Thursday, February 22, 2007

Stocks End Mixed amid Oil, Rate Worries

News Article
February 22, 2007

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Stocks End Mixed amid Oil, Rate Worries

Crude futures climbed near $61 as Iran reportedly expanded its uranium enrichment. Plus, Whole Foods agreed to buy Wild Oats

Stocks finished mixed Thursday, as the Dow Jones industrial average extended its pullback from Tuesday's all-time high. Higher bond yields, a rise in oil prices, and a report that Iran has expanded uranium enrichment weighed on sentiment. A huge selling program based on technical factors halted an early rally attempt, says Standard & Poor's Equity Research.

On Thursday, the Dow fell 51.91 points, or 0.41%, to 12,686.5, paced lower by General Motors (GM). The broader Standard & Poor's 500 index slipped 1.24 points, or 0.09%, to 1,456.39. The tech-heavy Nasdaq composite was down 6.52 points, or 0.26%, to 2,524.94, boosted by semiconductor stocks.
NYSE breadth was negative, with 18 issues declining for every 15 advancing. Nasdaq breadth was 16-13 positive.

Oil prices gained amid geopolitical concerns over Iran, helping corresponding shares. In the energy markets, April West Texas Intermediate crude oil futures rose 88 cents to $60.95 a barrel.

Among Thursday's stocks in focus, Whole Foods was up about 14% after the natural and organic foods giant announced plans to buy smaller rival Wild Oats (OATS) for $565 million.

Apple (AAPL) edged up after settling a patent suit from Cisco (CSCO) by agreeing to share the "iPhone" brand name.

Meanwhile, Microsoft (MSFT) broadened its legal battle with Alcatel-Lucent (ALU), claiming the Paris-based company violated four of the software maker's patents.

On the earnings front, Toll Brothers (TOL) was lower after the homebuilder reported a 67% decline in profits for its fiscal first quarter.

Abercrombie & Fitch (ANF) was also down, after the clothing retailer posted a 20% rise in fourth-quarter earnings but said its profits for the first half of this fiscal year would match or narrowly miss analyst expectations.

Shares of J.C. Penney (JCP) dipped as the retailer forecast first-quarter earnings below Wall Street expectations and said fourth-quarter profit fell 13%.

On the upside, ValueClick (VCLK) was up more than 10% after the online marketing company logged a 56% jump in fourth-quarter profit.

In analyst calls, shares of Analog Devices (ADI) also gained more than 10% after Citigroup raised its rating on the semiconductor maker from hold to buy.

Elsewhere, Genentech (DNA) was lower following federal regulators' rejection of a key patent.
In economic news, U.S. jobless claims fell 27,000 to 332,000 in the week ended Feb. 17, slightly higher than expected, from an upwardly revised 359,000 a week earlier. Weather and holiday distortions will probably lead traders to overlook this data, says Action Economics.

The jobless claims data require a careful look, some analysts observe. "Initial jobless claims remained elevated for the second consecutive week, which, taken at face value, would point to some slowing in job creation," says John Ryding, chief U.S. economist at Bear Stearns, in a note to clients. "However, given severe winter storms in the last two weeks, it is likely that the weather has boosted jobless claims in February."

No major economic releases were slated for Friday. The docket was set to pick up next week with data releases on personal income and spending, housing sales, fourth-quarter economic growth, and manufacturing activity.

European markets finished higher. The FTSE-100 index in London rose 23.8 points, or 0.37%, to 6,380.9. Germany's DAX index added 32.07 points, or 0.46%, to 6,973.73. In Paris, the CAC 40 index was up 13.3 points, or 0.23%, to 5,707.86.

Asian markets ended higher. In Japan, the Nikkei 225 index bounced 195.58 points, or 1.09%, to 18,108.79. In Hong Kong, the Hang Seng index gained 157.81 points, or 0.76%, to 20,809.23. Korea's Kospi index advanced 14.03 points, or 0.97%, to 1,465.41.

Treasury Market
Treasury yields pushed higher, as investors continued to digest Wednesday's increase in consumer prices. The 10-year note fell in price to 99-06/32 for a yield of 4.73%. The 30-year bond dropped to 98-24/32 for a yield of 4.83%. The higher inflation reading and recent cautionary comments from Fed officials are seen ruling out the chances of a interest-rate cut anytime soon, says S&P.

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