Friday, May 19, 2006

Stocks Inch Higher in Choppy Trading

News Article
May 19, 2006

Business Week Online

Stocks Inch Higher in Choppy Trading

Major indexes fluctuated as investors weighed inflation concerns and news that Dell will start using AMD chips in its computers

Stocks were clinging to a modest rebound in the final hour Friday, winding down a see-saw session as a quiet economic calendar did little to dispel inflation worries. Recent steep price drops helped lure buyers back to the market, says Standard & Poor's Equity Research.

In afternoon trading, the Dow Jones industrial average edged higher 0.56 points, or 0.01%, to 11,128.85, paced by Boeing (BA ), Verizon (VZ ) and AT&T (T ). The broader Standard & Poor's 500 index advanced 3.04 points, or 0.24%, to 1,264.85. The tech-heavy Nasdaq composite rose 4.49 points, or 0.21%, to 2,184.81.

Chipmaker Advanced Micro Devices (AMD ) was higher after Dell (DELL ) said it will use an AMD chip in its computers. The move was a change from Dell's previously exclusive relationship with Intel (INTC), whose shares fell after announcement. Separately, Dell posted fiscal first-quarter profits that were in line with Wall Street expectations.

Retailers were also reporting earnings. Gap (GPS ) was higher after late Thursday reporting a 17% drop in profit on lower clothing sales. AnnTaylor (ANN ) was also higher after its first-quarter profit more than doubled.

Elsewhere, Merck (MRK) was lower despite an FDA advisory committee recommending approval of the drug maker's Gardasil vaccine to prevent cervical cancer.

Pharmacy benefits manager Caremark RX (CMX ) was lower after getting a subpoena from federal prosecutors requesting records pertaining to granting stock options.

Drugmaker Genentech (DNA ) was higher after Morgan Stanley reportedly boosted its recommendation on the stock from equal-weight to overweight.

On the M&A front, Mittal Steel (MT ) upped its offer by a third for Luxembourg-based rival Arcelor.

Meanwhile, Anheuser-Busch (BUD ) said it bought the Rolling Rock beer brand for $82 million.

Among other stocks in focus, fast-food chain Burger King (BKC ) was higher in its second day of trading.

Though the economic calendar was quiet Friday, next week's will be bustling. Investors are set to receive reports on revised GDP growth, April new and existing home sales, April durable goods orders and March personal income numbers, among other data. Fed Chairman Ben Bernanke, Dallas Fed President Richard Fisher and San Francisco Fed President Janet Yellen are each set to speak, as well.

In the energy markets, June West Texas Intermediate crude oil futures closed down 92 cents at $68.53 a barrel. Fears of slowing growth were offsetting continued geopolitical worries, says Action Economics.

European markets finished mixed. In London, the Financial Times-Stock Exchange 100 index slipped 14.2 points, or 0.25%, to 5,657.4. Germany's DAX index edged higher 6.21 points, or 0.11%, to 5,672.28. In Paris, the CAC 40 index climbed 35.88 points, or 0.73%, to 4,944.57.

Asian markets finished higher. Japan's Nikkei 225 index rebounded 68.27 points, or 0.42%, to 16,155.45. In Hong Kong, the Hang Seng index rose 46.84 points, or 0.29%, to 16,313.36. Korea's Kospi index added 7.14 points, or 0.52%, to 1,372.29.

Treasury Market

Prices for 10-year Treasury notes edged higher in afternoon trading to 100-17/32 with a yield of 5.05%, while 30-year bonds rose to 90-10/32 for a yield of 5.14%.

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