dow Jones Industrial Average to a new all-time record close, and helped offset a fall in shares of Wal-Mart Stores Inc (NYSE: WMT) sparked by weak September sales. Investors also breathed a sigh of relief as oil prices backed off session highs after some traders questioned whether the OPEC will go ahead with a production cut.
Today, the Dow Jones industrial average closed up 16.08 or 0.14% to 11,866.69, the S&P 500 index closed up 3.00 or 0.22% to 1,353.22, and the tech-fueled Nasdaq composite index closed up 15.39 or 0.67% to 2,306.34.
Market breadth was positive. On the New York Stock Exchange, winners beat losers 11 to 5 on volume of 1.73 billion shares. On the Nasdaq, advancers topped decliners by 2 to 1 on volume of nearly 1.95 billion shares.
The markets have been moving upwards despite the data points to obvious signs of a slowdown. The market clearly believes the Federal Reserve has finished raising interest rates, with some participants now beginning to talk of possible interest rates cuts. There appears to be further upside in the market, and barring bad numbers related to the jobs or the economy, we should be able to keep rising.
Federal Reserve Vice Chairman Donald Kohn discussed upside risks to inflation. These were echoed by Philadelphia Fed President Charles Polsser. They opine that the interest rates may not be high enough to quell a recent bout of inflation. They said that the Fed needs to remain vigilant and recognize that maintaining the current stance of policy, or even firming further, may be in the best interests of the economy's long-run performance. They worried that inflation excluding food and energy costs could remain above 2% for at least another year.
On the data front, the initial claims for state unemployment insurance fell 17,000 to 302,000 during the week ending Sept. 30. The decline in jobless claims weighed on Treasury prices. If tomorrow's monthly employment report comes in too weak, that would raise worries about the speed of the economic slowdown. Should it come in too strong, that might spark concerns about wage inflation.
A number of retailer chains reported strong September sales. The onset of cooler temperatures, a retreat in gas prices and exciting fall merchandise in stores combined to help pump up sales at department and specialty clothing retailers last month. Analysts were expecting total September sales to rise 3.8%. However, 70% of the retailers beat expectations.
Shares of Wal-Mart Stores (NYSE: WMT) closed down $1.14 to $48.41, despite announcing that it is rolling out its discount generic drug program four months ahead of schedule. However, investors focused on the news that September sales were lower than initially reported. Wal-Mart Stores slashed its September sales results, saying that about 235 of its Wal-Mart and Sam's Club stores were " incorrectly coded" to calculate its same-store sales last month. Wal-Mart attributed the shortfall to tough year-over-year comparisons and weak apparel sales.
Shares of Hewlett-Packard (NYSE: HPQ) closed down $0.18 to $37.84, on news that the California attorney general brought felony charges against former CEO Patricia Dunn and others involved in the company's boardroom leak probe. Additional charges are against HP's former chief ethics officer Kevin Hunsaker, and three private investigators.
Shares of Target ((NYSE: TGT) rose $1.05 to close at $58.68, after the company posted a 6.7% rise in same-store sales that topped analyst forecasts. It also forecast sales growth of 3% to 5% in October and said it expected third-quarter profits would be above the average of analysts' expectations. Net retail sales for the five weeks ended Sept. 30, rose 13.4% to $4.885 billion.
Shares in Apple Computer Inc. (Nasdaq: AAPL) closed down $0.55 to $74.83, as it accepted that an internal probe of its past stock-option practices showed errors. Announcing the results of the internal study, it stated that it found no misconduct on the part of current management, but that it will have to restate several financial statements to record non-cash charges for stock-option compensation expenses.
U.S. light crude oil for November delivery gained 62 cents to settle at $60.03 a barrel on the New York Mercantile Exchange. Reports that OPEC is planning on cutting production by about 1 million barrels per day were denied by OPEC's acting president.
Shares of Target ((NYSE: TGT) rose $1.05 to close at $58.68, after the company posted a 6.7% rise in same-store sales that topped analyst forecasts. It also forecast sales growth of 3% to 5% in October and said it expected third-quarter profits would be above the average of analysts' expectations. Net retail sales for the five weeks ended Sept. 30, rose 13.4% to $4.885 billion.
Shares of Wal-Mart Stores (NYSE: WMT) closed down $1.14 to $48.41, despite announcing that it is rolling out its discount generic drug program four months ahead of schedule. However, investors focused on the news that September sales were lower than initially reported. Wal-Mart Stores slashed its September sales results, saying that about 235 of its Wal-Mart and Sam's Club stores were "incorrectly coded" to calculate its same-store sales last month. Wal-Mart attributed the shortfall to tough year-over-year comparisons and weak apparel sales.
The Dow Jones Industrial Average ended at its second record high in two days Wednesday, and the S&P 500 rallied to its best level in more than 5 1/2 years on increasing optimism that economic growth will continue at a pace that will sustain job creation and corporate profits. The Nasdaq Composite also rose to its best level since May.
Today, the Dow closed up 123.27 or 1.05% to 11,850.61, to close at 11,850.61, its highest level ever. The S&P 500 index closed up 16.11 or 1.21% to 1,350.22, and the tech-fueled Nasdaq composite index closed up 47.30 or 2.11% to 2,290.95.
Market breadth was positive. On the New York Stock Exchange, winners beat losers by more than 3 to 1 on volume of nearly 1.86 billion shares. On the Nasdaq, advancers topped decliners by 2 to 1 on volume of 2.24 billion shares.
A drop in energy prices and interest rates has fueled the market to scale new highs. Investors are increasingly optimistic that the Fed will orchestrate its famed soft landing. Till recently, they were worried that the Federal Reserve went too far in raising interest rates as it sought to choke inflationary pressures by slowing economic growth. Adding to positive sentiment on the market, Federal Chairman Ben Bernanke offered some soothing remarks on the weakening housing market. While he expects the housing slump to cut into second-half economic growth, strong underpinnings may limit the duration of the "substantial correction" underway. These include a good job market, strong income growth, demographics and continued low mortgage rates.
In data news, the ISM reported that factory activity in the U.S. decelerated in September, and the index fell to 52.9%. While the decline was sharper than expected, it stayed above 50%. It is apparent that manufacturing is losing momentum and feeling the effects of higher interest rates and a weaker housing market. New orders for U.S.-made factory goods were unchanged in August after a 1% drop in July. This points to a softening of growth in the factory sector, consistent with the decline to 52.9% in the ISM index. However, a report on the job market offered some pause for thought. The U.S. economy added about 78,000 private-sector jobs in September. This is the weakest job growth since last September and October, just after Hurricane Katrina hit the Gulf Coast. The September employment report is expected on Friday, and economists are currently looking for payrolls to grow about 124,000, after 128,000 in August.
Shares of General Motors Corp. (NYSE: GM) fell 9 cents to $33.32 on news that its talks on joining a Renault-Nissan alliance have ended without agreement. However, on this news, shares in Ford Motor climbed 4% on speculation that Renault-Nissan might now approach GM's rival.
Shares in Wal-Mart Stores Inc. (NYSE: WMT) closed up 9 cents at $49.55, despite revising its September same-store sales lower. Earlier the retailer said sales at stores open a year or more had risen 1.8%, but now corrected it to 1.3%. It attributed the change to the monthly reconciliation process it undergoes to determine the same-store sales change.
Shares of TiVo Inc. (Nasdaq: TIVO) shares dropped 12.3% at $6.59 after an appeals court said EchoStar Communications Corp. (Nasdaq: DISH) could continue to sell its competing digital-video recorder models pending appeal of the companies' patent dispute over the technology. This decision also prompted broker Bear Stearns to lower its rating on TiVo to underperform.
U.S. light crude oil for November delivery rose 73 cents to settle at $59.41 a barrel on the New York Mercantile Exchange. Traders weighed news of a refinery snag and prospects for an output cut among key producers against a rise in domestic crude supplies. The Energy Department also reported a build in stocks for other petroleum products.
Shares in Wal-Mart Stores Inc. (NYSE: WMT) closed up 9 cents at $49.55, despite revising its September same-store sales lower. Earlier the retailer said sales at stores open a year or more had risen 1.8%, but now corrected it to 1.3%. It attributed the change to the monthly reconciliation process it undergoes to determine the same-store sales change.
Shares of TiVo Inc. (Nasdaq: TIVO) shares dropped 12.3% at $6.59 after an appeals court said EchoStar Communications Corp. (Nasdaq: DISH) could continue to sell its competing digital-video recorder models pending appeal of the companies' patent dispute over the technology. This decision also prompted broker Bear Stearns to lower its rating on TiVo to underperform.
Stocks ended higher with the Dow Jones Industrial Average logging a new record close, after the price of oil slumped to a 14 month low. This raised hopes that falling energy costs will boost consumer spending and moderate any slowdown in the economy.
Today, the Dow industrials average closed up 56.99 or 0.49% to 11,727.34, taking out the record close of 11,722.98 hit on Jan. 14, 2000. The Dow also notched a record trading high of 11,758.95, eclipsing its previous record of 11,750.28, also hit on Jan. 14, 2000. The S&P 500 index closed up 2.79 or 0.21% to 1,334.11, and the Nasdaq composite index closed up 6.05 or 0.27% to 2,243.65.
Market breadth was mixed. On the New York Stock Exchange, winners beat losers by a narrow margin of 17 to 15 as 1.70 billion shares changed hands. On the Nasdaq, decliners topped advancers 15 to 13 on volume of nearly 1.99 billion shares.
Investors are betting that lower energy prices will mean lower inflationary pressures, which in turn makes it more likely that the economy will slow down, but not head into a recession, as has been feared. The performance in the near future will be regulated by the kind of earnings outlooks companies give in the next few weeks. Investors have been worried that the Federal Reserve went too far in raising interest rates as it sought to choke inflationary pressures by slowing economic growth.
Stock of Boeing Co. (NYSE: BA) rose 2.3% to $81.78 after European rival EADS, struggling to roll out the Airbus A380 superjumbo jet, said it will push back the aircraft's already-delayed delivery schedule by up to another year. This could tear into the company's projected earnings and raises the threat of canceled orders.
Shares of Pepsi Bottling Group Inc. (NYSE: PBG) lost 7% to $32.77, despite higher net earnings of $207 million, against $205 million last year. However, a Deutsche Bank analyst downgraded its rating citing valuation and input cost pressures. The reported EPS is 86 cents against the expected 81 cents. In the quarter, the revenue rose to $3.46 billion, up 7% from $3.21 billion last year. Global net revenue per case rose 4%, and net revenue per case improved in all geographic segments.
Shares of Marvel Technology (Nasdaq: MRVL) closed down $2.29 or 12% to $16.80, after saying that it will restate financial results going back to its initial public offering in 2000, due to misdated stock options. The company also warned that third-quarter sales will be down 10% from the previous quarter, due to weaker demand from disk-drive makers.
September sales report for the auto sector saw shares of General Motors (NYSE: GM) down $0.09 to $33.41, on a larger-than-expected decline of 6.8% in sales. Shares of Ford Motor (Nasdaq: F) closed up $0.10 or 1.2% to $8.23, on reporting a 5% rise in sales. Stock of Daimler Chrysler (NYSE: DCX) fell 8 cents to $49.91, on reporting a 2.3% decline in sales. However, most companies saw some buyers wade back into the highly-profitable pickup and SUV markets.
U.S. light crude oil for November delivery fell $2.35 or 4% to settle at $58.68 a barrel on the New York Mercantile Exchange. This is a result of easing supply concerns, swelling U.S. inventories and fewer risks to global production.
Shares of Pepsi Bottling Group Inc. (NYSE: PBG) lost 7% to $32.77, despite higher net earnings of $207 million, against $205 million last year. However, a Deutsche Bank analyst downgraded its rating citing valuation and input cost pressures. The reported EPS is 86 cents against the expected 81 cents. In the quarter, the revenue rose to $3.46 billion, up 7% from $3.21 billion last year. Global net revenue per case rose 4%, and net revenue per case improved in all geographic segments.
Stock of Boeing Co. (NYSE: BA) rose 2.3% to $81.78 after European rival EADS, struggling to roll out the Airbus A380 superjumbo jet, said it will push back the aircraft's already-delayed delivery schedule by up to another year. This could tear into the company's projected earnings and raises the threat of canceled orders.
Shares of Marvel Technology (Nasdaq: MRVL) closed down $2.29 or 12% to $16.80, after saying that it will restate financial results going back to its initial public offering in 2000, due to misdated stock options. The company also warned that third-quarter sales will be down 10% from the previous quarter, due to weaker demand from disk-drive makers.
Stocks ended lower with weakness in technology shares pacing the decline, while the Dow Jones Industrial Average once again backed off record highs amid a disappointing sales outlook from Wall-Mart Stores Inc (NYSE: WMT). Nervousness over the upcoming third-quarter earnings season also contributed to the pullback, and dented the positive impact of a sharp drop in the price of oil.
Today, the Dow industrials closed down 8.72 or 0.07% to 11,670.35, the S&P 500 index closed down 4.53 or 0.34% to 1,331.32, and the Nasdaq composite slumped 20.83 or 0.92% to 2,237.60.
Market breadth was negative. On the New York Stock Exchange, losers beat winners by 17 to 14 on volume of 1.37 billion shares. On the Nasdaq, decliners topped advancers by 2 to 1 on volume of 1.81 billion shares.
The see-saw in the market is indicative of some negative earnings surprises. Investor interest has shifted from Fed rates to third quarter corporate profits. Additionally, favorable price of oil has taken that too out of consideration. Economic news supported hopes that the economy is slowing enough to take the edge off inflation, but not so much as to head toward recession.
Amongst data news, factory activity in the US decelerated in September, with the ISM index falling to 52.9%, from 54.5% in August. The decline was sharper than the expected fall to 53.7%. However, the positive news on inflation was that the price index dropped sharply to 61% from 73%. Pending sales of existing homes rose by 4.3% in August, indicating the nation's housing market may be stabilizing. Additionally, spending on U.S. construction projects rose by 0.3% in August, fueled by a 3.4% increase in private nonresidential construction. This is heartening news for the housing sector.
Shares of Apple Computer Inc. (Nasdaq: AAPL) closed down $2.12 or 2.75% to $74.86, after Citigroup downgraded the stock to "hold" from "buy." The broker told clients it sees little potential for revenue upside versus the Street's consensus in either the third or fourth quarters of the year.
In mergers and acquisitions activity, Gilead Sciences Inc. (Nasdaq: GILD) has agreed to acquire Myogen Inc. (Nasdaq: MYOG) in a cash deal valued at about $2.5 billion. This move is aimed at gaining ownership of Myogen's potential treatment of pulmonary arterial hypertension and is part of a diversification strategy for Gilead, whose current product portfolio is focused mainly on HIV drugs. Shares of Gilead closed down $4.49 or 6.5% to $64.28, while that of Myogen closed up $16.36 or 47% to $51.44.
Harrah's Entertainment Inc. (NYSE: HET) closed up $9.25 or 14% to $75.68, on news that the company is considering selling itself to Apollo Management and Texas Pacific Group for $15 billion in cash. This could be one of the biggest-ever leveraged buyouts. The $81 a share bid from Apollo Management and Texas Pacific Group is a 22% premium to Harrah's Friday closing price of $66.42.
Shares of Wal-Mart Stores Inc. (NYSE: WMT) closed down $0.88 or 1.8% to $48.44, after the retailer said that sales at stores open a year or more rose 1.8% in September. This comes to the mid-point of its 1 to 3% forecast range for the month. Merrill Lynch called the sales results "marginally disappointing," considering that gas prices were lower and the weather was cooler.
U.S. light crude oil for November delivery fell $1.88 to settle at $61.03 a barrel on the New York Mercantile Exchange. They tumbled despite Venezuela and Nigeria stating that they would cut oil production.
In mergers and acquisitions activity, Gilead Sciences Inc. (Nasdaq: GILD) has agreed to acquire Myogen Inc. (Nasdaq: MYOG) in a cash deal valued at about $2.5 billion. This move is aimed at gaining ownership of Myogen's potential treatment of pulmonary arterial hypertension and is part of a diversification strategy for Gilead, whose current product portfolio is focused mainly on HIV drugs. Shares of Gilead closed down $4.49 or 6.5% to $64.28, while that of Myogen closed up $16.36 or 47% to $51.44.
Harrah's Entertainment Inc. (NYSE: HET) closed up $9.25 or 14% to $75.68, on news that the company is considering selling itself to Apollo Management and Texas Pacific Group for $15 billion in cash. This could be one of the biggest-ever leveraged buyouts. The $81 a share bid from Apollo Management and Texas Pacific Group is a 22% premium to Harrah's Friday closing price of $66.42.
Shares of Wal-Mart Stores Inc. (NYSE: WMT) closed down $0.88 or 1.8% to $48.44, after the retailer said that sales at stores open a year or more rose 1.8%in September. This comes to the mid-point of its 1 to 3% forecast range for the month. Merrill Lynch called the sales results "marginally disappointing," considering that gas prices were lower and the weather was cooler.
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Disclaimer: This site may include market analysis. All ideas, opinions, and/or forecasts, expressed or implied herein, are for informational purposes only and should not be construed as a recommendation to invest, trade, and/or speculate in the markets. Any investments, trades, and/or speculations made in light of the ideas, opinions, and/or forecasts, expressed or implied herein, are committed at your own risk, financial or otherwise.
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