Traders-Blog.com

U.S. stocks ended sharply higher after a Fed official insinuated that the current cycle of interest rate hikes may be coming to an end, but a 5% spike in crude-oil prices took some of the steam out of the rally in late-day trading. The Dow increased 82.39 points, to close at 10,549.87. The Nasdaq closed at 2,087.86, after rising 19.22 points, meanwhile the S&P closed at 1,202.22, after rising 10.72 points. Besides, crude-oil futures ended at their highest level in 5 weeks, with the benchmark July contract up 5.1 percent at $54.60 a barrel in New York trading.

The market had a big rally today due to a survey that showed manufacturing grew more slowly and costs pressures eased signaled the Federal Reserve may soon end its series of interest-rate increases. The Institute for Supply Management’s factory index slipped to 51.4 in May, which is the lowest level since June 2003, from 53.3 a month earlier. Also, a government report showed that U.S. home-price appreciation accelerated to 12.5 percent in the first quarter from a year earlier.

Shares of Google jumped $10.43, or 3.8 percent, to close at an all-time high of $287.70, after analyst Heath Terry boosted his price target from $275 to $350. Based on earnings before interest taxes depreciation and amortization, Google can grow an average of 45 percent annually over the next three years, while eBay and Yahoo would average about 38 percent over the same period.

William Donaldson, chairman of the Securities and Exchange Commission (SEC), announced that he will step down at the end of the month. He was picked by President Bush after Harvey Pitt resigned as SEC Chief in 2002 because of too many complaints for his regulation’s methodology. The SEC has always been criticized by the U.S Chamber of Commerce for imposing excessive fines in many of the cases. The departure of Donaldson leaves President Bush with the challenge of picking a new leader.

All the best,
Manuel Jesus-Backus
The Portfolio Crafter
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