PortfolioCrafter - Market Commentary 10/24/05
Monday, October 24th, 2005
Stocks surged as investors welcomed news that White House adviser Ben Bernanke has been tapped to succeed Alan Greenspan as chairman of the Federal Reserve. The administration confirmed Bernanke’s nomination at around 1 p.m. ET. Bernanke — who was a Fed governor until June — was widely considered the front runner for the job and is someone seen as carrying on Greenspan’s inflation-fighting policies.
Stocks closed sharply with the Dow Jones Industrial Average and the S&P 500 posting their biggest one-day gains in six months. Stocks bounced back after last week’s declines on falling oil prices and upbeat quarterly earnings. The Dow Jones industrial average closed up 169.78 or nearly 1.7% to 10,385.00, and saw the biggest one-day point and percentage gain since late April. The broader S&P 500 finished up 19.79 or nearly 1.7% to 1,199.38, and the Nasdaq composite ended up 33.62 or 1.6% to 2,115.83.
Market breadth was positive. On the New York Stock Exchange, winners topped losers by 25 to 7 on volume of 1.64 billion shares. On the Nasdaq, advancers beat decliners 21 to 8 as 1.58 billion shares changed hands. Stock gains were broad-based, with 28 out of 30 Dow issues gaining ground.
Amongst other indices, the Amex Securities Broker/Dealer Index gained 3% up 5.29 to 179.81, the Amex Biotech Index closed up 18.07 or nearly 3% to 631.59, the Dow Jones Home Construction Index gained 2.7% up 22.95 to $878.76, the Amex Oil Index gained 3% to up 28.09 to 952.25,and the Amex Pharmaceutical Index weakened 1.25% to 306.80.
Prominent amongst gainers were American Express up $2.39 or nearly 5% to $49.54, Merck gained up $0.82 or almost 3% to $27.00, Aloca closed up $0.59 to $23.94, Caterpillar finished up $1.39 to $50.31, Do Pont closed up $0.98 to $39.62, Home Depot was up $1.01 to $40.66, and General Motors ended up $1.21 to $29.47. Exxon Mobil gained 2.7 percent and was one of many oil stocks bouncing today.
On a take over proposal, Albertson gained $1.19 or 5% to $25.25, from Kroger which also closed up $0.27 to $20.07. The pharmacy unit of Albertson has drawn bids from three drug store chains.
Cendant was a loser and closed down $1.32 to $18.77, after the company said it will split itself up into four publicly traded companies by 2006 in an effort to lift the price of its stock. Stun-gun manufacturer Taser International also closed a bit off its highs after gaining as much as 24% intraday.
U.S. light crude oil for December delivery slipped 31 cents to settle at $60.32 a barrel on the New York Mercantile Exchange, erasing bigger losses during the session. The price dropped as Gulf Coast facilities managed to avoid the fallout from Hurricane Wilma.
All the best,
Manuel Jesus-Backus
The Portfolio Crafter