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« December 2006 |
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| February 2007 »
Stocks leaped with the Dow Jones Industrial Average posting its best day of the year after the Federal Reserve left interest rates unchanged and indicated that inflation remains under control, easing concerns the central bank might have to raise interest rates. Interpretation that inflation is moderating, while there's a pick up in the economy, should all be good for equities.
Today, the Dow Jones Industrial average closed up 98.38 or 0.79% to 12,621.69, the broader S&P 500 closed up 9.42 or 0.66% to 1,438.24, and the tech-heavy Nasdaq composite closed up 15.29 or 0.62% to 2,463.93.
Market breadth was positive. On the New York Stock Exchange, winners beat losers by 11 to 5 on volume of 1.721 billion shares. On the Nasdaq, advancers topped decliners by 16 to 13 on volume of 2.258 billion shares.
Policy-makers opted to hold a key short-term interest rate steady at 5.25%, for the fifth meeting in a row. In the closely watched statement, they acknowledged the recent signs of strength in the economy and said that growth should expand at a moderate pace over the next few quarters. On inflation, they said core pricing pressure had improved but that wage inflation remained an issue. The statement represents a substantial upgrade to the Fed's growth outlook, suggesting that despite the housing slow down, things are moving along. Additionally, the statement didn't add to bets that the Fed is likely to raise rates imminently, something investors have been concerned about recently.
The GDP grew at a 3.5% annual rate in the fourth quarter, up from a 2% gain in the third quarter and a faster pace than the 3% forecast by economists. This is a surprisingly strong showing given the ongoing slump in the housing market. A separate report, the Chicago PMI, showed a bigger than expected decline in manufacturing growth in the Midwest region in January.
Shares of Altria (NYSE: MO) closed down $0.15 to $87.39, after reporting higher fourth-quarter profit. Additionally, the company said it would spin off its majority stake in Kraft foods (NYSE: KFT). Its profit was $2.96 billion, compared with $2.29 billion, a year earlier. Its 89% stake in Kraft Foods will be distributed March 30 to shareholders on record as of March 16.
Stock of SanDisk (Nasdaq: SNDK) closed down $2.65 or 6% to $40.18, after saying that it swung to a quarterly loss from a profit a year ago. The maker of flash memory chips for cell phones and digital cameras have been declining swiftly and that the price outlook for 2007 is unclear.
Delta Air Lines (OTC: DALRQ) rejected a hostile takeover bid from US Airways Group (NYSE: LCC). Shares of US Airways closed up $2.88 to $55.98. US Air announced that the creditors' committee, whose approval Delta needs to emerge from bankruptcy, would not give its support to the nearly $10 billion cash-and-stock offer.
U.S. light crude oil for March delivery rose $1.17 to $58.05 a barrel on the New York Mercantile Exchange.
Shares of Altria (NYSE: MO) closed down $0.15 to $87.39, after reporting higher fourth-quarter profit. Additionally, the company said it would spin off its majority stake in Kraft foods (NYSE: KFT). Its profit was $2.96 billion, compared with $2.29 billion, a year earlier. Its 89% stake in Kraft Foods will be distributed March 30 to shareholders on record as of March 16.
Delta Air Lines (OTC: DALRQ) rejected a hostile takeover bid from US Airways Group (NYSE: LCC). Shares of US Airways closed up $2.88 to $55.98. US Air announced that the creditors' committee, whose approval Delta needs to emerge from bankruptcy, would not give its support to the nearly $10 billion cash-and-stock offer.
Stocks closed higher, benefiting from rallying oil prices and energy shares that helped offset the caution ahead of a Federal Reserve interest rate decision. The market held up pretty well considering the big stocks that are down after reporting a now familiar pattern of okay earnings and lackluster guidance. It's likely that we will stay around current levels until we can get a sense of where the economy's headed and what the Fed will do.
Today, the Dow Jones Industrial average closed up 32.53 or 0.26% to 12,523.31, while the broader S&P 500 closed up 8.20 or 0.58% to 1,428.82, and the tech-heavy Nasdaq composite closed up 7.55 or 0.31% to 2,448.64.
Market breadth was positive. On the New York Stock Exchange, winners topped losers by 23 to 9 on volume of 1.53 billion shares. On the Nasdaq, advancers beat decliners 18 to 11 on volume of 1.82 billion shares.
In the Fed meeting tomorrow, policymakers are expected to hold the key short-term interest rate steady. However, investors will be attuned to what the bankers have to say in the accompanying statement about the economy and the future direction of interest rates. Last fall, stocks rallied partly on bets that the Federal Reserve would start cutting rates as soon as the first quarter of this year. But such bets have disappeared in response to recent reports that have suggested a stronger finish to the fourth quarter and start to the first than had been expected. Investors have been coming to terms with the likelihood that the Federal Reserve may not cut interest rates any time soon.
Ahead of the Fed, reports are expected on the GDP growth in the fourth quarter, manufacturing in the Midwest and national construction spending. Also, the ADP monthly employment survey is due, and serves as something of a precursor to Friday's more closely-watched January jobs report. The reading on consumer confidence showed that the index rose to 110.3 in January from an upwardly revised 110 in December. This showed consumers most comfortable with the present situation, rather than the future, reflecting the strong jobs growth and lower oil and gas prices that have been seen recently.
Stock of 3M (NYSE: MMM) closed down $4.26 or 5.4% to $74.70, on posting a weaker-than-expected fourth-quarter profit and caution about the slowdown in the global economy. The slowdown in the U.S. housing and automotive markets had a significant negative impact on sales and gross margins in a handful of divisions. The company had a net profit of $1.18 billion, up from $746 million earned in the year-ago period.
Shares of United Parcel Service (NYSE: UPS) slumped about 2.7% after reporting fourth-quarter earnings that matched expectations but revenue and a 2007 outlook that fell short, as it forecast slowing domestic demand in the U.S. The company reported fourth-quarter earnings of $1.13 billion, up from $1.05 billion a year earlier. Its revenue rose 5.6% to $12.63 billion from $11.95 billion a year ago. In addition, UPS said it expects 2007 EPS of $4.10.
Stock of Procter & Gamble (NYSE: PG) closed down $0.29 to $64.59, after reporting higher quarterly sales and earnings that topped estimates, thanks to strong sales of its consumer products. The company also boosted its 2007 profit outlook. However, investors focused on the company's organic sales growth, which came in at the lower end of its guidance. Its second-quarter income rose 12% to $2.86 billion, from $2.55 billion a year ago. Its sales advanced 8% to $19.73 billion from $18.34 billion. Organic sales rose 5%, toward the low end of the company's guidance.
Shares of Motorola (NYSE: MOT) closed up $1.27 or 7% to $19.58, on news that billionaire investor Carl Icahn is looking for a seat on the telecom's board. Icahn owns about 33.5 million shares of the company, or about 1.3% of its shares outstanding. Icahn is famous for pressuring management for changes at companies in which he invests.
U.S. light crude oil for March delivery added $2.96 to settle at $56.97 a barrel on the New York Mercantile Exchange, a rise of 5.5%.
Stock of 3M (NYSE: MMM) closed down $4.26 or 5.4% to $74.70, on posting a weaker-than-expected fourth-quarter profit and caution about the slowdown in the global economy. The slowdown in the U.S. housing and automotive markets had a significant negative impact on sales and gross margins in a handful of divisions. The company had a net profit of $1.18 billion, up from $746 million earned in the year-ago period.
Shares of United Parcel Service (NYSE: UPS) slumped about 2.7% after reporting fourth-quarter earnings that matched expectations but revenue and a 2007 outlook that fell short, as it forecast slowing domestic demand in the U.S. The company reported fourth-quarter earnings of $1.13 billion, up from $1.05 billion a year earlier. Its revenue rose 5.6% to $12.63 billion from $11.95 billion a year ago. In addition, UPS said it expects 2007 EPS of $4.10.
Stock of Procter & Gamble (NYSE: PG) closed down $0.29 to $64.59, after reporting higher quarterly sales and earnings that topped estimates, thanks to strong sales of its consumer products. The company also boosted its 2007 profit outlook. However, investors focused on the company's organic sales growth, which came in at the lower end of its guidance. Its second-quarter income rose 12% to $2.86 billion, from $2.55 billion a year ago. Its sales advanced 8% to $19.73 billion from $18.34 billion. Organic sales rose 5%, toward the low end of the company's guidance.
Shares of Motorola (NYSE: MOT) closed up $1.27 or 7% to $19.58, on news that billionaire investor Carl Icahn is looking for a seat on the telecom's board. Icahn owns about 33.5 million shares of the company, or about 1.3% of its shares outstanding. Icahn is famous for pressuring management for changes at companies in which he invests.
Stocks finished mixed after investors behaved cautiously in the face of sliding crude oil prices, a flurry of merger developments, and technology innovations from chip-making companies Intel Corp. (Nasdaq: INTC) and IBM (NYSE: IBM). This is a heavy week with lots of earnings, economic data, and the Federal Reserve meeting. Any of these can move the market, so it is likely to remain choppy until investors can get a grip on the overall picture."
Today, the Dow Jones Industrial average closed up 3.76 or 0.03% to 12,490.78, the broader S&P 500 closed down 1.56 or 0.11% to 1,420.62, and the tech-heavy Nasdaq composite closed up 5.60 or 0.23% to 2,441.09.
Market breadth was positive. On the New York Stock Exchange, winners beat losers 9 to 7 on volume of 1.54 billion shares. On the Nasdaq, advancers beat decliners 17 to 12 on volume of 1.94 billion shares.
Nearly one-fourth of the S&P 500 is due to report results this week. Currently, earnings are on track to have risen about 10% from the same quarter a year ago. The Fed meeting is scheduled this week where policymakers are widely expected to hold the key short-term interest rate steady. Investors will be paying close attention to what the bankers have to say about the economy and the future direction of interest rates in its accompanying statement. Concerns about a host of economic reports due out later this week, has also prompted investors to wait and watch.
There were a spate of merger and take-over news. Merril Lynch (NYSE: MER) closed down $2.14 to $92.39, after stating that it would buy First Republic Bank for $1.8 billion. Stock of First Republic Bank closed up $15.33 to $53.63. Citigroup (NYSE: C) closed down $0.61 to $54.06, on announcing that it is buying Egg Banking from Britain's Prudential PLC in a $1.13 billion deal. Altris (Nasdaq: ATRS) closed up $5.41 to $32.55, on news that it will be bought by Symantec (Nasdaq: SYMC) for about $830 million. Stock of Symantec closed down $0.25 to $17.52.
Shares of Bristol-Myers Squibb (NYSE: BMY) closed up $1.22 or 4.7% to $27.43, on merger speculation with the French pharmaceutical giant Sanofi-Aventis (NYSE: SNY). This would make it the biggest drug company in the world. Bristol is understood to have signed a pre-merger deal. Stock of Sanofi closed down $0.64 to $44.70.
Intel (Nasdaq: INTC) and IBM (NYSE: IBM) both said separately that they are each developing smaller, faster chips. Stock of Intel closed up $0.36 to $20.89, and IBM closed up $1.09 to $98.54. Both companies are using "high-k" technology that substitutes a new material into a portion of the transistor that controls its primary on/off switching function, reducing leakage by more than 10 times.
U.S. light crude oil for March delivery fell sharply, easing $1.41 to settle at $54.01 a barrel on the New York Mercantile Exchange.
Shares of Bristol-Myers Squibb (NYSE: BMY) closed up $1.22 or 4.7% to $27.43, on merger speculation with the French pharmaceutical giant Sanofi-Aventis (NYSE: SNY). This would make it the biggest drug company in the world. Bristol is understood to have signed a pre-merger deal. Stock of Sanofi closed down $0.64 to $44.70.
Stocks closed mixed as investors showed renewed interest in technology shares, while the broad market remained under pressure and posted weekly losses amid caution about rising long-term interest rates in the bond market. Worries about higher interest rates overshadowed the day's corporate news, including upbeat earnings from Microsoft (Nasdaq: MSFT) and Caterpillar (NYSE: CAT), weaker results from Amgen (Nasdaq: AMGN) and a Citigroup (NYSE: C) downgrade of Cisco Systems (Nasdaq: CSCOT).
Today, the Dow Jones Industrial average closed down 15.54 or 0.12% to 12,487.02, and the broader S&P 500 closed down 1.72 or 0.12% to 1,422.18. The tech-heavy Nasdaq composite closed up 1.25 or 0.05% to 2,435.49. For the week, the Dow, S&P and Nasdaq all fell about 0.6%.
Market breadth was positive. On the New York Stock Exchange, winners beat losers by a margin of nine to seven on volume of 1.5 billion shares. On the Nasdaq, decliners topped advancers three to two on volume of 2 billion shares.
Revival of worries about the interest rate are behind this great sell-off. Investors clung to these worries as a second housing market report suggested a bottoming in new home sales. New home sales plunged 17.3% in 2006, the biggest drop in 16 years. The supply of completed homes available for sale rose to a record 172,000 in December, up nearly 50% from a year earlier. Adding fuel to fire, was the strong report on durable goods. New orders rose a larger-than-expected 3.1% in December as demand for aircraft and parts soared and most other sectors showed surprising strength. Excluding transportation orders, durable goods orders rose 2.3% in December following two monthly declines.
Next week brings a plate full of economic and fundamental information. Starting with the Fed meeting, a few big earnings announcements, such as Google (Nasdaq: GOOG), January's consumer confidence report on Tuesday, the fourth-quarter GDP report on Wednesday, and then the jobs report on Friday. While strong economic growth is good for corporate profits and ultimately leads to stock gains, but investors may be concerned that if growth is too strong it will cause the Federal Reserve to start raising interest rates again.
Shares of Caterpillar (NYSE: CAT) closed up $1.46 or 2.5% to $61.09, after reporting higher quarterly earnings that missed estimates on higher sales that topped estimates. The company also issued a bullish 2007 earnings forecast. Its net quarterly profit rose 4.3%, helped by increased sales of its engines and other machinery. It reported a fourth-quarter profit of $882 million, up from $846 million, last year. Sales rose 14 percent to $11 billion, lifted by a 13% jump in machinery sales and a 17% rise in engines sales.
Stock of Microsoft (Nasdaq: MSFT) closed up $0.17 to $30.60, on reporting strong quarterly sales and earnings that beat estimates. While it reported a drop in profit for its fiscal second quarter, its sales and earnings beat analyst expectations thanks to strong sales of its Xbox 360 game console during the holidays. The company reported quarterly revenues of $12.54 billion, up 6% from a year ago and ahead of the $12.09 billion expected by analysts.
Shares of Honeywell (NYSE: HON) closed down $0.07 to $44.13, despite reporting higher quarterly sales and earnings. However, the company also issued a 2007 earnings forecast in a range that could miss analysts' estimates. Its quarterly profit rose 13.8% on strong demand for its airplane components and systems used in commercial construction. Fourth-quarter earnings increased to $585 million, from $514 million, a year earlier. Revenue came in at $8.28 billion, up 13.8% from $7.28 billion.
Stock of Amgen (Nasdaq: AMGN) closed down $3.35 or 5% to $71.50, after reporting higher quarterly earnings that missed estimates on higher sales that topped estimates. Its EPS jumped 20% to 90 cents from 75 cents for the same period the previous year. It reported sales of $3.83 billion, a 17% increase compared to the year-ago period, when sales totaled $3.27 billion. For the full year 2006, its EPS increased 22% to $3.90 from the prior year, and sales jumped 15% to $14.3 billion.
U.S. light crude oil for March delivery rallied $1.19 to $55.42 a barrel on the New York Mercantile Exchange.
Stock of Amgen (Nasdaq: AMGN) closed down $3.35 or 5% to $71.50, after reporting higher quarterly earnings that missed estimates on higher sales that topped estimates. Its EPS jumped 20% to 90 cents from 75 cents for the same period the previous year. It reported sales of $3.83 billion, a 17% increase compared to the year-ago period, when sales totaled $3.27 billion. For the full year 2006, its EPS increased 22% to $3.90 from the prior year, and sales jumped 15% to $14.3 billion.
Shares of Honeywell (NYSE: HON) closed down $0.07 to $44.13, despite reporting higher quarterly sales and earnings. However, the company also issued a 2007 earnings forecast in a range that could miss analysts' estimates. Its quarterly profit rose 13.8% on strong demand for its airplane components and systems used in commercial construction. Fourth-quarter earnings increased to $585 million, from $514 million, a year earlier. Revenue came in at $8.28 billion, up 13.8% from $7.28 billion.
Stock of Microsoft (Nasdaq: MSFT) closed up $0.17 to $30.60, on reporting strong quarterly sales and earnings that beat estimates. While it reported a drop in profit for its fiscal second quarter, its sales and earnings beat analyst expectations thanks to strong sales of its Xbox 360 game console during the holidays. The company reported quarterly revenues of $12.54 billion, up 6% from a year ago and ahead of the $12.09 billion expected by analysts.
Shares of Caterpillar (NYSE: CAT) closed up $1.46 or 2.5% to $61.09, after reporting higher quarterly earnings that missed estimates on higher sales that topped estimates. The company also issued a bullish 2007 earnings forecast. Its net quarterly profit rose 4.3%, helped by increased sales of its engines and other machinery. It reported a fourth-quarter profit of $882 million, up from $846 million, last year. Sales rose 14 percent to $11 billion, lifted by a 13% jump in machinery sales and a 17% rise in engines sales.
Stocks closed sharply lower with the Dow Jones Industrial Average suffering its worst day of the year so far, as investors were shaken by a sell-off in the bond market, which sent long-term interest rates to five-month highs and fueled jitters about the housing market and the economy. The weak housing report added fuel to the fire.
Today, the Dow Jones Industrial average closed down 119.21 or 0.94% to 12,502.56, the broader S&P 500 closed down 16.23 or 1.13% to 1,423.9, and the Nasdaq closed down 32.04 or 1.3% to 2,434.24.
Market breadth was negative. On the New York Stock Exchange, losers beat winners 25 to 7 on volume of 1.70 billion shares. On the Nasdaq, decliners topped advancers 21 to 8 on volume of 2.2 billion shares.
Roughly one-third of the S&P 500 has reported earnings for the December quarter so far. Earnings are currently on track to rise 9.4% combining reported and expected earnings. This marks the slowest quarter of growth in nearly 5 years, reflecting both the effects of a slower growing economy and the tougher year-over-year comparisons after several years of strong growth. The slowdown in the global economy and its subsequent pressure on earnings may be an issue for stock investors, but that in the short term, stocks should be able to hang on to the upward bias that has been in place since last summer. The strength we've seen in the economy has pushed back the likelihood of a Fed rate cut and that's put some jitters in the market.
The report on existing home sales saw the biggest drop last year in 17 years. Home sales in December also saw a bigger-than-expected decline. However, the report also showed that home prices may have bottomed out in December. There was a 8.4% drop in the existing home sales in 2006, falling to 6.48 million. It was the largest decline since a 14.8% drop in 1989.
Stock of eBay (Nasdaq: EBAY) closed up $2.45 or 7.5% to $32.45, after reporting higher quarterly earnings that topped forecasts and issued a bullish first-quarter and full-year profit outlook. It reported an EPS of 31 cents against the expected 28 cents. Revenue was higher at $1.72 billion, up 29% from the $1.33 billion last year, and higher than the $1.67 billion predicted by analysts. The total value of all items sold on the site in the quarter reached $14.4 billion, up 20% from $12.0 billion in the year-ago quarter.
Shares of AT&T (Nasdaq: T) closed up $0.21 to $36.84, after reporting quarterly earnings that rose from a year earlier and topped estimates. The company also raised its forecast on the predicted benefits of its merger with SBC. The fourth-quarter income rose 17% to $1.9 billion, compared with $1.7 billion a year earlier. Revenue rose 23.1% to $15.9 billion from $12.9 billion. Looking ahead, AT&T said it expects to generate sharply higher savings from the BellSouth merger than originally forecast -- $22 billion vs. an original forecast of $18 billion.
Stock of Nokia Corp. (NYSE: NOK) rose 5.4% after delivering a forecast beating 19% increase in fourth-quarter profit. It also plans to buy back up to 4 billion euros in stock, and proposed an annual dividend of 0.43 euro a share, up 16% from 2005. Quarterly net income improved to 1.27 billion euros, from 1.07 billion euros a year earlier. Sales climbed 13% to 11.7 billion euros.
Shares of Ford Motor (Nasdaq: F) closed up $0.04 to $8.24, despite a bigger-than-expected fourth-quarter loss.. The automaker also said it would cut production for the current quarter. Weak sales of its key pickup trucks in the quarter and $9.9 billion in after-tax charges due to employee buyouts and plant closing plans resulted in $12.7 billion loss for 2006.
U.S. light crude oil for March delivery fell $1.14 to settle at $54.23 a barrel on the New York Mercantile Exchange.
Stock of Nokia Corp. (NYSE: NOK) rose 5.4% after delivering a forecast beating 19% increase in fourth-quarter profit. It also plans to buy back up to 4 billion euros in stock, and proposed an annual dividend of 0.43 euro a share, up 16% from 2005. Quarterly net income improved to 1.27 billion euros, from 1.07 billion euros a year earlier. Sales climbed 13% to 11.7 billion euros.
Shares of AT&T (Nasdaq: T) closed up $0.21 to $36.84, after reporting quarterly earnings that rose from a year earlier and topped estimates. The company also raised its forecast on the predicted benefits of its merger with SBC. The fourth-quarter income rose 17% to $1.9 billion, compared with $1.7 billion a year earlier. Revenue rose 23.1% to $15.9 billion from $12.9 billion. Looking ahead, AT&T said it expects to generate sharply higher savings from the BellSouth merger than originally forecast -- $22 billion vs. an original forecast of $18 billion.
Stock of eBay (Nasdaq: EBAY) closed up $2.45 or 7.5% to $32.45, after reporting higher quarterly earnings that topped forecasts and issued a bullish first-quarter and full-year profit outlook. It reported an EPS of 31 cents against the expected 28 cents. Revenue was higher at $1.72 billion, up 29% from the $1.33 billion last year, and higher than the $1.67 billion predicted by analysts. The total value of all items sold on the site in the quarter reached $14.4 billion, up 20% from $12.0 billion in the year-ago quarter.
Stocks rallied and lifted the Dow Jones Industrial Average to a new record and its best day of the year as the technology sector charged higher on the back of positive news from Yahoo Inc. (Nasdaq: YHOO) and Sun Microsystems Inc (Nasdaq: SUNW). These earnings tempered worries about technology sector earnings.
Today, the Dow Jones Industrial average closed up 87.97 or 0.70% to 12,621.77, closing at a record high, taking out the previous record from a week ago. The broader S&P 500 closed up 12.14 or 0.85% to 1,440.13, and the Nasdaq closed up 34.87 or 1.43% to 2,466.28.
Market breadth was positive. On the New York Stock Exchange, winners topped losers 23 to 10 on volume of 1.58 billion shares. On the Nasdaq, advancers beat decliners 20 to 9 on volume of 2.24 billion shares.
Worries about slower earnings growth and a run up in oil prices were tempered by a slew of improved quarterly results. The President's State of the Union address also helped recharge the rally, he said. The underlying tone for the market continues to be positive, so even when there is weakness, it seems to be more technical than fundamental in nature.
Additionally, the market also needed to consolidate its strong gains of the past six months and determine whether the outlook for earnings justify further gains in stock prices. It needed to take a breather and assess earnings guidance and economic conditions. While worries about a slowdown of the U.S. economy have receded amid a raft of stronger than expected data in recent weeks, investors will still pay attention to key reports on housing and orders for durable goods over the next two days.
Shares of Yahoo (Nasdaq: YHOO) closed up $1.98 to $28.94, after reporting fourth-quarter sales and earnings that rose from a year ago and topped estimates. Yahoo also announced an early launch for "Project Panama," its enhanced search engine that is expected to boost ad revenue. While the forecast first-quarter and full-year 2007 profit is short of forecasts, investors focused on the positive news and sent shares higher.
Stock of Sun Microsystems (Nasdaq: SUNW) closed up $0.49 or 8.6% to $6.15, owing to higher sales of its computer servers. Additionally, Kohlberg Kravis Roberts said it will invest $700 million into the group. The company earned a net income of $126 million, compared to a loss of $223 million in the year-ago period. Revenue climbed 7%, to $3.57 billion from $3.34 billion. Sun said the results were helped by a 14% rise in revenue from its systems products, including several lines of servers.
Shares of AT&T Inc. (NYSE: T) rose over 4% after the company's wireless unit Cingular reported better-than-expected earnings. Its fourth-quarter profit more than tripled as the company added an industry record 2.4 million net subscribers. Its net income jumped to $782 million from $204 million a year earlier. Revenue rose 10.2% to $9.8 billion from $8.85 billion.
Shares of McDonald's Corp (NYSE: MCD) closed down $0.69 to $44.16, after reporting fourth-quarter results that surged from a year earlier and met analysts' EPS forecast. Income was helped by brisk sales of breakfast items and its new Snack Wrap in the U.S., along with steady demand across all geographic regions. It reported earnings of $1.24 billion, up from $609 million in the year-earlier period. Same-store sales rose by 6.3% system-wide from the year-earlier quarter and by 5.7% for the full year.
U.S. light crude oil for March delivery rose 33 cents to settle at $55.37 a barrel on the New York Mercantile Exchange. The price rose despite the increase of distillates in the weekly oil inventories report released today.
Shares of Yahoo (Nasdaq: YHOO) closed up $1.98 to $28.94, after reporting fourth-quarter sales and earnings that rose from a year ago and topped estimates. Yahoo also announced an early launch for "Project Panama," its enhanced search engine that is expected to boost ad revenue. While the forecast first-quarter and full-year 2007 profit is short of forecasts, investors focused on the positive news and sent shares higher.
Stock of Sun Microsystems (Nasdaq: SUNW) closed up $0.49 or 8.6% to $6.15, owing to higher sales of its computer servers. Additionally, Kohlberg Kravis Roberts said it will invest $700 million into the group. The company earned a net income of $126 million, compared to a loss of $223 million in the year-ago period. Revenue climbed 7%, to $3.57 billion from $3.34 billion. Sun said the results were helped by a 14% rise in revenue from its systems products, including several lines of servers.
Shares of AT&T Inc. (NYSE: T) rose over 4% after the company's wireless unit Cingular reported better-than-expected earnings. Its fourth-quarter profit more than tripled as the company added an industry record 2.4 million net subscribers. Its net income jumped to $782 million from $204 million a year earlier. Revenue rose 10.2% to $9.8 billion from $8.85 billion.
Shares of McDonald's Corp (NYSE: MCD) closed down $0.69 to $44.16, after reporting fourth-quarter results that surged from a year earlier and met analysts' EPS forecast. Income was helped by brisk sales of breakfast items and its new Snack Wrap in the U.S., along with steady demand across all geographic regions. It reported earnings of $1.24 billion, up from $609 million in the year-earlier period. Same-store sales rose by 6.3% system-wide from the year-earlier quarter and by 5.7% for the full year.
Stocks closed higher reclaiming some ground from a sell-off in the previous session, as solid results from Texas Instruments (NYSE: TXN) helped soothe investor concerns about technology stocks. The Dow and S&P 500 rose, while the Nasdaq was little changed, as investors struggled to absorb a nearly 5% jump in oil prices.
Today, the Dow Jones Industrial average closed up 56.64 or 0.45% to 12,533.8, the broader S&P 500 index closed up 5.04 or 0.35% to 1,427.99, and the tech-heavy Nasdaq closed up 0.34 or 0.01% to 2,431.41.
Market breadth was positive. On the New York Stock Exchange, winners topped losers 21 to 11 on volume of 1.7 billion shares. On the Nasdaq, advancers beat decliners 17 to 11 on volume of 2.1 billion shares.
While last week there was some disappointing tech news and stocks fell, today appeared to be a bounce back. Nearly one-fourth of the S&P 500 reports quarterly results this week. Earnings are expected to have risen 9.2% in the fourth quarter versus a year ago. That would mark the slowest quarter of year-over-year growth since early 2002. The jump in energy prices put a little hesitation in the market, reviving some worries about inflationary pressures.
In economic news, the December index of leading economic indicators (LEI) rose 0.3%, against the expected rise by 0.2%. LEI was downwardly revised to a flat reading in the previous month.
Shares of Texas Instruments (NYSE: TXN) closed up $0.98 or 2% to $29.57, after reporting that fourth-quarter sales and earnings rose from a year ago and topped estimates. It also forecast first-quarter revenue that is short of estimates. It forecast first-quarter EPS of 28 cents to 34 cents on revenue of $2.95 billion to $3.2 billion. Analyst had expected first-quarter earnings of 35 cents a share on revenue of $3.3 billion.
Shares of Johnson & Johnson (NYSE: JNJ) fell 1% despite reporting a 3.5% increase in fourth-quarter profit, on the back of solid growth in all three of its divisions. It posted net income of $2.17 billion, compared with nearly $2.1 billion earned last year. It reported an EPS of 81 cents. Quarterly revenue climbed 8.5%, to $13.68 billion.
Stock of Pfizer (NYSE: PFE) closed down $0.63 to $26.32, for a second session on a Bear Stearns downgrade. It also announced that it will cut 10,000 jobs and close five plants, including three R&D sites and two factories, by the end of 2008. It also said that it does not expect sales to grow in 2007 and 2008, and that it might purchase up to $10 billion of its own stock. The announcement was part of Pfizer's five-year plan to reduce its manufacturing plants from 93 to 48 by the end of 2008. The company plans to invest $3 billion of the money it saves in cost cuts in new products and business development through the end of 2008.
Shares of Alcatel-Lucent (NYSE: ALU) tumbled 7.3% after the company warned that it failed to make a profit during the fourth-quarter and that sales declined. It also red-flagged restructuring charges of around 800 million euros in the quarter. It expects fourth-quarter revenue of around 4.42 billion euros compared with 5.25 billion euros last year.
U.S. light crude oil for March delivery rose $2.46 or 4.7% to $55.04 a barrel on the New York Mercantile Exchange.
Shares of Texas Instruments (NYSE: TXN) closed up $0.98 or 2% to $29.57, after reporting that fourth-quarter sales and earnings rose from a year ago and topped estimates. It also forecast first-quarter revenue that is short of estimates. It forecast first-quarter EPS of 28 cents to 34 cents on revenue of $2.95 billion to $3.2 billion. Analyst had expected first-quarter earnings of 35 cents a share on revenue of $3.3 billion.
Stock of Pfizer (NYSE: PFE) closed down $0.63 to $26.32, for a second session on a Bear Stearns downgrade. It also announced that it will cut 10,000 jobs and close five plants, including three R&D sites and two factories, by the end of 2008. It also said that it does not expect sales to grow in 2007 and 2008, and that it might purchase up to $10 billion of its own stock. The announcement was part of Pfizer's five-year plan to reduce its manufacturing plants from 93 to 48 by the end of 2008. The company plans to invest $3 billion of the money it saves in cost cuts in new products and business development through the end of 2008.
Stocks closed sharply lower with the Dow Jones Industrial Average losing more than 100 points at its worst level and the Nasdaq Composite down further as sentiment towards the technology sector soured after disappointing earnings last week. A slide in oil prices following a morning advance failed to reassure investors, amid ongoing concerns that energy prices could further rebound.
Today, the Dow Jones Industrial average closed down 88.37 or 0.7% to 12,477.16, the broader S&P 500 index closed down 7.55 or 0.53% to 1,422.95, and the tech-heavy Nasdaq closed down 20.24 or 0.83% to 2,431.07.
Market breadth was negative. On the New York Stock Exchange, losers topped winners by 20 to 11 on volume of 1.49 billion shares. On the Nasdaq, decliners beat advancers by more than 2 to 1 on volume of 1.93 billion shares.
While investors have welcomed a mostly upbeat start to the earnings period, they continue to show caution after last year's big rally and a rebound in oil prices amid colder northeast weather. Today's stock retreat was an acceleration of what started Friday, and the recent rebound in oil prices seems to have sparked a short-term rotational move out of technology and into commodities. However, the early-year advance and the fluctuations are fairly typical of this time of year, and don't necessarily suggest a change in the overall upward trend of the market.
Shares of Pfizer (NYSE: PFE) closed down $0.27 or 1% to $26.95, despite reporting higher earnings on flat sales. Additionally, the company also announced that it would cut 10,000 jobs and shutter 5 plants as part of a broad restructuring. It revealed an additional $1 billion in restructuring moves, and also said it does not expect sales to grow in 2007 and 2008, and that it might purchase up to $10 billion of its own stock. The cuts include the recently announced termination of 2,200 sales representatives in the U.S. This announcement is part of Pfizer's five-year plan to reduce its manufacturing plants from 93 to 48 by the end of 2008.
Stock of Boeing (NYSE: BA) close down $3.03 or 3.6% to $85.60, after Wachovia downgraded it to "market perform" from "outperform." Wachovia cited concerns that the commercial-aircraft-order cycle has peaked.
Shares of Citigroup (NYSE: C) closed up $0.18 to $54.68, on news that it has moved its CFO, Sallie Krawcheck, to the job as head of its Global Wealth Management division. Additionally, Citigroup has also agreed to buy ABN Amro's mortgage Group for an estimated $3 billion. This will increase its customer base by 1.5 million customers. The unit has $9 billion in assets and a $224 billion mortgage service portfolio.
Shares of Intel Corp. (Nasdaq: INTC) lost 0.1% even after reaching a deal with Sun Microsystems (Nasdaq: SUNW), which will now use Intel chips. Shares of Sun Micro fell 0.4% while Intel rival Advanced Micro Devices (NYSE: AMD), which could suffer a blow from the deal, dropped 1.1%. Sun would now buy Intel chips to use in its server systems, and the agreement could include an Intel endorsement of Sun's Solaris operating system. This would be a blow to AMD, which is now Sun's exclusive source for chips based on the popular x86 design used in most personal computers and servers.
U.S. light crude oil for February delivery closed down $0.86 to $51.13. Prices zigzagged, initially tracking a surge in natural gas amid forecasts for below-average temperatures across much of the U.S and then giving up gains ahead of the expiration of the front-month contract.
Shares of Pfizer (NYSE: PFE) closed down $0.27 or 1% to $26.95, despite reporting higher earnings on flat sales. Additionally, the company also announced that it would cut 10,000 jobs and shutter 5 plants as part of a broad restructuring. It revealed an additional $1 billion in restructuring moves, and also said it does not expect sales to grow in 2007 and 2008, and that it might purchase up to $10 billion of its own stock. The cuts include the recently announced termination of 2,200 sales representatives in the U.S. This announcement is part of Pfizer's five-year plan to reduce its manufacturing plants from 93 to 48 by the end of 2008.
Shares of Citigroup (NYSE: C) closed up $0.18 to $54.68, on news that it has moved its CFO, Sallie Krawcheck, to the job as head of its Global Wealth Management division. Additionally, Citigroup has also agreed to buy ABN Amro's mortgage Group for an estimated $3 billion. This will increase its customer base by 1.5 million customers. The unit has $9 billion in assets and a $224 billion mortgage service portfolio.
Shares of Intel Corp. (Nasdaq: INTC) lost 0.1% even after reaching a deal with Sun Microsystems (Nasdaq: SUNW), which will now use Intel chips. Shares of Sun Micro fell 0.4% while Intel rival Advanced Micro Devices (NYSE: AMD), which could suffer a blow from the deal, dropped 1.1%. Sun would now buy Intel chips to use in its server systems, and the agreement could include an Intel endorsement of Sun's Solaris operating system. This would be a blow to AMD, which is now Sun's exclusive source for chips based on the popular x86 design used in most personal computers and servers.
Stocks finished mixed on the day and for the week, with the broad market little changed but technology shares posting steep weekly losses, after IBM's (NYSE: IBM) earnings forecast failed to live up to investor expectations, further souring sentiment towards the tech sector. A number of better than expected results from several blue chip stocks failed to push the Dow higher, as Wall Street was hesitant to take a position at the start of the earnings season.
Today, the Dow Jones Industrial average closed down 2.40 or 0.02% to 12,565.53, the broader S&P 500 closed up 4.13 or 0.29% to 1,430.50, while the tech-heavy Nasdaq closed up 8.10 or 0.33% to 2,451.31. For the week, the Dow Jones Industrial Average and the S&P 500 finished nearly flat, and the Nasdaq Composite fell 2.1%.
Market breadth was positive. On the New York Stock Exchange, winners beat losers 23 to 19 on volume of 1.6 billion shares. On the Nasdaq, advancers topped decliners 18 to 11 on volume of 2.1 billion shares.
Investors' worries about some disappointing numbers issued earlier this week were apparent as in-line or better than expected results from three Dow components failed to move stocks higher. Most investors are just hanging back because they want to see what the bulk of earnings look like.
Upbeat news such as the preliminary consumer sentiment index from the University of Michigan rising to 98.0, failed to excite the market. This read topped estimates and reflects the impact of the recent decline in oil prices and gains for the stock market. The bigger than expected uptick in housing starts and the Philadelphia Federal Reserve reporting a rebound in Mid-Atlantic factory activity, are good economic news. The recent economic readings have fueled speculation that the Federal Reserve will not cut interest rates anytime soon. Jeffrey Lacker, the Richmond Federal Reserve Bank president, said that inflation remains the main risk for the U.S. economy, but that there are signs that it is moderating.
Shares of IBM (NYSE: IBM) closed down $3.37 or 5.5% to $96.08, despite posting quarterly sales and earnings that topped estimates, due to strength in services and its recent software acquisitions. However, investors took a 'sell the news' approach and sent shares lower. It reported an EPS of $2.20, compared to the expected $2.19. Its net income was $3.54 billion, compared to $3.19 billion in the fourth quarter last year. Its revenue was $26.3 billion, compared to the expected $25.66 billion. For its technology consulting business, IBM signed contracts totaling $17.8 billion in the quarter, up 55% from the year-ago quarter.
Stock of Citigroup (NYSE: C) closed down $0.06 to $54.33, after reporting quarterly earnings that fell from a year earlier, but also topped estimates. Its fourth-quarter profit fell 26% on the year, mainly because the firm booked a $2.1 billion gain a year earlier on the sale of its asset-management unit to Legg Mason. It also reported $415 million of previously announced charges in the latest quarter related to its Japanese consumer-finance business. The company earned $5.13 billion in the quarter, compared to $6.93 billion a year ago. The company also raised its quarterly dividend 10% to 54 cents a share. Its revenue rose 15% to a record $23.83 billion compared to $20.78 billion.
Shares of General Electric (NYSE: GE) closed down $1.04 or 1.5% to $36.96, despite reporting higher quarterly earnings that met estimates. However, the company also said it would restate financial results for the years 2001 through 2005, as well as the first three quarters of 2006. For the fourth quarter, the company had income from continuing operations of $6.6 billion, up from the $5.9 billion, a year earlier. Revenue at continuing operations was up 11% to $44.6 billion, better than the forecast of $44.2 billion.
General Electric Co. (NYSE: GE) said o it will buy two of Abbott Laboratories (NYSE: ABT) diagnostics business units for $8.13 billion, broadening GE's reach into diagnostics. Shares of Abbott Laboratories closed up $0.50 to $53.29. Abbott's Molecular Diagnostics and Diabetes Care businesses are not part of the transaction and will remain part of Abbott. For GE, a foray into more traditional test-tube-based diagnostics would follow its $10.7 billion acquisition in 2004 of British bioscience company Amersham, which is developing molecular agents that could enhance PET scans and other advanced tests.
Stock of Alcoa Inc. (NYSE: AA) closed up 3.6% after saying it plans to buy back up to 10% of its outstanding stock and hike its dividend by 13%. It plans to buy back about 87 million shares over the next three years, in its first new buyback plan since July 2001. It will also raise its annual dividend to 68 cents a share from 60 cents. The company will fund the buyback and the dividend through its cash generation, adding that it's committed to maintaining a debt-to-capital ratio of 30% to 35%.
Shares of Motorola (NYSE: MOT) closed up $0.53 or 2.5% to $19.24, after the company said it plans to cut 3500 jobs in a bid to improve operating costs. The company forecast 2007 EPS to be flat to slightly above its 2006 earnings of $1.13 on sales of $46 billion to $49 billion. Profit from continuing operations fell to $528 million, from $1.177 billion in the year-ago quarter.
U.S. light crude oil for December delivery climbed $1.51 to settle at $51.99 a barrel on the New York Mercantile Exchange.
Shares of IBM (NYSE: IBM) closed down $3.37 or 5.5% to $96.08, despite posting quarterly sales and earnings that topped estimates, due to strength in services and its recent software acquisitions. However, investors took a 'sell the news' approach and sent shares lower. It reported an EPS of $2.20, compared to the expected $2.19. Its net income was $3.54 billion, compared to $3.19 billion in the fourth quarter last year. Its revenue was $26.3 billion, compared to the expected $25.66 billion. For its technology consulting business, IBM signed contracts totaling $17.8 billion in the quarter, up 55% from the year-ago quarter.
Stock of Citigroup (NYSE: C) closed down $0.06 to $54.33, after reporting quarterly earnings that fell from a year earlier, but also topped estimates. Its fourth-quarter profit fell 26% on the year, mainly because the firm booked a $2.1 billion gain a year earlier on the sale of its asset-management unit to Legg Mason. It also reported $415 million of previously announced charges in the latest quarter related to its Japanese consumer-finance business. The company earned $5.13 billion in the quarter, compared to $6.93 billion a year ago. The company also raised its quarterly dividend 10% to 54 cents a share. Its revenue rose 15% to a record $23.83 billion compared to $20.78 billion.
Shares of General Electric (NYSE: GE) closed down $1.04 or 1.5% to $36.96, despite reporting higher quarterly earnings that met estimates. However, the company also said it would restate financial results for the years 2001 through 2005, as well as the first three quarters of 2006. For the fourth quarter, the company had income from continuing operations of $6.6 billion, up from the $5.9 billion, a year earlier. Revenue at continuing operations was up 11% to $44.6 billion, better than the forecast of $44.2 billion.
General Electric Co. (NYSE: GE) said o it will buy two of Abbott Laboratories (NYSE: ABT) diagnostics business units for $8.13 billion, broadening itss reach into diagnostics. Shares of Abbott Laboratories closed up $0.50 to $53.29. Abbott's Molecular Diagnostics and Diabetes Care businesses are not part of the transaction and will remain part of Abbott. For GE, a foray into more traditional test-tube-based diagnostics would follow its $10.7 billion acquisition in 2004 of British bioscience company Amersham, which is developing molecular agents that could enhance PET scans and other advanced tests.
Stock of Alcoa Inc. (NYSE: AA) closed up 3.6% after saying it plans to buy back up to 10% of its outstanding stock and hike its dividend by 13%. It plans to buy back about 87 million shares over the next three years, in its first new buyback plan since July 2001. It will also raise its annual dividend to 68 cents a share from 60 cents. The company will fund the buyback and the dividend through its cash generation, adding that it's committed to maintaining a debt-to-capital ratio of 30% to 35%.
Shares of Motorola (NYSE: MOT) closed up $0.53 or 2.5% to $19.24, after the company said it plans to cut 3500 jobs in a bid to improve operating costs. The company forecast 2007 EPS to be flat to slightly above its 2006 earnings of $1.13 on sales of $46 billion to $49 billion. Profit from continuing operations fell to $528 million, from $1.177 billion in the year-ago quarter.
Stocks closed lower after an earnings forecast from technology icon Apple Inc. (Nasdaq: AAPL) disappointed investors, weighing heavily on shares throughout the tech sector. The Nasdaq composite slumped for a second straight session amidst worries about the strength of technology earnings in the just-completed fourth quarter.
Today, the Dow Jones Industrial average closed down 9.22 or 0.07% to 12,567.93, the S&P 500 index closed down 4.25 or 0.3% to 1,426.37, and the Nasdaq closed down 36.21 or 1.46% to 2,443.21.
Market breadth was negative. On the New York Stock Exchange, losers topped winners 5 to 3 on volume of 1.61 billion shares. On the Nasdaq, decliners trounced advancers by more than 3 to 1 as 2.4 billion shares changed hands.
Stocks lost today on Apple's earnings forecast and a spate of mixed economic news. Investors were also likely backing off in the aftermath of the rally in the second half of 2006. With the new year, there is some portfolio realigning going on as they move out of riskier areas of the market. However, longer term the bias for stocks remains positive, but in the very near term, more selling would not be a surprise.
In economic news, the December CPI rose 0.5% in the month, and the core CPI rose 0.2%, in line with forecasts. This report did little to quell inflationary worries, and with oil prices having slumped considerably since December, future reports could show lower pricing pressures. Federal Reserve officials remain wary about the potential for inflation to flare up, though expectations for price rises have been well contained. For the full year 2006, the CPI increased by 2.5%, an improvement over 2005 when it was up 3.4%.
The pace of home building rebounded in December. Housing starts jumped to an annual pace of 1.64 million against the forecast 1.57 million. Building permits, jumped 5.5% to an annual rate of just under 1.60 million from the nine-year low of 1.51 million pace in November.
The Philadelphia Fed index rose to 8.3 in January, against the expected rise to 2.0. Federal Reserve chairman Ben Bernanke, bluntly warned the U.S. Congress that failure to act soon to deal with the budgetary strains posed by an aging U.S. population could lead to serious economic harm. He also acknowledged projections that the U.S. budget deficit could hold steady or even narrow in the near-term.
Shares of Apple (Nasdaq: AAPL) closed down $5.88 or 5% to $89.07, after it issued fiscal second-quarter sales and earnings guidance that was short of analysts' forecasts. In the latest quarter, Apple reported an EPS of $1.14, beating the 78 cents expected by analysts. It reported a net quarterly income of $1.0 billion, up 77% from $565 million in the year-ago quarter. It reported quarterly revenue of $7.1 billion, against the expected $6.42 billion.
Stock of Lam Research (Nasdaq: LRCX) closed down 13% after warning that shipment delays will weigh on the current quarter's results. That overshadowed the company's otherwise upbeat second-quarter earnings.
Shares of Merrill Lynch (NYSE: MER) closed down $1.41 to $95.40, despite reporting quarterly earnings that jumped from a year ago and topped analysts' expectations, thanks to a gain in M&A advisory fees and strength in its private equity business.
U.S. light crude oil for February delivery closed down $1.76 to $50.48 a barrel on the New York Mercantile Exchange, falling after a surprisingly strong weekly energy inventories report. However, unlike last year, the sell-off in oil has not goosed stock gains, with investors perhaps betting that oil prices could rebound or concerned about what a drop in oil prices might mean for Fed policy.
Shares of Apple (Nasdaq: AAPL) closed down $5.88 or 5% to $89.07, after it issued fiscal second-quarter sales and earnings guidance that was short of analysts' forecasts. In the latest quarter, Apple reported an EPS of $1.14, beating the 78 cents expected by analysts. It reported a net quarterly income of $1.0 billion, up 77% from $565 million in the year-ago quarter. It reported quarterly revenue of $7.1 billion, against the expected $6.42 billion.
Stocks ended lower after the Dow Jones Industrial Average backed off an all-time high and technology sector weakness linked to Intel Corp. (Nasdaq: INTC) offset strong results from financial giant J.P. Morgan Chase (NYSE: JP). The tech sell-off sank the Nasdaq composite and forced the Dow Jones industrial average to give up its attempt at closing at a record high for the fourth straight session.
Today, the Dow Jones Industrial average closed down 5.44 or 0.04% to 12,577.15, the S&P 500 closed down 1.28 or 0.09% to 1,430.62, and the Nasdaq closed down 18.36 or 0.74% to 2,479.42.
Market breadth was mixed. On the New York Stock Exchange, winners topped losers by a narrow margin of 17 to 15 on volume of 1.524 billion shares. On the Nasdaq, decliners beat advancers 17 to 12 on volume of 2.314 billion shares.
The earnings reporting period amps up this week. Earnings are currently on track to have risen 8.8% in the fourth quarter. However, with less than 10% of the S&P 500 having reported results, the figure will change over the next few weeks. Nonetheless, the fourth quarter remains likely to post the slowest year-over-year earnings growth since the first quarter of 2002, and that's a concern for investors.
The December PPI rose a greater than expected 0.9% and the core PPI rose 0.2%, also exceeding forecasts. December industrial production and capacity utilization, both rose more than economists were expecting. These support other readings that have showed a firmer economy and a strengthening of employment. Tomorrow's CPI number would be a key on the inflation outlook and the direction of Federal Reserve policy. December CPI is expected to have risen 0.4%, and the core CPI is expected to have risen 0.2%. If the number is lower than estimates, stocks could break out, but if it follows the PPI, we could see selling. However, a very strong CPI number would raise concerns that inflation is not cooling fast enough and that, as a result, the Fed might eventually need to start lifting interest rates again.
The Fed said in its "beige book" that U.S. economic growth is expanding at a modest pace, while the labor market remains tight. This furthered bets that the Fed won't soon cut rates. San Francisco Fed President Janet Yellen, said that while monetary policy will reduce inflation over time, risks remain, particularly amid tight labor market conditions. She stated that the economy seems to be achieving a "soft landing" rather than a recession and that the impact from the housing market slowdown is proving to be limited.
Shares of Intel (Nasdaq: INTC) closed down $1.26 or 5.7% to $21.04, after reporting quarterly EPS of 26 cents, a penny more than what analysts were expecting but down from 40 cents a year earlier. It also warned that gross margins, a key measure of profitability, would be weaker in 2007.
Shares of JP Morgan Chase (NYSE: JP) closed up $0.04 to $48.43, on reporting quarterly earnings that surged from a year ago and topped estimates. Strength in investment banking helped it post record quarterly results, but it also reported a decline in retail banking profit. Its fourth-quarter net income soared 68% from the year-ago period to $4.5 billion, and the revenue climbed 14% to $16.9 billion from the same quarter last year. Quarterly income from continuing operations came in at $3.9 billion, up from $2.6 billion, a year earlier. Analysts had forecast an EPS of 95 cents.
Stock of McDonald's Corp. (NYSE: MCD) closed up $0.29 to $44.86, after stating that fourth-quarter earnings and December sales would top estimates. It expects an EPS of 61 cents from continuing operations for the fourth quarter, against the expected 58 cents. Its sale at its hamburger restaurants rose 7.2% in December, against the expected 4%. Same-store sales rose 6.9% in the United States, 8.2% in Europe, and 4.8% in Asia, Middle East and Africa.
U.S. light crude oil for February delivery gained $1.03 to settle at $52.24 a barrel on the New York Mercantile Exchange. After falling below $51 a barrel, crude oil prices bounced back in the afternoon.
Stock of McDonald's Corp. (NYSE: MCD) closed up $0.29 to $44.86, after stating that fourth-quarter earnings and December sales would top estimates. It expects an EPS of 61 cents from continuing operations for the fourth quarter, against the expected 58 cents. Its sale at its hamburger restaurants rose 7.2% in December, against the expected 4%. Same-store sales rose 6.9% in the United States, 8.2% in Europe, and 4.8% in Asia, Middle East and Africa.
Shares of JP Morgan Chase (NYSE: JP) closed up $0.04 to $48.43, on reporting quarterly earnings that surged from a year ago and topped estimates. Strength in investment banking helped it post record quarterly results, but it also reported a decline in retail banking profit. Its fourth-quarter net income soared 68% from the year-ago period to $4.5 billion, and the revenue climbed 14% to $16.9 billion from the same quarter last year. Quarterly income from continuing operations came in at $3.9 billion, up from $2.6 billion, a year earlier. Analysts had forecast an EPS of 95 cents.
Shares of Intel (Nasdaq: INTC) closed down $1.26 or 5.7% to $21.04, after reporting quarterly EPS of 26 cents, a penny more than what analysts were expecting but down from 40 cents a year earlier. It also warned that gross margins, a key measure of profitability, would be weaker in 2007.
Stocks closed mixed after investors digested in-line earnings results from Wells Fargo & Co. (NYSE: WFC) and a weak forecast from Symantec Corp. (Nasdaq: SYMC), while energy shares weighed amid a continued slide in crude oil prices. Blue chips got a lift on lower oil prices and techs slid ahead of Intel's quarterly report, expected after the close.
Today, the Dow Jones Industrial average closed up 26.51 or 0.21% to 12,582.59, closing at a fresh record high for the third session in a row. The S&P 500 closed up 1.17 or 0.08% to 1,431.90, building on the more than 6-year high it closed at last week, and the Nasdaq closed down 5.04 or 0.20% to 2,497.78, after ending the previous session at its highest point in nearly six years.
Market breadth was mixed. On the New York Stock Exchange, losers and winners were roughly even on volume of 1.50 billion shares. On the Nasdaq, decliners topped advancers by eight to seven on volume of 2.17 billion shares.
The market appears to be in the waiting game. This is a big week on both the economic front, with numbers on inflation and housing, and on the earnings front, starting with a number of companies to declare their earnings. While the slide in oil prices has been positive for the economy and the inflation outlook, it's been a mixed blessing for the stock market. This has helped the rally but has also hurt energy shares. There is continued uncertainty about the strength of the economy. Additionally, the NY Empire State index, a regional read on manufacturing, fell to 9.1 in January from 22 the previous month. This is against the expected fall to 20 in the month.
Shares of Wells Fargo (NYSE: WFC) closed up $0.73 to $36.24, after it reported quarterly earnings that rose from a year ago. Wells Fargo said earnings increased to $2.18 billion, from $1.93 billion last year. Revenue grew by 11%, reaching $9.4 billion. Additionally, Bear Stearns (NYSE: BSC) said it'll pay an undisclosed price to buy from Wells Fargo its direct and indirect consumer-finance subsidiaries serving Latin America.
Shares of Symantec (Nasdaq: SYMC) closed down $2.69 or 7% to $17.79, after the web and network security software maker warned that fiscal third quarter and 2007 profit will miss forecasts. It expects to see third quarter EPS of 10 to 11 cents, compared to earlier expectations of 14 to 15 cents, and $1.29 to $1.31 billion in revenue, compared to previously anticipated $1.315 to $1.345 billion in revenue. Additionally, Symantec also received a pair of downgrades. CIBC World Markets downgraded the stock to sector performer from sector out performer, while J.P. Morgan a downgraded the stock to neutral from overweight.
Stock of General Electric (NYSE: GE) closed up $0.25 to $38.14, after it agreed to buy the aerospace unit of Smiths Group for $4.8 billion in cash as it seeks to further capitalize on the airline industry's return to health and robust U.S. military spending. It has also signed a letter of intent to combine its homeland protection division with Smiths' detection unit in a joint venture called Smiths GE Detection. This acquisition signals GE's determination to cash in on record new plane orders and the accompanying surge in demand for flight management technology and aircraft components. This satisfies its long-held ambition of going "beyond the engine" and will complement its existing aviation division to create a $16 billion giant.
Shares of Bp Plc (NYSE: BP) closed down $1.37 to $63.27, as a committee led by former Secretary of State James Baker said that it failed to provide the leadership, resources or structure needed for effective safety at its five U.S. refineries, leading to "material" problems at all of them. The explosion killed 15 people at a Texas City refinery in 2005, led to the commission that has singled out CEO John Browne for paying too much attention to environmental issues and not enough to safety at his own refineries.
Oil prices continued to slide with U.S. light crude oil for February delivery falling $1.78 to settle at $51.21 a barrel on the New York Mercantile Exchange. Prices fell after Saudi Arabia's oil minister said that OPEC production cuts were effective and there was no need for an emergency meeting of the oil cartel.
Stock of General Electric (NYSE: GE) closed up $0.25 to $38.14, after it agreed to buy the aerospace unit of Smiths Group for $4.8 billion in cash as it seeks to further capitalize on the airline industry's return to health and robust U.S. military spending. It has also signed a letter of intent to combine its homeland protection division with Smiths' detection unit in a joint venture called Smiths GE Detection. This acquisition signals GE's determination to cash in on record new plane orders and the accompanying surge in demand for flight management technology and aircraft components. This satisfies its long-held ambition of going "beyond the engine" and will complement its existing aviation division to create a $16 billion giant.
Shares of Symantec (Nasdaq: SYMC) closed down $2.69 or 7% to $17.79, after the web and network security software maker warned that fiscal third quarter and 2007 profit will miss forecasts. It expects to see third quarter EPS of 10 to 11 cents, compared to earlier expectations of 14 to 15 cents, and $1.29 to $1.31 billion in revenue, compared to previously anticipated $1.315 to $1.345 billion in revenue. Additionally, Symantec also received a pair of downgrades. CIBC World Markets downgraded the stock to sector performer from sector out performer, while J.P. Morgan a downgraded the stock to neutral from overweight.
Shares of Wells Fargo (NYSE: WFC) closed up $0.73 to $36.24, after it reported quarterly earnings that rose from a year ago. Wells Fargo said earnings increased to $2.18 billion, from $1.93 billion last year. Revenue grew by 11%, reaching $9.4 billion. Additionally, Bear Stearns (NYSE: BSC) said it'll pay an undisclosed price to buy from Wells Fargo its direct and indirect consumer-finance subsidiaries serving Latin America.
Stocks closed at sharply higher levels, sending the Dow Jones Industrial Average to a record close, as investors shrugged off recent jitters about global markets and commodities, leaving room for the market to focus on earnings and the technology sector.
Today, the Dow Jones industrial average closed up 72.82 or 0.59% to 12,514.98, the broader S&P 500 closed up 8.97 or 0.63% to 1,423.82, the Nasdaq closed up 25.52 or 1.04% to 2,484.85, and ended at its highest point in nearly six years.
Market breadth was positive. On the New York Stock Exchange, winners topped losers by almost 23 to 9 on volume of 1.6 billion shares. On the Nasdaq, advancers topped decliners by 19 to 10 on volume of 2.4 billion shares.
The interest rate hike from the Bank of England took investors by surprise. However, the continuing decline of oil prices in response to warm Northeast weather and easing supply shortage fears have been a great consolation. In addition, some of the money that's coming out of oil and other commodities is going into tech and pharmaceuticals. The upbeat jobless claims report helped reassure investors about the strength of the economy. Additionally, many of the factors that have lifted stocks remain in place, including: a sense that the economy is slowing, but not heading for a recession; moderating oil prices; bets that the Federal Reserve will cut interest rates later in the year; and earnings growth that is strong.
The weekly jobless claims fell to the lowest level since July. The number of Americans filing new claims for jobless benefits plunged a larger-than-expected 26,000 to its lowest level in more than five months. Jobless claims are at a level economists see as consistent with the solid pace of employment growth. Analysts had expected claims, which provide a rough guide to the pace of layoffs, to fall to 324,000 from the 329,000 initially reported for the Dec. 30 week.
On the downside, investors on both sides of the Atlantic were thrown for a loop after the Bank of England opted to boost its benchmark lending rate by a quarter-percentage point due to pricing pressures. The move surprised economists who thought the bankers would hold steady for the time being. This takes borrowing costs to their highest level in 5-1/2 years. Most analyst had thought the central bank would wait at least another month to see whether wages were heading up in the new year and for a clearer reading on the consumer sector.
Shares of Genentech (NYSE: DNA) closed up $3.67 or 4.3% to $87.41, after reporting quarterly sales and earnings that rose from a year ago and topped estimates. It also issued a 2007 earnings growth projection that is more than analysts are currently forecasting. It had very strong sales of its flagship oncology drugs and new eye medication Lucentis. It reported a net income of $594 million, or 55 cents a share, compared with $339 million, or 31 cents a share, for the same quarter last year. Operating revenue rose to $2.7 billion, up from $1.9 billion in 2005. This is against an EPS of 56 cents on revenue of $2.55 billion. Sales of its top-selling drug Rituxan jumped 16% to $560 million.
Shares of Cisco Systems (Nasdaq: CSCO) closed up $0.02 to $28.70, on stating that it is suing Apple (Nasdaq: AAPL) for trademark infringement over the name of its new device iPhone.. Stock of Apple closed down $1.23 to $95.77. Cisco has held the trademark on 'iPhone' since 2000, and is seeking an injunction preventing Apple from using the 'iPhone' name.
U.S. light crude oil for February delivery fell $2.14 to $51.88 a barrel on the New York Mercantile Exchange.
Shares of Cisco Systems (Nasdaq: CSCO) closed up $0.02 to $28.70, on stating that it is suing Apple (Nasdaq: AAPL) for trademark infringement over the name of its new device iPhone.. Stock of Apple closed down $1.23 to $95.77. Cisco has held the trademark on 'iPhone' since 2000, and is seeking an injunction preventing Apple from using the 'iPhone' name.
Shares of Genentech (NYSE: DNA) closed up $3.67 or 4.3% to $87.41, after reporting quarterly sales and earnings that rose from a year ago and topped estimates. It also issued a 2007 earnings growth projection that is more than analysts are currently forecasting. It had very strong sales of its flagship oncology drugs and new eye medication Lucentis. It reported a net income of $594 million, or 55 cents a share, compared with $339 million, or 31 cents a share, for the same quarter last year. Operating revenue rose to $2.7 billion, up from $1.9 billion in 2005. This is against an EPS of 56 cents on revenue of $2.55 billion. Sales of its top-selling drug Rituxan jumped 16% to $560 million.
Stocks closed higher with investors looking past a sell-off in oil and commodities to focus on strength in the technology sector and Alcoa Inc.'s (NYSE: AA) strong kick-off to the fourth-quarter earnings season. The general sentiment is that the market has overshot on the way down and would rebound strongly.
Today, the Dow Jones industrial average closed up 25.56 or 0.21% to 12,442.16, the broader S&P 500 index closed up 2.74 or 0.19% to 1,414.85, and the Nasdaq closed up 15.50 or 0.63% to 2,459.33.
Market breadth was positive. On the New York Stock Exchange, winners barely edged losers on volume of 1.56 billion shares. On the Nasdaq, advancers just edged decliners on volume of 2.30 billion shares.
The talk of the week is definitely oil and other commodities. Oil prices continued to erode - and continued to have a mixed impact on stocks. While lower oil and gas prices put more money into the hands of consumers, the can also can hurt oil company profits. Investors have also been a bit tentative ahead of the start of the first big wave of fourth-quarter earnings. While a few companies are due through the end of the week, most of the S&P 500 won't report results until later in the month.
Shares of Alcoa (NYSE: AA) closed up $1.71 or 6% to $30.23, as it launched the reporting period, becoming the first Dow component to release results, as is traditional. It reported that fourth-quarter earnings increased by 60%, far outpacing big restructuring costs. Its net income rose to $359 million, or 41 cents a share, from $224 million, or 26 cents a share, in the year-ago period. Its revenue climbed 20% to $7.8 billion.
Stock of Apple (Nasdaq: AAPL) closed up $4.43 or 4.8% to $97.00, as it continued to rally after announcing a new iPhone that allows users to play music and surf the Web on their cell phone. The device will be available in June and will retail for between $499 and $599.
Shares of US Airways (NYSE: LCC) closed up $1.03 or 3% to $58.93, after it increased its takeover bid for bankrupt Delta Air Lines by almost 20% to $10.2 billion. Delta's unsecured creditors would receive $5 billion in cash and 89.5 million shares of US Airways stock. It has set a deadline of Feb. 1 for its new offer to be endorsed by Delta's creditor's committee.
U.S. light crude oil prices for February delivery fell $1.62 to settle at $54.05 a barrel on the New York Mercantile Exchange. The inventory report brought out that supplies of crude stocks sank by 5 million barrels last week, but distillates and gasoline inventories rose by 5.4 million barrels.
Shares of Alcoa (NYSE: AA) closed up $1.71 or 6% to $30.23, as it launched the reporting period, becoming the first Dow component to release results, as is traditional. It reported that fourth-quarter earnings increased by 60%, far outpacing big restructuring costs. Its net income rose to $359 million, or 41 cents a share, from $224 million, or 26 cents a share, in the year-ago period. Its revenue climbed 20% to $7.8 billion.
Shares of US Airways (NYSE: LCC) closed up $1.03 or 3% to $58.93, after it increased its takeover bid for bankrupt Delta Air Lines by almost 20% to $10.2 billion. Delta's unsecured creditors would receive $5 billion in cash and 89.5 million shares of US Airways stock. It has set a deadline of Feb. 1 for its new offer to be endorsed by Delta's creditor's committee.
Stocks closed mixed on with a continued slide in crude oil prices weighing on the broad market but with technology shares receiving a bid after Apple Computer Inc. (Nasdaq: AAPL) unveiled its new iPhone device. However, the inability of the market to perform better given the significant decline in energy is somewhat disheartening. This is not a great sign for the overall health of the market.
Today, the Dow Jones industrial average closed down 6.89 or 0.06% to 12,416.60, the S&P 500 closed down 0.73 or 0.05% to 1,412.11, and the Nasdaq closed up 5.63 or 0.23% to 2,443.83.
Market breadth was mixed. On the New York Stock Exchange, advancers beat decliners 9 to 7 on volume of 1.70 billion shares. On the Nasdaq, losers surpassed winners 15 to 14 on volume of 2.17 billion shares.
Outside of the tech sector, market participants wonder whether falling oil and commodities of late signal a pending economic slowdown, which would be bad for earnings, or a simple sector correction, which would relieve costs pressures on corporate profits. In addition to earnings, stock trading tomorrow will be influenced by the economic reports that are expected, including readings on the November trade balance and wholesale inventories.
Apple (Nasdaq: AAPL) stole the show at the annual Macworld conference. CEO Steve Jobs said that the company would launch the "iPhone" - with iPod, cell phone and "Internet communicator" capabilities. Additionally, the company will be renamed Apple Inc. to reflect its larger focus on consumer electronics. Shares of Apple closed up $7.10 or 8.3% to $92.57.
Shares of Sprint Nextel (NYSE: S) closed down $2.19 or 11% to $17.45, after stating that its 2007 revenue will fall in a range that sets the midpoint below analysts' forecasts. It also said that it will cut about 5,000 jobs next year. It expects to report full-year revenue of about $41 billion, below the average analyst forecast of $41.5 billion.
Shares of BP (NYSE: BP) closed down $1.85 to $62.44, after the oil major said its oil and gas production fell 5% in the fourth quarter of 2006 compared to last year, sparking fears about the company's growth potential.
Stock of GE (NYSE: GE) closed up $0.00 to $37.55, as it is reportedly seeking buyers for its plastics business, worth up to $10 billion. Goldman Sach is acting on behalf of GE and has contacted potential plastics-industry bidders. These include at least four groups, including Apollo Management, Bain Capital, the Blackstone Group BG.UL and Kohlberg Kravis Roberts & Co.
U.S. light crude oil prices for February delivery recovered most of its early losses and was 45 cents lower at $55.64. Oil prices have been tumbling for the last week in response to unusually warm Northeast weather and bets that large hedge funds are cutting their exposure to the sector.
Shares of Sprint Nextel (NYSE: S) closed down $2.19 or 11% to $17.45, after stating that its 2007 revenue will fall in a range that sets the midpoint below analysts' forecasts. It also said that it will cut about 5,000 jobs next year. It expects to report full-year revenue of about $41 billion, below the average analyst forecast of $41.5 billion.
Apple (Nasdaq: AAPL) stole the show at the annual Macworld conference. CEO Steve Jobs said that the company would launch the "iPhone" - with iPod, cell phone and "Internet communicator" capabilities. Additionally, the company will be renamed Apple Inc. to reflect its larger focus on consumer electronics. Shares of Apple closed up $7.10 or 8.3% to $92.57.
Stocks reversed early weakness to close higher as comments by a Federal Reserve official helped soothe recent concerns about the economy and Fed policy, while optimism about the technology sector helped offset concerns about the upcoming earnings season. Investors welcomed lower oil prices, a spate of mergers and some bullish analyst comments on the technology sector.
Today, the Dow Jones industrial average closed up 25.48 or 0.21% to 12,423.49, the S&P 500 closed up 3.13 or 0.22% to 1,412.84, and the Nasdaq closed up 3.95 or 0.16% to 2,438.20.
Market breadth was positive. On the New York Stock Exchange, winners beat losers by 19 to 13 on volume of 1.6 billion shares. On the Nasdaq, advancers narrowly edged out decliners by 15 to 14 on volume of 1.93 billion shares.
Investors remain confused about the direction of interest rates after last week's events. The surprisingly strong December jobs report raised bets that the Fed won't begin cutting interest rates anytime soon. However, Fed Vice Chairman Donald Kohn said in a speech that the economy looked set for a soft landing despite the downturn in housing, reinforcing expectations that Fed rate cuts may be delayed. Now, Kohn's comments on inflation have left the door open for rate cuts. These comments have helped clarify the Fed's intentions to some extent.
Shares of Gap (NYSE: GPS) closed up $1.37 or 10% to $20.26, on reports that that it has hired Goldman Sachs (NYSE: GS) to help it look into strategic alternatives, including the possibility of putting itself up for sale. The company has been plagued with a protracted string of sales declines at its namesake stores. It operates more than 3,000 stores in the United States, including its Gap, Banana Republic, Old Navy, and Forth & Towne divisions.
Shares of IBM (NYSE: IBM) gained 1.5% after a UBS analyst upgraded the world's largest technology services company to "Buy" from "Neutral" and raised the price target. On the other hand, shares of Wal-Mart closed down $0.39 to $47.00, and Home Depot closed down $0.30 to $39.49, on being downgraded by Goldman Sachs.
Shares of General electric (NYSE: GE) closed down $0.01 to $37.55, after it stated that it will buy privately owned Vetco Gray for $1.9 billion. The company supplies drilling and production equipment. Vetco Gray is a subsidiary of Vetco International Ltd, which is owned by three private equity firms, Candover, 3i Group and JP Morgan Partners. The transaction is expected to close in early 2007. Vetco is expected to generate more than $1.6 billion in sales in 2006. It has 5,000 employees in more than 30 countries. This acquisition enables GE to seize faster growth in a rapidly expanding global business.
Shares of Forest Oil (NYSE: FST) closed down $1.09 to $30.13, after it stated that it will buy Houston Exploration (NYSE: THX) for $1.5 billion in cash and stock. Shares of Houston Exploration closed up $2.00 to $50.69.
U.S. light crude oil prices for February delivery fell 22 cents to settle at $56.09 a barrel on the New York Mercantile Exchange. The unusually warm winter weather in the Northeast and signs that supplies are ample have contributed to a nearly 9% slide in oil prices since last week. Additionally, Saudi Arabia said it would fully implement the production cuts agreed to previously and there have been further talk on OPEC production cuts.
Shares of General electric (NYSE: GE) closed down $0.01 to $37.55, after it stated that it will buy privately owned Vetco Gray for $1.9 billion. The company supplies drilling and production equipment. Vetco Gray is a subsidiary of Vetco International Ltd, which is owned by three private equity firms, Candover, 3i Group and JP Morgan Partners. The transaction is expected to close in early 2007. Vetco is expected to generate more than $1.6 billion in sales in 2006. It has 5,000 employees in more than 30 countries. This acquisition enables GE to seize faster growth in a rapidly expanding global business.
Shares of Gap (NYSE: GPS) closed up $1.37 or 10% to $20.26, on reports that that it has hired Goldman Sachs (NYSE: GS) to help it look into strategic alternatives, including the possibility of putting itself up for sale. The company has been plagued with a protracted string of sales declines at its namesake stores. It operates more than 3,000 stores in the United States, including its Gap, Banana Republic, Old Navy, and Forth & Towne divisions.
Stocks ended sharply lower on the day and mixed on the shortened three-day trading week after news of surprising strength in the labor market in December fueled concerns that the Federal Reserve won't cut interest rates anytime soon. A downgrade of Intel Corp. (Nasdaq: INTC) and a profit-warning from Motorola Inc. (NYSE: MOT) also weighed on the technology sector. The jobs number has the market scared to some extent, as they had been happy with the recent weak numbers.
Today, the Dow Jones industrial average closed down 82.68 or 0.66% to 12,398.01, the broader S&P 500 closed down 8.63 or 0.61% to 1,409.71, and the Nasdaq closed down 19.18 or 0.78% to 2,434.25. For the week, the Dow fell 0.5%, the S&P 500 lost 0.6% and the Nasdaq added 0.78%.
Market breadth was negative. On the New York Stock Exchange, losers trounced winners by more than 3 to 1 on volume of 1.71 billion shares. On the Nasdaq, losers beat winners 3 to 1 on volume of 2.1 billion shares.
In a report, the Labor Department said that employers added 167,000 jobs to their payrolls in December, against the expected addition of 100,000 jobs. The unemployment rate held steady at 4.5%, as expected. This shows that the consumer is starting the year on a good note, particularly when you combine it with the recent drop in oil prices. The report also confirmed other recent readings that showed the economy is slowing but not heading for recession, and that inflation is perhaps not moderating enough for the Fed to start cutting rates just yet.
Shares of Motorola (NYSE: MOT) closed down $1.61 or 9% to $18.94, after the cell phone manufacturer lowered its fourth-quarter forecast due to a shortfall of mobile device sales. Although Motorola sold more handsets than Wall Street expected - a record 66 million - it was forced to cut prices to entice customers as it battled rivals in markets around the globe. Its fourth-quarter sales is expected to range between $11.6 billion and $11.8 billion, lower than the previously pegged $11.8 billion to $12.1 billion. Analysts had forecast sales of $11.99 billion.
Leading U.S. consumer electronics chains, such as Best Buy (NYSE: BBY) closed up $0.16 to $50.00, on reporting strong December sales at stores open at least a year.
U.S. light crude oil prices for February delivery rebounded, climbing 72 cents to $56.31 a barrel on the New York Mercantile Exchange.
Shares of Motorola (NYSE: MOT) closed down $1.61 or 9% to $18.94, after the cell phone manufacturer lowered its fourth-quarter forecast due to a shortfall of mobile device sales. Although Motorola sold more handsets than Wall Street expected - a record 66 million - it was forced to cut prices to entice customers as it battled rivals in markets around the globe. Its fourth-quarter sales is expected to range between $11.6 billion and $11.8 billion, lower than the previously pegged $11.8 billion to $12.1 billion. Analysts had forecast sales of $11.99 billion.
Stocks closed mixed on after taking a tumble and drastically reversing a strong morning performance, as the minutes from the Federal Reserve's latest meeting on interest rates revived concerns about U.S. growth while giving little ammunition for those hoping for rate cuts. Worries about the economy and inflation deflated attempts at extending the 2006 rally.
Today, the Dow Jones industrial average closed up 11.37 or 0.09% to 12,474.52, the broader S&P 500 closed down 1.67 or 0.12% to 1,416.63, and the Nasdaq closed up 7.87 or 0.33% to 2,423.16.
Market breadth turned negative. On the New York Stock Exchange, losers topped winners by 9 to 7 on volume of 2.14 billion shares. On the Nasdaq, decliners edged advancers 17 to 12 as 2.13 billion shares changed hands.
The released minutes of the Fed policy meeting noted there was still considerable uncertainty about the pace of core inflation and the impact of the housing market on the economy. They also said employment should slow in the next quarter or so and that downside risks to growth have increased. While they agreed that inflation was the predominant concern, some felt the "subdued tone" of economic data meant risks to growth had increased. Essentially, they didn't give any indications of when the Fed will cut rates, and only one member thought that slowing economic growth might soon warrant the Fed to change its stance. Investors are looking for evidence that growth is slowing enough to nip the edge off inflation, but not enough to send the economy into recession.
On the economic front, the ISM manufacturing index rose to 51.4 in December, topping forecasts for a rise to 50. The index was 49.5 in November, and a reading below 50 indicates contraction in the sector. Additionally, November construction spending fell 0.2%, versus forecasts for a drop of 0.6%. This possibly indicates a culmination of the slowdown in construction.
Stock of General Motors Corp. (NYSE: GM) posted the steepest declines on the Dow, losing 4.1% after Banc of America downgraded the stock to sell from neutral. This is in response to the steep decline in sales as Toyota Motors has continued to outshine its American rivals.
Stock of Home Depot (NYSE: HD) closed up $0.95 or 2% to $41.11, on news that CEO Robert Nardelli is leaving the company. Nardelli, who was criticized for the size of his pay package and for his management style, will leave with a $210 million severance package. He will be replaced by Vice Chairman Frank Blake.
U.S. light crude oil for February delivery dropped $2.73 to $58.32 a barrel on the New York Mercantile Exchange. This lead to a sigh of relief from investors as a big drop in oil can mean lower costs and higher earnings for many companies.
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