Thursday, September 14, 2006

Stocks End Mixed as Oil Falls

News Article
September 14, 2006

Business Week Online

Stocks End Mixed as Oil Falls

Crude futures tumbled near $63, while downgrades weighed on Boeing and General Electric. Investors awaited Friday's inflation data

Stocks finished narrowly mixed in choppy trading Thursday, as investors considered analyst downgrades, mixed economic data, and falling energy prices. Traders seemed anxious about the inflation numbers due Friday, says Standard & Poor's Equity Research.

Also in focus was quadruple witching, when the monthly stock and index option expirations coincide with the quarterly expiration of stock and index futures contracts.

The Dow Jones industrial average slipped 15.93 points, or 0.14%, to 11,527.39. The broader Standard & Poor's 500 index shed 1.79 points, or 0.14%, to 1,316.28. The tech-heavy Nasdaq composite edged up 1.06 points, or 0.05%, to 2,228.73, boosted by strength in semiconductor stocks.

NYSE breadth was negative, with 20 issues declining for every 13 advancing. Nasdaq breadth was 16-13 negative.

After four straight sessions of gains, market optimism seems to be on the rise, some analysts say. "While we still need some more things to fall into place to say that the long, strong run is here, this is the best chance in four months for the equity jitters to conclude," says Brian Reynolds, chief market strategist at MS Howells.

Oil prices continued to tumble Thursday. In the energy markets, October West Texas Intermediate crude oil futures closed down 75 cents at $63.22 a barrel, as natural gas prices hit two-year lows following a report showing an unexpectedly large increase in supplies.

Investors were also digesting a full plate of economic data. Retail sales rose 0.2% in August, and also edged up 0.2% excluding autos. Import prices added 0.8% in August, following a 1.0% increase in July. Business inventories gained 0.6% in July, as expected.

Meanwhile, jobless claims fell 5,000 to 308,000 in the week ended Sept. 9, after an upwardly revised 313,000 a week earlier.

Federal Reserve Governor Susan Bies avoided commenting on interest rates or the economy in her prepared testimony before the House Financial Services subcommittee. New York Fed President Timothy Geithner was set to speak late Thursday on hedge funds.

The main event Friday is a report on consumer inflation. Data releases are also on tap for consumer sentiment, industrial production, and the Empire State index of regional manufacturing activity.

In corporate news, shares of two blue-chips were lower after analyst downgrades. UBS lowered its rating on shares of Boeing (BA ) from neutral to reduce and cut General Electric (GE ) from buy to neutral.

GE also announced a $3.8 billion deal to sell a majority stake in its advanced materials unit to private investment group Apollo Management.

Software giant Microsoft (MSFT ) was higher as the company raised its quarterly dividend by 11%.

Shares of automaker Ford (F) dipped amid news the automaker and the United Auto Workers Union plan to offer buyouts to the company's 75,000 UAW workers in the U.S.

Oil and gas producer Anadarko Petroleum (APC ) said it agreed to sell Canadian subsidiary Anadarko Canada for $4.24 billion to Canadian Natural Resources (CNQ ).

On the earnings front, Bear Stearns (BSC ) was higher after the investment bank reported a 16% increase in third-quarter profit, on the heels of solid results from Lehman Brothers (LEH ) and Goldman Sachs (GS ).

Retailer Pier 1 Imports (PIR) was lower after the company posted a wider second-quarter loss on 15% lower same-store sales, but said it expects to do better over the holiday season.

Elsewhere, Stanley Furniture (STLY) was lower after the wood furniture maker cut its forecasts for third-quarter and full-year results, citing weaker-than-expected sales.

Shares of XM Satellite Radio (XMSR ) climbed after Credit Suisse upgraded the stock from neutral to outperform.

European markets finished mixed. In London, the Financial Times-Stock Exchange 100 index fell 15 points, or 0.25%, to 5,877.2. Germany's DAX index edged up 1.25 points, or 0.02%, to 5,907.37. In Paris, the CAC 40 index was down 14.08 points, or 0.27%, to 5,123.85.

Asian markets ended mostly higher. Japan's Nikkei 225 index climbed 192.34 points, or 1.22%, to 15,942.39. In Hong Kong, the Hang Seng index slipped 26.59 points, or 0.15%, to 17,183.45. Korea's Kospi index rallied 25.62 points, or 1.92%, to 1,358.75.

Treasury Market

Treasury yields ticked higher following the mixed reports on the economy. The 10-year note fell in price to 100-22/32 for a yield of 4.79%, while the 30-year bond dropped to 93-18/32 for a yield of 4.92%.

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