January 11, 2007
Dow Hits Record as Oil Slides
Crude futures tumbled below $52, while Genentech posted solid fourth-quarter earnings. Apple's new iPhone sparked a trademark dispute with CiscoStocks finished broadly higher Thursday, as the Dow hit a new all-time closing high amid a plunge in oil prices and solid earnings news. Tech stocks led the market higher despite a trademark dispute between two sector heavyweights. The Nasdaq's breakout from a two-month trading range added to bullish sentiment, says Standard & Poor's Equity Research.
On Thursday, the Dow Jones Industrial average rose 72.82 points, or 0.59%, to 12,514.98, above its previous closing record of 12,510.57, set Dec. 27. The broader Standard & Poor's 500 index added 8.97 points, or 0.63%, to 1,423.82. The tech-heavy Nasdaq composite climbed 25.52 points, or 1.04%, to 2,484.85.
NYSE breadth was decidedly positive, with 24 issues advancing for every 10 declining. Nasdaq breadth was 20-10 positive.
Oil prices sank in a volatile session. In the energy markets, February West Texas Intermediate crude oil futures fell $2.14 to $51.88, their lowest level since May 27, 2005, despite a U.S. attack on an Iranian consulate in iraq.
The recent decline in crude, along with upcoming equity options expirations, likely gave stocks a boost, some analysts say. "Oil could be giving investors confidence that the consumer is going to live another day," says Todd Salamone, senior vice president at Schaeffer's Investment Research.
Some upbeat quarterly results fueled investor optimism about earnings season. Genentech (DNA) was higher after the drugmaker reported a 75% jump in fourth-quarter profit.
Looking ahead, Friday's calendar is relatively quiet for earning releases. The schedule picks up next week with quarterly results from Intel (INTC), Apple (AAPL), and Citigroup (C), among others.
On the economic docket Friday, the release of December retail sales is expected to rise 0.7%, or 0.5% excluding automobiles, says Action Economics. Investors will also be sifting through data on November, December import and export prices, and the December U.S. Treasury Budget.
Among Thursday's other stocks in the news, Apple was lower following two days of big gains, as Cisco (CSCO) sued the tech company for alleged trademark infringement over the use of the name "iPhone" for the iPod maker's new product.
Shares of ConocoPhillips (COP) dipped after the energy company reported disappointing preliminary proved reserve additions for 2006.
In analyst calls, MetLife (MET) was higher after UBS reportedly upgraded the insurer from neutral to buy.
M&A activity continued to percolate. AirTran Holdings (AAI) raised its bid for Midwest Air Group (MEH) to $345 million.
Real estate group Equity Office Properties (EOP) was higher on a report a bidding war might break out for the company in response to private-equity firm Blackstone's $20 billion buyout offer.
Amusement park operator Six Flags (SIX) agreed to sell three of its water parks and four of its theme parks for $312 million to Jacksonville (Fla.)-based PARC 7F-Operations.
In economic news, U.S. jobless claims tumbled 26,000 to 299,000 in the week ended Jan. 6, a bigger drop than expected, from a downwardly revised 325,000 in the previous week.
Meanwhile, the Bank of England raised a key interest rate by 25 basis points to 5.25% in an unexpected move. Separately, the European Central Bank held its benchmark rate steady at 3.5%.
European markets finished higher on Thursday after the European Central Bank indicated it might not raise interest rates anytime soon. The FTSE-100 index in London rose 69.4 points, or 1.13%, to 6,230.1. Germany's DAX index rose 120.74 points, or 1.84%, to 6,687.3. In Paris, the CAC 40 index was up 107.85 points, or 1.96%, to 5,609.8.
Asian markets ended mostly lower. In Japan, the Nikkei 225 index lost 104.23 points, or 0.62%, to 16,838.17. In Hong Kong, the Hang Seng index slid 182.97 points, or 0.94%, to 19,385.37. Korea's Kospi index gained 9.52 points, or 0.7%, to 1,365.31.
Treasury yields extended recent gains following a disappointing TIPS auction, the sharp drop in weekly jobless claims, and the surprise Bank of England rate hike. The 10-year note fell in price to 99-03/32 for a yield of 4.74%. Some traders were getting set for expected strength in Friday's retail sales report, says Action Economics.