Tuesday, August 22, 2006

Stocks Finish Mixed amid Iran Worries

News Article
August 22, 2006

Business Week Online

Stocks Finish Mixed amid Iran Worries

Iran responded to calls for the country to suspend its nuclear program. Toll Brothers beat estimates but lowered its full-year guidance

Stocks finished narrowly mixed in slow trading Tuesday, as a homebuilder's better-than-expected quarterly results offset concerns about the latest twist in the Iran nuclear standoff. Chicago Fed President Michael Moskow's prediction that "more rate hikes may still be necessary to cut inflation" prompted some afternoon selling.

The Dow Jones industrial average edged down 5.21 points, or 0.05%, to 11,339.84. The broader Standard & Poor's 500 rose 1.29 points, or 0.1%, to 1,298.81. The tech-heavy Nasdaq composite added 2.27 points, or 0.11%, to 2,150.02.

NYSE breadth was slightly positive, with 19 issues advancing for every 14 declining. Nasdaq breadth was 17-13 positive.

Iran delivered its response Tuesday to a U.N. demand that Tehran suspend uranium enrichment in exchange for an incentive package. Details of the response remained unclear, though the oil exporter's top negotiator said the country was ready to enter "serious negotiations."

In the energy markets, September West Texas Intermediate crude oil futures settled and expired up 18 cents at $72.63 a barrel. Earlier, Iranian gunners fired on a Romanian oil rig in the Persian Gulf.

Among stocks to watch, Toll Brothers (TOL) was higher after the luxury homebuilder beat Wall Street expectations despite reporting a 19% drop in fiscal third-quarter profit and cutting its full-year outlook.

Software giant Microsoft (MSFT ) was lower amid news the company plans to offer discounts for upgrades to its Windows Vista operating system.

Shares of Advanced Micro Devices (AMD) rose after the chipmaker said it aims to raise its share of the global market for computer processors to about 30% by 2008. Bear Stearns raised its rating on the stock from peer perform to outperform.

Wireless carrier Sprint Nextel (S) was lower after the company said Len Lauer, its chief operating officer, was leaving the company. President and Chief Executive Gary Forsee will assume Lauer's responsibilities. Merrill Lynch reportedly downgraded the stock from buy to neutral.

In other analyst calls, XM Satellite Radio (XMSR ) was sharply higher as Bear Stearns upgraded the stock from underperform to outperform.

Companies set to announce quarterly results after the close included medical device maker Medtronic (MDT ).

The economic calendar was quiet again Tuesday, with a report on existing home sales due Wednesday and new home sales a day later. Durable goods orders and weekly jobless claims data will also be on tap Thursday.

European markets finished mixed. In London, the Financial Times-Stock Exchange 100 index lost 12.6 points, or 0.21%, to 5,902.6. Germany's DAX index rose 23.58 points, or 0.41%, to 5,818.41. In Paris, the CAC 40 index was up 23.68 points, or 0.46%, to 5,128.33.

Asian markets finished higher. Japan's Nikkei 225 index shot up 212.13 points, or 1.33%, to 16,181.17. In Hong Kong, the Hang Seng index gained 141.87 points, or 0.83%, to 17,149.75. Korea's Kospi index advanced 13.29 points, or 1.01%, to 1,334.96.

Treasury Market

Treasuries finished mixed to higher ahead of Wednesday's housing data. The 10-year note was little changed at 100-17/32 for a yield of 4.81%, while the 30-year bond edged up in price to 93-03/32 for a yield of 4.95%. Chicago Fed President Moskow's hawkish comments helped bond prices pull back from modest early gains.

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