Dow, Near New Milestone

123jump.com Staff
28 Sep, 2006
New York City

Market averages traded higher as buyers showed interest in large cap stocks. Dow Jones Industrial Average, consisting of thirty large companies rose 29.11 points to close at 11,718.45. Dow came close to breaking the previous high of 11,722.98 reached on January 14, 2000. General Motors rose 4% on the news that Tracinda Corp has informed GM that it will like to add 12 million shares to its current stake of 9.9% in the company. Oil and gold edged higher.

[R]4:30PM NY and 10:30PM Frankfurt – GDP growth estimate for second quarter was revised lower to 2.6% from 2.9%.[/R]

-Yield on 10-year bond closed at 4.63% and 30-year bond closed at 4.77%.

-Crude oil dropped 20 cents to $62.76 per barrel and natural gas November futures dropped 28 cent to close at $5.38 per mBtu.

-Gold rose $7.40 to $605, silver gained 3 cent to $11.735 and copper dropped 6 cent to $3.428.

-Asian Markets closed higher across the region led by gains in Korea with 0.8% and Indonesia with 0.7%. Australia and Singapore rose 0.4%. Taiwan dropped 0.9% and Thailand lost 0.74% at close.

-European Markets edged higher at close with 0.7% rise in the UK, 0.6% gain in Norway and France and Netherland rose 0.13%. Spain dropped 0.15%.

-Latin American Market rose across the region led by rise of 1.1% in Brazil, 0.8% in Argentina, 0.5% in Mexico and Chile. Canada rose 0.6% on strength in tech and banking stocks.

[R]14:00PM Airlines, brokers, utilities led decliners.[/R]
U.S. stocks turned mixed after the Dow Jones Industrial Average hit record highs and lifted the S&P 500 Index to a 5 1/2-year peak. The Dow briefly topped its all-time closing high of 11,722.98 in early trading, but has shown a notable decline since then. An increase by the price of oil also generated some selling pressure. Crude for November delivery gained 56 cents at $63.52 a barrel. As a result of the price increase, significant weakness emerged in the oil-sensitive airline sector, as reflected by the 1.8 percent loss currently being shown by the Amex Airline Index. Disk drive stocks moved notably lower, offsetting a 1.6% gain that it posted on Wednesday.

SanDisk ((SNDK)) and Msystems ((FLSH)) stood out as two of the disk drive sector''s worst performances, both down 3%. Weakness posted by some retail, housing, and networking stocks also contributed to the downward mood. Among retail stocks, AutoZone ((AZO)) fell 2.3%. Meanwhile, energy stocks bucked the downtrend by the broader markets, benefiting from the increase by the price of oil. In early afternoon trading, the Dow was down 13.05, or 0.11% at 11,676.19. The S&P was down 1.33, or 0.10%, at 1,335.26. The Nasdaq, down 4.94, or 0.22%, at 2,258.45

[R]12:30PM European shares closed mostly higher.[/R]
European markets closed largely in the positive, lifted by strong commodities-related stocks. Short-lived rally on Wall Street also provided support, helping to offset weakness in utility shares. The German DAX 30 edged down by 0.1%, dragged by 6.1% decline in Infineon Technology shares after Taiwan''s BenQ, said that it is discontinuing funding for its German mobile phone unit in order to stem unsustainable losses. The French CAC 40 added 0.1%, helped by the automotive sector. Renault gained 1.5% following statement by General Motors’ CEO that talks on joining the Renault-Nissan alliance may extend beyond a mid-October deadline set by the companies. London FTSE 100 rose 0.5%, boosted by oil majors like BP, Royal Dutch Shell and miners, such as Rio Tinto and BHP Billiton, rising for a third session in a row. Royal & Sun Alliance also helped boost the index, with the insurance group rising 4.8% after it said it will sell its U.S. operation to an entity set up by the unit''s management team for 158 million pounds.

Oil prices hovered round $63 a barrel. Light sweet crude November delivery lost 4 cents to $62.92. London Brent November contract rose 39 cents to $62.60.Gasoline fell 3 cents to $1.51 a gallon, while heating oil was steady at $1.7144. Natural gas futures dropped 13 cents to $5.542 per 1,000 cubic feet. The U.S. dollar extended strength versus major currencies. The euro traded at $1.2684, down from $1.2704. The dollar bought 117.88 yen, up from 117.45. The British pound stood at $1.8732, down from $1.8885. European gold also advanced. In London the precious metal traded at $604.40, up from $591.30 per ounce. In Zurich gold traded at $603.75, up from $592.85. Silver closed at $11.60, up from $11.40.


[R]11:30AM Market rally faded on profit taking.[/R]
After a short-lasting rally, U.S. stock markets lost direction as investors turned to profit taking. In early trading, the Dow briefly topped its record closing high of 11,722.98, but was unable to move significantly above that level and has moved back to the downside since then. Earlier the 110-year-old Dow Jones industrial average rose to 11,724.86, pulling past its previous record closing high of 11,722.98 set on January 14, 2000. In late morning, the Dow was up just 1.92, or 0.02%, at 11,691.16. The S&P, up 0.09, at 1,336.68, is still 190 points below its closing high of 1,527.46, although it is trading at a 5 1/2-year high. The Nasdaq, up 0.18 at 2,263.57, is not expected to approach its high close of 5,048.62 any time soon.

Among the most notable Thursday''s gainers, Resources Connection ((RECN)) jumped 14% after reporting Q1 net earnings of $11 million, or 22 cents a share, compared with $15.1 million, or 29 cents a share a year ago. Intel ((INTC)) shares rose 1.4% after Citigroup raised its stock price target for the company, citing an improved PC industry environment for the third quarter. Energy Conversion Devices ((ENER)) rose 9% after the company increased the number of independent directors on its board.

On the side of the losers, Tvia ((TVIA)) plunged 58% after the provider of digital display processors said it expects Q2 revenue of $300,000 to $400,000, compared to Q1 revenue of $5.1 million, citing shortages of LCD panels. American Greetings ((AM)) dropped 8.5% as the company swung to a Q2 loss of $10.5 million, or 18 cents a share, from year-ago income of $3.2 million, or 5 cents, missing estimates. Sales fell to $360.1 million from $385 million. Family Dollar Stores ((FDO)) reported Q4 earnings of 26 cents a share, up from a year-ago profit of 18 cents a share, beating estimates of 23 cents. Sales rose 10.3%, while same-store sales increased 4.9% in the quarter. For September, the company projected same-store sales growth of roughly 2%, below a previous plan for growth of 3% to 5%. The stock dropped 3%. HB Fuller ((FUL)) slipped 5.5% after its stock was downgraded to neutral from overweight at J.P. Morgan, citing valuation. McCormick & Co ((MCK)) fell 3.6% following a downgrade at Merrill Lynch to neutral from buy.


[R]10:30AM The Sensex closes marginally higher on F&O derivatives.[/R]
The Sensex on BSE advanced 13.83 points, or 0.1%, to settle at 12,380.74. The market breadth was positive. For 1,358 shares that advanced 1,122 shares declined and 72 shares remained unchanged. The market traded in a range of 91 points. The turnover on BSE was Rs 3,578.65 crore, higher than Rs 3,279 crore on Wednesday. The turnover on NSE was Rs 8,583 crore.

[Stocks in focus

Banking stocks were in highest demand. HDFC Bank jumped 4.5% to Rs 940, State Bank of India gained 2.6% to Rs 1,025 and ICICI Bank rose 2.3% to Rs 704.

[Advancers

Many state controlled banks gained. Top advancers were Syndicate Bank (up 7% to Rs 87), Corporation Bank (up 7% to Rs 442), Bank of Baroda (up 7% to Rs 287.55), Oriental Bank of Commerce (up 6.5% to Rs 276), Vijaya Bank (up 6% to Rs 57.35), Bank of India (up 6% to Rs 163.60), Union Bank of India (up 6% to Rs 138) and Canara Bank (up 4.9% to Rs 293).

Housing finance company HDFC gained 3.5% to Rs 1,498, continuing its recent recovery on hopes of sustained strong demand for housing loans. Mahindra & Mahindra added nearly 2% to Rs 668. The company today announced it had signed an agreement to buy Jeco Holding AG of Germany.

Software outsourcing company Infosys advanced 1.5% to Rs 1,863. Shares reached a high of Rs 1,874.70 which is a 52-week high for the stock. Tata Power rose 3% to Rs 555. The copmany announced on Wednesday that it will commission the first unit of its 1,000-Megawatt Maithon power project in eastern India by the end of 2009, and a second unit by mid-2010.

Gateway Distriparks added up after a huge block deal of 46.3 lakh shares was traded in the stock on BSE, at Rs 160. The stock rose 4% to Rs 163.

Decliners

TCS led the decliners , sinking 2.25%, Maruti Udyog lost 2.19%, Larsen retreated 2.09%, Dr Reddy''s Labs sank 2.01%, and Jet Airways sagged 3%. A rebound in crude prices pushed down refiners. HPCL lost 3% to Rs 285, BPCL shed 1.5% to Rs 369 and Indian Oil Corporation dipped 1.7% to Rs 517. International crude oil price rose to a 7-day high of above $63 a barrel amid speculation that OPEC may cut output.

Other news

Prime Minister Manmohan Singh asked ten northern states to go slow on fiscal incentives to the industry, while prescribing hasty improvement of tax systems and free trade for better economic growth.

India should gradually reduce exports of iron ore as local demand is rising, steel minister Ram Vilas Paswan stated on Thursday. Exporters claim that India has enough iron ore reserves to meet both domestic and export demand, but steel makers argue the country should process the raw material and export value-added products.


[R]9:45AM The Dow Jones average hit a record high.[/R]
The Dow Jones industrial average hit its record-high close Thursday morning, lifted by optimism about steady interest rates and a soft landing for the economy. The Dow rose to 11,724.86, facing one more milestone, its intraday high of 11,750.28, before it could move into uncharted territory. The Nasdaq Composite gained 2.01 to 2,265.40 and the Standard & Poor''s 500 slipped 0.26 to 1,336.33.

A rally in shares of General Motors contributed to the record-high level of the blue-chip index. General Motors ((GM)) rose 3.4% after company''s CEO said that talks on joining the Renault-Nissan alliance may extend beyond a mid-October deadline. Retail stocks moved higher, with shares of Saks Inc. ((SKS)), department-store retailer, rising 4.5% to after Bank of America raised its rating on the stock to buy.

Technology stocks slightly advanced in early trading, with gains from Intel Corp.((INTC)), Apple Computer Inc.((AAPL)), and Oracle Corp.((ORCL)). Hewlett-Packard ((HPQ)) was in focus after CEO Mark Hurd said in testimony that a company probe into boardroom leaks was provoked by good intentions, but soon turned into a ‘rogue investigation’. The scandal claimed its latest victim among H-P''s management team, with the resignation Thursday of general counsel Ann Baskins. Company’s shares dropped 1%.

Airline stocks moved narrowly higher at the open, with regional carrier Mesa Air Group Inc. ((MESA)) leading percentage gainers with a 1.1% rise and Continental Airlines Inc. ((CAL)) leading decliners, down 1%. Prices in the telecommunications sector were little changed. ADC Telecom ((ADCT)) added 1.5% to lead the equipment sector, while Verizon Communications ((VZ)) fell again despite positive analyst reports.


[R]09:00AM Stock market futures turned lower on GDP data.[/R]
U.S. stock futures fell on Thursday after a report showed revised Q2 GDP below expectations, renewing worries about economic slowdown. The latest reading on the GDP, released by the Commerce Department showed that economy grew at 2.6% pace in the second quarter, slower than the 2.9% figure estimated a month ago. In another report, the Labor Department reported that number of new people signing up for unemployment benefits fell by a seasonally adjusted 6,000 to 316,000 for the work week ending Sept. 23. The figures came in close to expectations for claims to total around 315,000. S&P 500 futures were down 0.10 point, still above fair value. Dow Jones industrial average futures were down 1 points and Nasdaq 100 futures were unchanged.

[R]Economy grew at a slower pace in Q2.[/R]
Thursday morning, the Department of Commerce released its final report on second quarter gross domestic product, showing that the pace of GDP growth was unexpectedly revised down from the preliminary reading. The report showed that GDP growth was revised down to 2.6 percent from the preliminary reading of 2.9 percent growth. The downward revision came as a surprise to economists, who had expected GDP growth to be unrevised. The downwardly revised second quarter growth compares to the 5.6 percent rate of growth that was reported for the first quarter. The Commerce Department said that the downward revision in second quarter GDP growth primarily reflected a downward revision to private inventory investment, an upward revision to imports of services, and a downward revision to residential fixed investment.

The report also noted that the growth in second quarter GDP was primarily due to positive contributions from consumer spending on services, exports, nonresidential structures, state and local government spending, and private inventory investment. The deceleration in the pace of growth compared to the first quarter reflected downturns in consumer spending on durable goods, equipment and software spending, and federal government spending. The Commerce Department also said that its closely watched reading on core consumer prices, which excludes good and energy prices, rose at an annual rate of 2.7 percent in the second quarter. This represents a downward revision from the 2.8 percent rate of growth previously reported. The pace of core consumer price growth in the second quarter still represents a significant acceleration from the 2.1 percent rate of growth reported for the first quarter.

[R]Initial jobless claims fell by 6,000.[/R]
The Department of Labor released its report on initial jobless claims in the week ended September 23 on Thursday, showing that jobless claims fell compared to an upwardly revised reading for the previous week. The report showed that jobless claims fell to 316,000 from the previous week''s revised figure of 322,000. Economists had expected jobless claims to fall to 315,000 from the 318,000 originally reported for the previous week. The Labor Department also said that the less volatile four-week moving average fell to 315,500 from the previous week''s revised average of 316,000. The report also showed that continuing claims in the week ended September 16 fell to 2.444 million from the preceding week''s revised level of 2.452 million.


[R]7:30AM Asian stocks advance Thursday on energy-related stocks.[/R]
Asian markets were broadly higher on Thursday. Japan''s Nikkei 225 Average ended the session 0.5% higher to 16,024.9. shares of Japanese oil and gas company Inpex Holdings gained 1.7%, while refiner AOC Holdings Inc gained 2.9%. Mining, which includes upstream oil stocks such as Inpex, climbed 2.1%. Nippon Steel rose 1.7%. Rival JFE rose 1.5%. Sumitomo Metal Mining climbed 2.3%.

Australia S&P ASX/200 advanced 0.4% to 5,115.2, as the mining sector rose for a second day following recent weakness in the commodity sector. Miners advanced with BHP Billiton Ltd up 1.2%, while smaller rival Rio Tinto Ltd. firmed up 1.3%. Hang Seng Index in Hong Kong edged up 0.2% to 17,551.5.

The China Enterprises Index, or Hong Kong-listed shares in mainland-incorporated companies, was up 0.6% at 7,113.8. The largest oil producer in China PetroChina climbed 1.5%; offshore oil producer CNOOC rose 1.4%. Kospi Index in South Korea was up 0.8%, while the Shanghai Composite Index advanced 0.7%. The Weighted Index in Taiwan fell 0.9% to 6,885.1, to rank as the lead declining market.


[R]6:30AM European markets driven higher on Thursday by profit-taking[/R]
European markets were slightly higher by mid-day on Thursday. The U.K. FTSE 100 index added 0.1% to 5,937, the German DAX Xetra 30 added 0.1% to 5,995.08 and the French CAC-40 index climbed 0.25 to 5,253.89.

Advancers

German truck maker MAN gained 3.6% on rumors that Volkswagen, the German carmaker, was poised to make a bid for the company. MAN has been trying to buy Scania, its Swedish rival in which VW has a major stake. Shares in Scania were up 1.1%. Dutch chemicals group DSM gained 4% after it announced the launch of a share buyback program and a loyalty dividend. TNT gained 2.4%, while KPN remained flat.

Decliners

VW fell 0.7% and Novartis slipped 0.1%.The company showed that its experimental treatment offered sustained relief for patients with relapsing MS, with up to 77% remaining free of relapses for over two years. Iberdrola fell 5.6% having gained nearly 18% over the previous two sessions after construction group ACS built a 10% stake.

Endesa fell 1.7% having risen more than 19% in the two previous days after Germany’s Eon raised the stakes in the bid for the company following the purchase of a 10% holding by Acciona, the Spanish conglomerate.

Other news

In Brussels, the European Court of Justice ruled that the Dutch state broke EU laws by holding golden shares in telecoms group KPN and parcel delivery company TNT. The court stated that by holding the shares the Dutch government restricted the free movement of capital. The ruling effectively restricts measures for member states to protect companies from foreign takeovers.

Oil and gold

Light, sweet crude oil for November delivery added 6 cents to $63.02 a barrel in electronic trading on the New York Mercantile Exchange. November Brent crude on London''s ICE Futures exchange fell 11 cents to $62.10 a barrel. Gold traded around $600 for the first time in more than two weeks on Thursday after a recovery in crude oil prices sparked buying from investors.

Currencies

The U.S. dollar was lower against the euro but gained against other major currencies in European trading Thursday morning. The euro bought $1.2710, up $1.2704 late Wednesday in New York. The British pound traded at $1.8782, down from $1.8885. The dollar bought 117.67 Japanese yen, up from 117.45