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« November 2006 |
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| January 2007 »
Stocks finished the year with strong gains with all three major stock averages booking their best performance since 2003. However, for the day, the investors backed off a bit at the end of an upbeat quarter. Markets will be closed Monday for New Year's Day and Tuesday for the national day of mourning for President Ford, marking a rare four-day closure for U.S. trading.
Today, the Dow Jones industrial average closed down 38.37 or 0.31% to 12,463.15, the broader S&P 500 closed down 6.43 or 0.45% to 1,418.3, and the Nasdaq closed down 10.28 or 0.42% to 2,415.29. For the year, the Dow gained 16.3%, the S&P gained 13.6% and the Nasdaq Composite advanced 9.5%.
Market breadth was negative and volume was light. On the New York Stock Exchange, decliners beat advancers 10 to 6 as 1 billion shares changed hands. On the Nasdaq, losers topped winners 9 to 6 on volume of around 1.4 billion shares.
There was little corporate or economic news to focus on and investors seemed content to hold on to gains through most of the session, before bailing out a little in the last half hour of trade. 2006 marked the fourth year in a row that the S&P 500 and Nasdaq composite posted gains. While, for the Dow, it was the third of four upbeat years. The stock gains were far better than what many prognosticators were expecting.
Analyst opine that January could bring some weakness as investors that have held off taking profits on 2006 gains for tax reasons opt to sell some winners. In addition, the arrival of the new Congress in late January and the start of fourth-quarter earnings pre-announcements could all set markets up for a pullback.
Shares of Apple (Nasdaq: AAPL) closed up $3.97 to $84.84, after the company restated its earnings and acknowledged that options were wrongly dated but it said CEO Steve Jobs didn't benefit as a result. Apple said it has recognized total additional non-cash stock-based compensation expenses of $84 million after taxes, including $4 million and $7 million in fiscal years 2006 and 2005, respectively. The board of directors is confident that the company has corrected the problems that led to the restatement, and it has complete confidence in Steve Jobs and the senior management team.
It is reported that Marsh & McLennan Cos. (NYSE: MMC) has agreed to sell Putnam Investments unit to fellow financial firm Power Corp. of Canada for $3.9 billion. This led the shares of MMC to close down $0.08 or 0.2% to $30.66. A deal could be announced early next year.
Shares of AT&T (NYSE: T) closed up $0.22 or 0.7% to $35.72, on news that it has offered concessions that should lead the way to winning approval of its $85 billion buyout of BellSouth (NYSE: BLS). The stock of BellSouth closed up $0.31 to $47.11. New conditions include a promise to observe "network neutrality" principles, an offer of affordable stand-alone digital subscriber line service and divestment of some wireless spectrum. This would be the largest telecommunications merger in U.S. history. For the year, shares of AT&T Corp. have gained 46%.
Stock of Goodyear Tire & Rubber (NYSE: GT) gained 5%, as the company said it plans to achieve savings through a three-year deal with the United Steelworkers union. The contract would give Goodyear the ability to save up to $610 million over the term of the contract and $300 million a year in ongoing savings.
Shares of General Motors (NYSE: GM) closed up $0.11 to $30.73, and this was the best-performing Dow stock of the year. GM that lost half of its value in 2005 as investors feared the automobile giant might go bankrupt, rose 58.2% in 2006.
U.S. light crude oil for February delivery rose 52 cents to $61.05 a barrel on the New York Mercantile Exchange.
Shares of Apple (Nasdaq: AAPL) closed up $3.97 to $84.84, after the company restated its earnings and acknowledged that options were wrongly dated but it said CEO Steve Jobs didn't benefit as a result. Apple said it has recognized total additional non-cash stock-based compensation expenses of $84 million after taxes, including $4 million and $7 million in fiscal years 2006 and 2005, respectively. The board of directors is confident that the company has corrected the problems that led to the restatement, and it has complete confidence in Steve Jobs and the senior management team.
Shares of AT&T (NYSE: T) closed up $0.22 or 0.7% to $35.72, on news that it has offered concessions that should lead the way to winning approval of its $85 billion buyout of BellSouth (NYSE: BLS). The stock of BellSouth closed up $0.31 to $47.11. New conditions include a promise to observe "network neutrality" principles, an offer of affordable stand-alone digital subscriber line service and divestment of some wireless spectrum. This would be the largest telecommunications merger in U.S. history. For the year, shares of AT&T Corp. have gained 46%.
Shares of General Motors (NYSE: GM) closed up $0.11 to $30.73, and this was the best-performing Dow stock of the year. GM that lost half of its value in 2005 as investors feared the automobile giant might go bankrupt, rose 58.2% in 2006.
Stocks closed mildly lower after the Dow Jones Industrial Average managed to set a new intraday high, as the brunt of selling pressure seen earlier in the day disappeared ahead of the final trading day of the year. The market earlier was hurt by concerns about strong data forcing the Federal Reserve to keep rates high. However, the declines were minimal one day after the Dow Jones industrial average hit its highest close ever and one day before the end of a strong year on Wall Street.
Today, the Dow Jones industrial average closed down 9.05 or 0.07% to 12,501.52, the broader S&P 500 index closed down 2.11 or 0.15% to 1,424.73, and the Nasdaq closed down 5.65 or 0.23% to 2,425.57.
Market breadth was negative, and volume was moderate. On the New York Stock Exchange, losers beat winners 8 to 7 on volume of 770 million shares. On the Nasdaq, decliners topped advancers 4 to 3 as 1.07 billion shares changed hands.
Investors eyed a trio of bullish economic reports that caused worries that the Federal Reserve may not cut interest rates as soon as investors have been hoping. The pace of existing home sales rose in November from the previous month, although the median price dropped 3.1% to $218,000. While the pace of home sales picked up 0.6% from the 6.24 million rate in October, it was 10.7% below year-ago levels of 7.03 million units.
U.S. consumer confidence rebounded in December, rising to an eight-month high as consumers' view of the labor market improved. The index of consumer sentiment climbed to 109.0 in December - its highest reading since April 2006 - from an upwardly revised 105.3 in November. This is against the forecast reading of 102.0. However, there is little to suggest sharp improvement in overall economic activity in the fourth quarter of the year.
The number of Americans filing new claims for unemployment rose less than expected last week. The number rose a smaller-than-expected 1,000 to 317,000 that showed a stable job market. Economist had forecast that claims would be a seasonally adjusted 320,000. The four-week moving average of claims, declined to 315,750, from 326,000 in the prior week.
Shares of Apple (Nasdaq: AAPL) closed down $0.59 or 0.7% to $80.93, amid ongoing concerns about its options practices, which are under federal investigation. Apparently, the company gave CEO Steve Jobs 7.5 million stock options in 2001 without the approval of the board.
Shares of IBM (NYSE: IBM) closed down $0.14 to $97.06, after IBM and Siemens AG received a 10-year, $9.3 billion contract from the German armed forces to modernize their data centers, software and computers. Siemens will receive a 60% share of the deal, and IBM would get the rest. Stock of Siemens rose 1.2% to 75.02 euros on the news and were the top gainer in a flat German DAX. The two companies will co-manage the project, jointly holding 50.1% in the consortium running it. The German government holds the remaining 49.9%.
U.S. light crude oil for February delivery rose 41 cents to $60.75 a barrel on the New York Mercantile Exchange. The price of oil fluctuated after the weekly energy inventory report showed a big decline in oil reserves and a jump in gasoline stockpiles.
Shares of Apple (Nasdaq: AAPL) closed down $0.59 or 0.7% to $80.93, amid ongoing concerns about its options practices, which are under federal investigation. Apparently, the company gave CEO Steve Jobs 7.5 million stock options in 2001 without the approval of the board.
Shares of IBM (NYSE: IBM) closed down $0.14 to $97.06, after IBM and Siemens AG received a 10-year, $9.3 billion contract from the German armed forces to modernize their data centers, software and computers. Siemens will receive a 60% share of the deal, and IBM would get the rest. Stock of Siemens rose 1.2% to 75.02 euros on the news and were the top gainer in a flat German DAX. The two companies will co-manage the project, jointly holding 50.1% in the consortium running it. The German government holds the remaining 49.9%.
Stocks rallied and pushed the Dow Jones Industrial Average to a new closing high above the 12,500 mark. Unexpected robust housing sales data cheered investors. Additionally, falling oil prices, fresh burst of end-of-year buying fueled the markets.
Today, the Dow Jones industrial average closed up 102.94 or 0.83% to 12,510.57, its highest close ever. The broader S&P 500 index closed up 9.94 or 0.7% to 1,426.84, the Nasdaq closed up 17.71 or 0.73% to 2,431.22.
Market breadth was positive. On the New York Stock Exchange, winners topped losers by 26 to 7 on volume of 972 million shares. On the Nasdaq, advancers beat decliners by 21 to 8 on volume of 1.234 billion shares.
Traditionally, the last days at the end of the year and the first few days of a new year have tended to be positive for equities. Additionally, the above-forecast new home sales numbers for November have some investors moving toward the opinion that the housing market may have bottomed out. This could lead to greater strength in the economy in 2007. The Dow hitting a new record was important for the psychology of the market, adding to hopes that the more than four-year old bull market can continue next year.
Investors welcomed a report showing a surprisingly strong jump in new home sales and prices in November. New homes sold at an annual pace of 1.05 million or up 3.4%, against the expected 1.02 million pace. The median average home price came in at $251,700, up from the $248,500 level in October. The inventory of new homes on the market came down to an estimated 6.3 months' supply, compared to 6.7 months in October and 7.2 months in July.
Shares of Apple (Nasdaq: AAPL) closed up $0.01 to $81.52, on news that federal prosecutors are looking into whether company executives falsified stock options documents. The shares sank as much as 6% in the morning, before recovering.
There is speculation that Ford President and CEO Alan Mulally and Toyota Chairman Fujio Cho were discussing a possible tie-up between the two companies. The two met last week in Japan, though further details are not known.
Shares of Burger King Holdings Inc. (NYSE: BKC) closed down 1 cent at $20.60, after stating that the fast food outlet's U.K. sales could fall by 10% to 15% in Britain as it has stopped television advertising to children.
U.S. light crude oil for February delivery fell 52 cents to settle at $60.38 a barrel on the New York Mercantile Exchange. The contract was under pressure after forecasts for warmer-than-average temperatures in the Eastern U.S. dampened demand expectations, overshadowing political concerns involving Iran, Nigeria and Somalia.
Shares of Apple (Nasdaq: AAPL) closed up $0.01 to $81.52, on news that federal prosecutors are looking into whether company executives falsified stock options documents. The shares sank as much as 6% in the morning, before recovering.
Stocks closed higher after investors made a beeline for shares that dropped to attractive prices during last week's sell-off, although Amazon.com Inc. (Nasdaq: AMZN) and other retailers were pressured by concerns about the strength of holiday shopping sales. However, falling oil prices helped offset a weak report on holiday retail sales.
Today, the Dow Jones industrial average closed up 64.41 or 0.52% to 12,407.63, the broader S&P 500 index closed up 6.14 or 0.44% to 1,416.90, and the tech-heavy Nasdaq composite closed up 12.33 or 0.51% to 2,413.51.
Volume was light with many investors on vacation. Market breadth was positive. On the New York Stock Exchange, advancers topped decliners by a margin of two to one on volume of 800 million shares. On the Nasdaq, winners beat losers by a margin of 17 to 11 as 1 billion shares changed hands.
While the Santa Claus rally has lifted stocks this month, stocks had trouble finding momentum ahead of the holiday weekend. Today, all three major gauges posted gains in thin trade, despite reports that sales for the holiday shopping period grew about 6.6% - below last year's 8.7%. However, the recent corporate takeover boom has been partly responsible for turning investors' attention away from the disappointing year-end retail sales reports.
Stock of Microsoft Corp. (Nasdaq: MSFT) closed up 1.2% at $29.97, after it was in focus following a WSJ.com report that the company is leveraging personal and search information gleaned from its Hotmail e-mail program and its Live Search engine in a worldwide effort to target ads at users of its sites. The method, called behavioral targeting, is designed to allow advertisers to more efficiently reach exactly the audiences they want. However, computer-security experts have found potentially serious flaws in Microsoft's new Vista operating system.
Shares of Eli Lilly & Co. (NYSE: LLY) finished 0.8% higher at $51.78, after the FDA approved Byetta injection as an add-on therapy to improve blood-sugar control. The treatment has been approved for people with type 2 diabetes who have not achieved adequate control on other medications.
Stock of Telika (Nasdaq: TELK) closed down $11.49 or 70% to $4.77, after the drug maker said its experimental cancer drug failed to improve survival in patients with advanced lung cancer or ovarian cancer.
Light sweet crude oil sank $1.31 to $61.10 a barrel on the New York Mercantile Exchange as mild Northeast weather offset concerns about Iran's nuclear program.
Shares of Eli Lilly & Co. (NYSE: LLY) finished 0.8% higher at $51.78, after the FDA approved Byetta injection as an add-on therapy to improve blood-sugar control. The treatment has been approved for people with type 2 diabetes who have not achieved adequate control on other medications.
Stock of Microsoft Corp. (Nasdaq: MSFT) closed up 1.2% at $29.97, after it was in focus following a WSJ.com report that the company is leveraging personal and search information gleaned from its Hotmail e-mail program and its Live Search engine in a worldwide effort to target ads at users of its sites. The method, called behavioral targeting, is designed to allow advertisers to more efficiently reach exactly the audiences they want. However, computer-security experts have found potentially serious flaws in Microsoft's new Vista operating system.
Stocks closed lower and booked losses for the week, after a key economic report on orders of big ticket items fueled concerns about growth, offsetting upbeat earnings from Blackberry maker Research in Motion Ltd. (Nasdaq: RIMM) and software producer Red Hat Inc (Nasdaq: RHAT). The data also gave investors a chance to book profits ahead of the long Christmas holiday weekend, while low volumes exaggerated the market's moves.
Today, the Dow Jones industrial average closed down 78.03 or 0.63% to 12,343.22, the broader S&P 500 index closed down 7.54 or 0.53% to 1,410.76, and the tech-heavy Nasdaq composite index closed down 14.67 or 0.61% to 2,401.18. For the week, the Dow Industrials dropped 0.8%, the S&P 500 fell 1.1%, while the Nasdaq lost 2.3%. It was the heaviest week of losses for the tech-heavy index since July.
Market breadth was negative. On the New York Stock Exchange, decliners topped advancers by a margin of 19 to 12 on volume of 986 million shares. On the Nasdaq, losers beat winners by a margin of 4 to 3 as 1.33 billion shares changed hands.
Stocks may not enjoy the Santa Claus rally, during the last five trading sessions of the year, since stocks have already run up big gains this year. The Dow is up 15%, the S&P 500 has gained 13% and the Nasdaq is up 9%. But as the year draws to a close, some analysts still have hopes for a rally. The stock market's ability to continue to advance and maintain its gains of the past six months has been interpreted as a bet that the economy will have a soft landing next year, with the Fed expected to cut interest rates to help stave off a fast-falling housing market.
Stocks slid today after a report showing a surprise decline in durable goods orders overshadowed a tame inflation reading. Orders for big-ticket items rose 1.9%, but excluding transportation, orders tumbled 1.1%. The core PCE was flat in December. The key inflation gauge showed no rise in prices in November while Americans' incomes and spending both rose, but came in a bit lighter than expected. Spending increased 0.5%, up from a revised 0.3% in October. Personal income grew 0.3% against the forecast 0.4% rise.
Stock of Research In Motion Ltd. (Nasdaq: RIMM) closed down $3.70 to $130.00, despite reporting 47% growth in quarterly profit on strong shipments of its handheld devices. Additionally, Pacific Crest Securities raised the price target for the shares to $160 from $150. The company reported a third-quarter profit of $176 million, compared with last year's $120.1 million. Sales for the quarter rose 49% to $835.1 million, compared to the $560.6 million a year ago.
Shares of Red Hat (Nasdaq: RHAT) shot up $4.50 or 23% to $22.46, after the software developer posted strong sales and added more than 12,000 new customers. However, the company said third-quarter net income fell 37% to $15.5 million, from $24.5 million a year earlier. Yet sales rose 45% to $105.8 million from $73.1 million last year on the back of higher subscription sales of the company's open-source software. Its subscription revenue was $88.9 million, up 48% year-over-year.
U.S. light crude oil for February delivery fell 25 cents to settle at $62.41 a barrel on the New York Mercantile Exchange.
Stock of Research In Motion Ltd. (Nasdaq: RIMM) closed down $3.70 to $130.00, despite reporting 47% growth in quarterly profit on strong shipments of its handheld devices. Additionally, Pacific Crest Securities raised the price target for the shares to $160 from $150. The company reported a third-quarter profit of $176 million, compared with last year's $120.1 million. Sales for the quarter rose 49% to $835.1 million, compared to the $560.6 million a year ago.
Shares of Red Hat (Nasdaq: RHAT) shot up $4.50 or 23% to $22.46, after the software developer posted strong sales and added more than 12,000 new customers. However, the company said third-quarter net income fell 37% to $15.5 million, from $24.5 million a year earlier. Yet sales rose 45% to $105.8 million from $73.1 million last year on the back of higher subscription sales of the company's open-source software. Its subscription revenue was $88.9 million, up 48% year-over-year.
Stocks closed lower as investors reacted to a weaker than expected regional manufacturing survey and a downward revision of third quarter economic growth, which offset positive momentum from deal making by Raytheon Co. (NYSE: RTN) and Glaxo Smithkline Plc (NYSE: GSK). The weakness can be attributed to a combination of economic weakness combined with the malaise befalling the market as we approach the holidays.
Today, the Dow Jones industrial average closed down 42.62 or 0.34% to 12,421.25, the broader S&P 500 index closed down 5.23 or 0.37% to 1,418.3, and the tech-heavy Nasdaq composite index closed down 11.76 or 0.48% to 2,415.85.
Market breadth was negative. On the New York Stock Exchange, losers beat winners by a margin of 19 to 13 on volume of 1.4 billion shares. On the Nasdaq, decliners topped advancers by a margin of 16 to 13 as 1.9 billion shares changed hands.
The markets turned lower as the Philadelphia Federal Reserve Bank's monthly survey posted a big decline in December. The index fell to a negative 4.3, versus forecasts for a positive 4.0 reading. This brought investors' attention back to the health of the economy. This is indicative that regional readings may also show a slow growth.
On the economic front, the Commerce Department said the GDP grew at a slower pace in the third quarter than previously estimated. The GDP grew at an annual 2% pace in the third quarter, down from the earlier estimate of 2.2%. This too provided a mixed backdrop for stocks. The Labor Department said initial jobless claims rose to 315,000 last week, exactly as predicted. The index of leading economic indicators inched up 0.1% to 138.2 in November, also meeting expectations on Wall Street.
Shares of Best Buy (NYSE: BBY) closed up $0.78 or 2% to $49.14, after Credit Suisse raised its rating on the electronics retailer to "outperform" from "neutral." On the other hand stock of Jabil Circuit closed down $2.32 or 9% to $24.24, after issuing a disappointing sales outlook for the current period.
Shares of Bed Bath & Beyond (Nasdaq: BBBY) closed down $1.44 or 4% to $38.49, as it disappointed investors with its quarterly earnings report. The home goods retailer reported a higher quarterly profit, but the results fell short of forecasts.
Ohio-based regional bank Huntington Bancshares announced that it had agreed to buy another Ohio-based regional bank, Sky Financial Group for $3.6 billion. Shares of Sky Financial (Nasdaq: SKYF) closed up $3.45 or 14% to $27.74.
Shares of General Mills Inc. (NYSE: GIS) gained 1.6%. to close at $58.95. The company posted a 4% rise in second-quarter income, to $385 million from $370 million a year ago. Sales for the quarter rose 5.3% to $3.47 billion, while worldwide unit volume expanded 3%.
In M&A news, Raytheon (NYSE: RTN) has agreed to sell its aircraft-making unit to Canada's Onex and Goldman Sachs (NYSE: GS) for $3.3 billion. Raytheon also will buy back $750 million in stock. And Britain's GlaxoSmithKline (NYSE: GSK) said it will buy Praecis Pharmaceuticals (Nasdaq: PRCS) for $54.8 million.
U.S. light crude oil for February delivery sank $1.06 to settle at $62.66 a barrel on the New York Mercantile Exchange.
Shares of Bed Bath & Beyond (Nasdaq: BBBY) closed down $1.44 or 4% to $38.49, as it disappointed investors with its quarterly earnings report. The home goods retailer reported a higher quarterly profit, but the results fell short of forecasts.
Shares of General Mills Inc. (NYSE: GIS) gained 1.6%. to close at $58.95. The company posted a 4% rise in second-quarter income, to $385 million from $370 million a year ago. Sales for the quarter rose 5.3% to $3.47 billion, while worldwide unit volume expanded 3%.
Stocks pared earlier gains to close lower as a sell-off in natural gas reversed the early positive momentum from a flurry of merger news. The drop in oil brought down the entire energy sector, weighing on the broader market and leaving the averages mostly unchanged on the day.
Today, the Dow Jones Industrial average closed down 7.45 or 0.06% to 12,463.87, after scaling a new record trading high of 12,498.47. The broader S&P 500 index closed down 2.02 or 0.14% to 1,423.53, and the tech-heavy Nasdaq composite index closed down 1.94 or 0.08% to 2,427.61.
Market breadth was mixed. On the New York Stock Exchange, advancers beat decliners by a margin of nearly 2 to 1 on volume of 1.4 billion shares. On the Nasdaq, losers topped winners by a margin of 16 to 13 as 1.8 billion shares changed hands.
Major overseas indexes rebounded after the Thai government lifted the controls on foreign stock investments that roiled global markets yesterday. It is evident that investors don't want to get spontaneous at this time of the year and at this point, there's not really a lot that can derail the market until the start of the new year. Tomorrow, investors will be on the lookout for the final reading of GDP growth in the third quarter. Additionally, the Philadelphia Fed's survey that measures regional manufacturing activity, weekly jobless claims and leading economic indicators will also be available.
Shares of FedEx (NYSE: FDX) closed down $2.15 or 2% to $111.85, after it warned about results for the current period. While it reported an 8% gain in second quarter income, investors were more focused on the fact that the shipper cut its third-quarter outlook. Second-quarter net income rose 8% to $511 million, from $471 million in the year earlier. Its total revenue rose 10% reaching $8.93 billion from $8.09 billion.
Shares of Swedish telecommunications equipment provider Ericsson (Nasdaq: ERICY) fell 0.1% after news it agreed to buy Redback Networks (Nasdaq: RBAK) for $2.1 billion. Shares of Redback closed up $4.49 or 21% to $25.66. Redback makes "edge" routers that connect computers to the Internet and allow operators to simultaneously deliver broadband, television and telephone services over networks using standard Internet infrastructure. This technology is essential to carriers that want to offer increasingly popular "triple-play" communications services.
Stock of Harrah Entertainment (NYSE: HET) closed up $0.37 to $82.69, after it agreed to be bought for $17.1 billion by private investors Apollo Management and Texas Pacific Group. The deal is for $90 a share in cash, along with the assumption of $10.7 billion in debt and is valued at $27.8 billion. The $90 a share price represents a 36% premium to its Sept. 29 closing price, the day before an initial offer of $81 a share was made.
Steel giant Arcelor Mittal (NYSE: MT) gained 1% to $42.12 after news it is buying Mexico's Sicartsa from Grupo Villacero for $1.44 billion. This will continue the steel-industry consolidation trend that started when Mittal Steel bought Arcelor. It has also agreed to a 50-50 joint venture to distribute and trade its long products in Mexico and the southwestern U.S. Sicartsa already shares a production site with Mittal Steel Lazaro Cardenas, and combining the two companies will help drive estimated annual synergies of $130 million.
Shares of Palm (Nasdaq: PALM) fell 0.9% after posting a sharp drop in earnings, which was expected, but disappointed with its forecast for the current quarter. For the quarter, the company reported earnings of $12.8 million, against the $260.9 million last year. Revenue for the quarter fell to $392.9 million from $444.6 million.
Shares of Dell Inc. (NYSE: DELL) fell 1.4% after the company said it selected Donald Carty, the head of its audit committee and a close friend of founder Michael Dell, to be its new CFO and straighten out the firm's accounting mess. The move comes as the company copes with investigations into its bookkeeping, corporate stumbles and a faltering stock price.
U.S. light crude oil for February delivery rose 26 cents to settle at $63.72 a barrel on the New York Mercantile Exchange after a weekly report on fuel inventories showed a dip in crude stocks.
Shares of Swedish telecommunications equipment provider Ericsson (Nasdaq: ERICY) fell 0.1% after news it agreed to buy Redback Networks (Nasdaq: RBAK) for $2.1 billion. Shares of Redback closed up $4.49 or 21% to $25.66. Redback makes "edge" routers that connect computers to the Internet and allow operators to simultaneously deliver broadband, television and telephone services over networks using standard Internet infrastructure. This technology is essential to carriers that want to offer increasingly popular "triple-play" communications services.
Stock of Harrah Entertainment (NYSE: HET) closed up $0.37 to $82.69, after it agreed to be bought for $17.1 billion by private investors Apollo Management and Texas Pacific Group. The deal is for $90 a share in cash, along with the assumption of $10.7 billion in debt and is valued at $27.8 billion. The $90 a share price represents a 36% premium to its Sept. 29 closing price, the day before an initial offer of $81 a share was made.
Steel giant Arcelor Mittal (NYSE: MT) gained 1% to $42.12 after news it is buying Mexico's Sicartsa from Grupo Villacero for $1.44 billion. This will continue the steel-industry consolidation trend that started when Mittal Steel bought Arcelor. It has also agreed to a 50-50 joint venture to distribute and trade its long products in Mexico and the southwestern U.S. Sicartsa already shares a production site with Mittal Steel Lazaro Cardenas, and combining the two companies will help drive estimated annual synergies of $130 million.
Stocks finished mixed with the Dow Jones Industrial Average at a new record close, as higher crude oil prices lifted energy stocks, offsetting earlier weakness sparked by a surprise rise in producer prices and disappointing results from Oracle Corp (Nasdaq: ORCL). The turmoil in Thailand did not affect the markets.
Today, the Dow closed up 30.05 or 0.24% to 12,471.32, to post its 21st record close since October. It also scaled a new intraday high of 12,491.91 during the session. The broader S&P 500 index closed up 3.07 or 0.22% to 1,425.55, and the tech-fueled Nasdaq composite closed down 6.02 or 0.25% to 2,429.55.
Market breadth was mixed. On the New York Stock Exchange, advancers beat decliners by a margin of nearly 17 to 15 on volume of 1.56 billion shares. On the Nasdaq, losers topped winners by a margin of 16 to 13 as 1.99 billion shares changed hands.
Stocks slid at the open after an inflation report and steep sell-off in Thailand raised jitters. The Thai central bank has unveiled plans to impose capital controls on foreign investors, in an effort to curb the rise of its currency. However, by midday, those worries eased and the positive tone that has underpinned the stock market's recent rally returned. The Producer Price Index rose sharply to 2% in November, posting its biggest gain since 1974. This report came on the heels of a report last week that showed prices paid by consumers remained in check last month. The stronger than expected rise is a disappointment for folks expecting the Federal Reserve to cut rates in early 2007.
Shares of Circuit City Stores Inc. (NYSE: CC) closed down $3.75 or 16% to $19.01, after it posted a quarterly loss and said its holiday sales were hurt by fierce price competition from Wal-Mart. The loss was wider than analysts' estimates, due to price cuts, and scaled back sales projections.
Shares of Oracle (Nasdaq: ORCL) closed down $0.81 or 14% to $17.10, despite reporting earnings in line with expectations. It reported a net income of $967 million, or an EPS of 18 cents against the 22 cents expected by analyst. Investors were disappointed that its sales of new software licenses rose less than expected.
Shares of Morgan Stanley (NYSE: MS) closed up 2% after the company posted strong earnings and said it would spin off its Discovery credit card unit. The investment bank reported a 10% decline in net income for the fourth quarter, but profit still managed to outpace analysts' expectations. Its net income slipped to $2.21 billion from $2.47 billion a year ago. The consolidated net revenue for the latest quarter was $8.63 billion versus $6.96 billion a year ago.
Stock of Pfizer Inc. (NYSE: PFE) closed up 1.4%, after the board raised its dividend and said elected CEO Jeffrey Kindler would serve as chairman. It raised its dividend from 24 cents to 29 cents per share, a 21% hike.
U.S. crude light crude oil for January delivery soared 94 cents to settle at $63.15 a barrel on the New York Mercantile Exchange.
Shares of Oracle (Nasdaq: ORCL) closed down $0.81 or 14% to $17.10, despite reporting earnings in line with expectations. It reported a net income of $967 million, or an EPS of 18 cents against the 22 cents expected by analyst. Investors were disappointed that its sales of new software licenses rose less than expected.
Shares of Morgan Stanley (NYSE: MS) closed up 2% after the company posted strong earnings and said it would spin off its Discovery credit card unit. The investment bank reported a 10% decline in net income for the fourth quarter, but profit still managed to outpace analysts' expectations. Its net income slipped to $2.21 billion from $2.47 billion a year ago. The consolidated net revenue for the latest quarter was $8.63 billion versus $6.96 billion a year ago.
Stocks closed lower as investors took profit on recent gains, notably in technology shares, offsetting the boost from an upgrade of Citigroup Inc (NYSE: C) and more merger news, including two leveraged buyouts. A slide in crude oil prices also weighed on energy shares and capped gains for the broader market.
Today, the Dow closed down 4.25 or 0.03% to 12,441.27, the broader S&P 500 index closed down 4.61 or 0.32% to 1,422.48, the tech-fueled Nasdaq composite closed down 21.63 or 0.88% to 2,435.57.
Market breadth was mixed. On the New York Stock Exchange, winners beat losers by 21 to 11 on volume of 1.5 billion shares. On the Nasdaq, advancers barely edged decliners by 20 to 9 on 1.9 billion shares changed hands.
Profit taking of the market's strong gains recently and concerns about holiday sales coming in weak contributed to the downside today. The traditional "Santa Claus" rally was missing. However, the market has already been moving higher without much interruption for the past six months, and there is no reason for gains not to continue until the end of the year. While economic data has been showing conflicting signals of both strength and weakness, the fact that we're holding onto the strong gains means investors are confident. In economic news, the Commerce Department said the U.S. current account deficit widened to $225.6 billion in the third quarter.
Shares of financial services giant Citigroup (NYSE: C) closed up $1.37 or 2.5% to $55.44, on an upgrade. Merrill Lynch (NYSE: MER) upgraded the stock to a buy from a neutral, with the broker citing the stock's attractive valuation and saying it has greater confidence the bank will achieve its 2007 earnings target.
Harrah's Entertainment (NYSE: HET) reportedly is on the verge of being sold to two private-equity firms for at least $90 a share. The stock closed up $2.80 or 3% to $82.30, in what would be one of the largest private deals in history. Apollo Management and Texas Pacific Group are set to win an auction to acquire the gambling giant, beating out an offer from Penn National Gaming Inc (Nasdaq: PENN). The deal could be valued at more than $16 billion. Penn reportedly offered about $87 a share. Harrah had a revenue of more than $7 billion last year and a current market capitalization of nearly $15 billion. It owns 39 casinos in the U.S., including some gems of the Las Vegas Strip such as Caesars Palace and Paris.
Shares of Realogy (NYSE: H) closed up $4.91 or 19% to $30.41, after it said that private equity firm Apollo Group would buy it for about $6.65 billion. The firm, whose brands include the Coldwell Banker and Century 21 franchises, will receive $30 per share, or an 18% premium over Friday's close.
Stock of Biomet Inc. (Nasdaq: BMET) closed down $0.47 or 1% to $41.53, after it said it will be bought by a group of private equity firms for about $10.9 billion. The group that includes Blackstone Group, Goldman Sachs Capital Partners and Kohlberg Kravis Roberts. Additionally, it also said it would be delaying its fiscal second quarter earnings report "due to developments related to the review of historical stock option practices. The bid is 27% over its closing price on April 3, the day before market speculation arose that the company had retained Morgan Stanley to assist it in "exploring strategic alternatives." However, it is only a couple of dollars above Friday's close of $42 a share.
U.S. light crude oil for January delivery sank $1.22 to settle at $62.21 a barrel on the New York Mercantile Exchange.
Shares of financial services giant Citigroup (NYSE: C) closed up $1.37 or 2.5% to $55.44, on an upgrade. Merrill Lynch (NYSE: MER) upgraded the stock to a buy from a neutral, with the broker citing the stock's attractive valuation and saying it has greater confidence the bank will achieve its 2007 earnings target.
Harrah's Entertainment (NYSE: HET) reportedly is on the verge of being sold to two private-equity firms for at least $90 a share. The stock closed up $2.80 or 3% to $82.30, in what would be one of the largest private deals in history. Apollo Management and Texas Pacific Group are set to win an auction to acquire the gambling giant, beating out an offer from Penn National Gaming Inc (Nasdaq: PENN). The deal could be valued at more than $16 billion. Penn reportedly offered about $87 a share. Harrah had a revenue of more than $7 billion last year and a current market capitalization of nearly $15 billion. It owns 39 casinos in the U.S., including some gems of the Las Vegas Strip such as Caesars Palace and Paris.
Stock of Biomet Inc. (Nasdaq: BMET) closed down $0.47 or 1% to $41.53, after it said it will be bought by a group of private equity firms for about $10.9 billion. The group that includes Blackstone Group, Goldman Sachs Capital Partners and Kohlberg Kravis Roberts. Additionally, it also said it would be delaying its fiscal second quarter earnings report "due to developments related to the review of historical stock option practices. The bid is 27% over its closing price on April 3, the day before market speculation arose that the company had retained Morgan Stanley to assist it in "exploring strategic alternatives." However, it is only a couple of dollars above Friday's close of $42 a share.
Stocks closed higher for the day and the week as the Dow Jones Industrial Average set another record high close, after hopes of a Goldilocks economy and an interest rate cut in 2007 were revived by an unchanged reading on consumer inflation. The mild read on consumer prices have furthered bets that inflation is easing.
Today, the Dow closed up 28.76 or 0.23% to 12,445.52, ending at a record high for the 20th time since October. The broader S&P 500 closed up 1.6 or 0.11% to 1,427.09, and the tech-fueled Nasdaq closed up 3.35 or 0.14% to 2,457.2. For the week, the Dow Jones industrials gained 1.1%, the S&P 500 advanced 1.2% and the Nasdaq Composite rose 0.8%.
Market breadth was narrowly negative. On the New York Stock Exchange, losers edged winners 17 to 15 on volume of 2.105 billion shares. On the Nasdaq, decliners barely edged out advancers 15 to 14 on volume of 2.375 billion shares.
Stocks have rallied this week thanks to a spate of economic news that has supported hopes that growth is slowing at a moderate pace, and that inflationary pressures are waning. Friday's Consumer Price Index (CPI) supported these hopes. Unless the economy starts to show dramatically slower growth, even slower than in the third quarter, there's good reason to remain optimistic in the longer term.
Both overall consumer prices and core prices were unchanged in November, while economists thought both would rise 0.2%. This supports the Fed comment that the slowing economy should take the edge off pricing pressure. With core CPI "behaving well" for two months in a row, the inflation picture may actually be a little better than had been thought. Additionally, industrial production showed a surprise rise of 0.2% in November, versus economists' bets for an unchanged reading. Capacity utilization held steady, missing forecasts for a slight rise.
Shares of Apple Computer Inc. (Nasdaq: AAPL) closed down 0.9% at $87.77 after saying it was unable to file its Form 10-K by the required filing date of December 14 and that the company will need to restate its historical financial statements to include charges for past stock option grants.
Stock of Adobe Systems (Nasdaq: ADBE) closed up $1.99 or 5% to $42.80, after the software maker reported higher quarterly earnings and revenue. Its quarterly profit rose 16% after its acquisition of Macromedia helped boost sales of its computer programs used for design and document sharing. Its fourth-quarter net income rose to $181.9 million, from $156.3 million a year earlier. Revenue rose to $682.2 million, from $510.4 million in the year-earlier quarter. It said it is targeting revenue growth of about 15% for 2007 and an operating margin of 25 to 27% for the year.
Shares of Dell (NYSE: DELL) closed down $0.37 to $26.50, after declaring that it will delay filling its third-quarter financial report because of ongoing investigations into its finances. The SEC, the U.S. attorney for the Southern District of New York and the company's audit committee have raised questions about Dell's financial reporting. The company also has not yet filed second-quarter earnings with the SEC.
Stock of Ford Motor Co. (Nasdaq: F) closed down 0.4% to $7.08, after news of its first management reshuffling under new CEO Alan Mulally. The company will expand the role of its head of product development in the Americas to include the rest of the world. Derrick Kuzak will be in charge of global product development asit seeks to integrate its international operations and streamline the design and creation of new car models.
U.S. light crude oil for January delivery gained 92 cents to $63.43 a barrel on the New York Mercantile Exchange.
Stock of Adobe Systems (Nasdaq: ADBE) closed up $1.99 or 5% to $42.80, after the software maker reported higher quarterly earnings and revenue. Its quarterly profit rose 16% after its acquisition of Macromedia helped boost sales of its computer programs used for design and document sharing. Its fourth-quarter net income rose to $181.9 million, from $156.3 million a year earlier. Revenue rose to $682.2 million, from $510.4 million in the year-earlier quarter. It said it is targeting revenue growth of about 15% for 2007 and an operating margin of 25 to 27% for the year.
Stock of Ford Motor Co. (Nasdaq: F) closed down 0.4% to $7.08, after news of its first management reshuffling under new CEO Alan Mulally. The company will expand the role of its head of product development in the Americas to include the rest of the world. Derrick Kuzak will be in charge of global product development asit seeks to integrate its international operations and streamline the design and creation of new car models.
Stocks closed sharply higher with the Dow Jones Industrials Average setting a record close, after positive forecasts from some household names helped investors shrug off an upcoming cut in oil output. Upbeat earnings from the banking sector, a drop in jobless claims and a rebound in technology added to the cheer.
Today, the Dow closed up 99.26 or 0.81% to 12,416.76, the broader S&P 500 closed up 12.28 or 0.87% to 1,425.49, and the tech-fueled Nasdaq closed up 21.44 or 0.88% to 2,453.85. The Dow broke through a previous record closing high of 12,342.56 set Nov. 17. It also hit a new trading high of 12,431.26. The S&P 500 closed at its highest level since November 2000, taking out its previous 2006 high from early December, and the Nasdaq closed about 12 points below its 2006 high.
Market breadth was positive. On the New York Stock Exchange, winners topped losers two to one on volume of 1.567 billion shares. On the Nasdaq, advancers topped decliners 17 to 12 on volume of 1.95 billion shares.
Recent reports have reaffirmed that growth and inflation will keep the Federal Reserve from cutting interest rates as early as hoped. Tomorrows report on consumer prices will also give additional signs of inflation. Additionally, Friday is a "quadruple witching" day, in which individual stock futures and options and stock index futures and options all expire at the same time. This can lead to fluctuations in the prices of the underlying stocks.
In economic news, the number of workers seeking first-time jobless benefits fell more than 20,000 to a seasonally adjusted 304,000, from 324,000 in the previous week. This is against the expected fall to 320,000. The four-week moving average, slipped by 1,500 to 327,250 from 328,750 the previous week.
Citigroup (NYSE: C) strategist Tobias Levkovich lifted his year-end 2007 targets for the Dow Jones Industrials Average and the S&P 500 Index, to imply double-digit percentage gains, citing expectations of continued strong earnings growth and other seasonal factors. He sees the Dow industrials reaching 14,000 by the end of 2007, and the S&P 500 to 1,600. This implies a 14% gain for the Dow and a 13% rise for the S&P 500. This handily beats the returns promised by bonds or cash, and so argues for "a meaningfully heavy allocation toward stocks."
Shares of Costco Wholesale Corp. (Nasdaq: COST) rose 1.8% after reporting a first-quarter profit of $236.9 million, up from $215.8 million in the year-earlier period. The 10% rise in first-quarter income is attributable to tight spending, higher membership fees and robust sales of electronics and toys. Revenue reached $14.15 billion, up 9%, as it rang up a 9% increase in sales of big-ticket electronics, diamond rings and fine wines and a 14% jump in membership fees. Same-store sales rose 4%.
Stock of Bear Stearns (NYSE: BSC) gained 2.6%, after reporting fourth-quarter net income rise 38% to $562.8 million – way past analyst forecasts. Higher underwriting fees and a strong merger and acquisitions trend boosted its profits by more than half in its fourth quarter, helping the company report its most profitable quarter ever and its fifth straight year of record earnings. The revenue increased to $4.47 billion, from $3.18 billion last year.
Shares of Dow component Procter & Gamble (NYSE: PG) closed down 5 cents at $63.35 after it confirmed second-quarter earnings and sales targets. The company continues to see an EPS of 81 cents to 83 cents on sales growth of 5% to 8%. Analysts had forecast an EPS of 83 cents, with sales growing 4% to 7%.
U.S. light crude oil for January delivery surged $1.14 to settle at $62.51 a barrel on the New York Mercantile Exchange after OPEC said it would cut production by 500,000 barrels per day starting Feb. 1.
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