BusinessWeek.com
January 9, 2007
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Stocks End Mixed amid Oil, Apple News
Crude futures tumbled below $56. Apple unveiled its long-awaited iPhone product, while Alcoa kicked off earnings season after the closing bell
Stocks finished mixed in choppy trading Tuesday, recovering from early lows as Apple (AAPL) unveiled a new product and falling oil prices weighed on energy stocks. Investors were apparently nervous ahead of earnings season, which kicked off after the close with Alcoa (AA), says Standard & Poor's Equity Research.On Tuesday, the Dow Jones Industrial average slipped 6.89 points, or 0.06%, to 12,416.6. The broader Standard & Poor's 500 index edged down 0.73 points, or 0.05%, to 1,412.11. The tech-heavy Nasdaq composite rose 5.63 points, or 0.23%, to 2,443.83.
NYSE breadth was positive, with 19 issues advancing for every 14 declining. Nasdaq breadth was 16-15 negative.
Oil prices extended their slide in a volatile session, as warmer weather across the Northern Hemisphere reduced demand. In the energy markets, February West Texas Intermediate crude oil futures fell 45 cents to $55.64, after dropping below $54 to their lowest levels in 18 months.
Earnings season got started after the closing bell with quarterly results from Alcoa, which reported 60% higher fourth-quarter profits. Earnings growth for the S&P 500 is expected to slow to a 9% pace in the fourth quarter, according to S&P, snapping a streak of 18 straight quarters with double-digit gains.
Looking ahead, Wednesday's release of November wholesale sales is seen rising 0.2%, says Action Economics. The November trade deficit is expected to rise $0.8 billion to $59.7 billion.
Companies slated to report earnings Wednesday include Genenentech (DNA).
Among Tuesday's stocks in the news, Apple was sharply higher after the computer and iPod maker introduced its long-anticipated iPhone mobile phone at the MacWorld Conference. Shares of BlackBerry maker Research in Motion (RIMM) sank on the news.
Meanwhile, Sprint Nextel (S) was sharply lower after the phone maker's 2007 sales outlook fell short of analyst expectations. Deutsche Bank downgraded the stock from hold to sell.
In earnings news, Cheesecake Factory (CAKE) was higher after the restaurant operator reported fourth-quarter revenue that beat Street estimates.
Supervalu (SVU) was lower after the supermarket chain said its third-quarter earnings climbed 51%, less than analysts expected.
D.R. Horton (DHI) was modestly higher after the homebuilder posted a 28% drop in fiscal first-quarter sales orders.
On the M&A front, Stifel Financial (SF) agreed to acquire BankAtlantic Bancorp (BBX) unit Ryan Beck Holdings for $91.1 million in stock.
The economic calendar was quiet Tuesday. U.S. ICSC-UBS chain store sales index rose a solid 0.7% in the week ended Jan. 6, following a 0.3% uptick the previous week.
European markets finished modestly higher. The FTSE-100 index in London nudged higher 1.9 points, or 0.03%, to 6,196.1. Germany's DAX index added 6.78 points, or 0.1%, to 6,614.37. In Paris, the CAC 40 index was up 14.44 points, or 0.26%, to 5,553.03.
Asian markets ended mixed. In Japan, the Nikkei 225 index gained 146.18 points, or 0.86%, to 17,237.77. In Hong Kong, the Hang Seng index lost 131.58 points, or 0.66%, to 19,898.08. Korea's Kospi index advanced 3.53 points, or 0.26%, to 1,374.34.
Treasury Market
Treasury prices drifted in a light session for economic data. The 10-year note nudged higher in price to 99-26/32 for a yield of 4.65%, while the 30-year bond edged down to 96-09/32 for a yield of 4.74%. Traders were awaiting the trade deficit data due Wednesday morning.
