About
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
Email: manuel [AT] manuelbackus.com
Links
Subscribe
Receive weekly trading tips by email.
|
|
« September 2006 |
Main
| 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 |
