BusinessWeek.com
November 29, 2006
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Stocks Rise on Solid GDP Data
Third-quarter economic growth was revised up to 2.2%, stronger than expected. Also in focus: new home sales and the Fed's Beige Book
Stocks were trading higher early Wednesday afternoon, following a report showing stronger-than-expected economic growth. Major indexes slipped from session highs as oil prices surged. Investors were also awaiting the Federal Reserve's Beige Book report, a day after Fed Chairman Ben Bernanke warned that inflation remains "uncomfortably high."Near midsession, the Dow Jones industrial average rose 64.81 points, or 0.53%, to 12,201.26. The broader Standard & Poor's 500 index added 9.28 points, or 0.67%, to 1,396. The tech-heavy Nasdaq composite was up 12.16 points, or 0.5%, to 2,424.77.
Investors were sifting through another batch of economic data Wednesday. Third-quarter gross domestic product (GDP) growth was revised up to 2.2%, from 1.6% in the advance report. Economists were expecting a 1.7% growth rate.
Meanwhile, new home sales fell 3.2% to 1.004 million in October, from a downwardly revised 1.037 million. The numbers were close to expectations, says Action Economics.
The Fed's Beige Book was also on tap this session.
Oil prices extended recent gains Wednesday, boosting corresponding shares. In the energy markets, January West Texas Intermediate crude futures rose $1.11 to $62.10 a barrel after a weekly inventory report showed an unexpectedly large decline in supplies.
In corporate news, Pfizer (PFE) was modestly higher after the drugmaker said it plans to slash 2,200 U.S. sales jobs to make up for revenue lost to cheaper generic rivals.
Ford (F) was higher as the automaker said about 38,000 of its hourly production workers have taken buyout or early retirement offers this year.
Jewelery seller Tiffany's (TIF) was higher on a 23% increase in fiscal third-quarter profit, as the company raised its full-year earnings outlook.
Shares of Intel (INTC) gained after the chipmaker won a court ruling throwing out a patent-infringement lawsuit over technology that lets computers communicate without interfering with other processes.
On the M&A front, Novartis (NVS) was higher following a report Nestle may buy the Swiss health products maker's Gerber baby-food unit.
In analyst calls, NYSE Group (NYX) was lower after J.P. Morgan lowered its recommendation on the shares from overweight to neutral, citing valuation.
European markets finished higher. In London, the FTSE-100 index rose 82.12 points, or 1.31%, to 6,084.4. Germany's DAX index added 82.12 points, or 1.31%, to 6,363.8. In Paris, the CAC 40 index climbed 75.01 points, or 1.41%, to 5,381.25.
Asian markets ended higher. In Japan, the Nikkei 225 index rebounded 220.94 points, or 1.39%, to 16,076.2. In Hong Kong, the Hang Seng index gained 141.4 points, or 0.76%, to 18,780.93. Korea's Kospi index gained 11.08 points, or 0.78%, to 1,422.55.
Treasury Market
Treasury yields drifted higher following the GDP gain and home sales data. The 10-year note edged down in price to 100-30/32 for a yield of 4.51%, while the 30-year bond crept lower to 98-14/32 for a yield of 4.6%. "It's a battle of wills in Treasuries, with neither buyers nor sellers able to decisively set direction," says Action Economics.
