PortfolioCrafter - Market Commentary 12/21/05
Thursday, December 22nd, 2005
Modest gains today after four losing sessions. While gains were modest, the markets were lifted by a string of new merger deals, including Seagate Technology’s $1.9 billion acquisition of its rival Maxtor Corp.
The Dow Jones industrial average gained 28.18 or 0.3% to 10,833.73, the Standard & Poor’s 500 index finished up 3.17 or 0.3% to 1,262.79, and the Nasdaq composite index closed up 9.24 or 0.4% to 2,231.66.
The market breadth was positive. On the New York Stock Exchange, rising shares outnumbered decliners by 21 to 12 on volume of 1.5 billion shares. On the Nasdaq advancers beat decliners by a margin of about 18 to 11 as 1.7 billion shares changed hands.
In the previous four sessions the Dow has lost 0.7 percent, the S&P has slipped 1 percent and the Nasdaq has fallen 1.8 percent. But the losses have been limited and it won’t take much of a push for stocks to recover before the year is up.
Investors have been awaiting the traditional “Santa Claus” rally. While a run-up at the end of the year is still in sight, the rising oil prices and a stronger dollar have taken some steam out of the stock market’s gains. A string of deals in the technology sector sent stocks higher, but flaring oil prices made investors recoup losses after four consecutive losing sessions.
A government report stated that the Gross Domestic Product expanded at a 4.1% annual rate in the third quarter against the estimated 4.3%. while GDP is lower, investors were still happy that it remained above 4%.
General Motors continued to slide another 4% on news that shareholder Kirk Kekorian had sold 12 million of his 56 million GM shares in order to take tax losses. GM has lost over 50% of its value this year. However, on the Dow, DuPont gained $0.85 to $42.80, American International Group gained $1.02 to $66.44, and Alcoa closed up $0.69 to $28.99. Amongst losers, Disney closed down $0.17 to $24.10, and Honeywell lost $0.47 to $37.68.
Segate Technology closed up $0.63 to $20.23, on news that it will buy rival computer disk-drive maker Maxtor for $1.9 billion in stock. Maxtor shares closed up $2.41 or 53% to $6.93. IBM announced that it will buy software developer Micromuse for $865 million. Micromuse gained over 37% to gain $2.71 to $9.92.
U.S. crude for February delivery gained 47 cents to settle at $58.56 a barrel on the New York Mercantile Exchange.
All the best,
Manuel Jesus-Backus
The Portfolio Crafter
