PortfolioCrafter - Market Commentary 10/27/05
October 27th, 2005 / 9:11 pm / by portfoliocrafter
Today was the third consecutive day that stocks fell as concerns about slower-earnings growth combined with classic seasonal weakness sent the market lower. Ailing General Motors, and the impact of a possible indictment of key Bush administration officials on the president’s economic agenda added fuel to fire.
The Dow Jones industrial average closed down 115.03 or 1.1% to 10,229.95, the broader Standard & Poor 500 ended down 12.48 or just over 1% to 1,178.90, and the Nasdaq composite finished down 36.22 or 1.7% to 2,063.81. This was the biggest one-day drop in more than three weeks for the Nasdaq.
Amongst other indices, the Dow Jones Home Construction Index closed down $30.73 or 3.6% to $814.90, the Philadelphia Semiconductor Index closed down 11.94 or 2.7% to 427.64, the Amex Networking Index ended down 7.15 or 3.2% to 218.98, and the Philadelphia Oil Service Index ended down by 2.5%.
The market breadth was negative. On the New York Stock Exchange, losers beat winners by almost three to one on volume of 1.78 billion shares. On the Nasdaq, decliners topped advancers by more than three to one as 1.74 billion shares changed hands. Declines were broad based, with 25 out of 30 Dow issues falling on the session. A variety of tech stocks also slumped today.
General Motors closed down $1.98 or 6.8% to $27.19, on reports that the Securities and Exchange Commission had issued subpoenas regarding its pension-accounting and insurance practices. Speculation that it was planning to file for bankruptcy also fueled this slide. Alcatel closed down $0.95 to $11.66, after cutting its full-year profit target. Exxon Mobil closed down $0.60 to $55.60, after it reported earnings per share that rose from a year ago but missed analysts’ estimates. Digital River ended down $9.77 or 26% to $27.71, after slashing 2006 forecasts late Wednesday. Johnson & Johnson ended down 2.2% at $61.44 after the Food and Drug Administration rejected Dapoxetine, its new drug for premature ejaculation. Shares of Baidu.com Inc tumbled down 13.2% to end at $70.35 after the Chinese Internet search engine’s first quarterly results fell short of analyst expectations. Shares in Martha Stewart Living Omnimedia Inc. ended down 15.2% at $17.97 after the company reported a deeper third-quarter loss and forecast a flat fourth quarter.
Amongst few gainers, Verizon Communications climbed as much as 2.4% to $31.32 after the telecom giant posted forecast-beating third-quarter results. The stock ended up 17 cents at $30.76. Goodyear Tire & Rubber Co. ended up $1.97, or 14.7% at $15.35 after citing strong operating results in its tire businesses, improved pricing and product mix, and higher volume in its international operations for the performance.
U.S. light crude oil for December delivery jumped 43 cents to settle at $61.09 a barrel on the New York Mercantile Exchange, after sliding 2.5 percent on Wednesday.
All the best,
Manuel Jesus-Backus
The Portfolio Crafter
