PortfolioCrafter - Market Commentary 1/25/06
January 25th, 2006 / 10:12 pm / by portfoliocrafter
A rise in long-term interest rates and weaker-than-expected housing data outweighed a drop in crude-oil prices and some solid earnings reports. However, technology stocks dominated volume after the bell with shares of Qualcomm Inc., Juniper Networks Inc. and InfoSpace Inc. stacking the session’s top-five most-actively traded slots.
Today, the Dow Jones industrial average closed down 2.48 to 10,709.74, the Standard & Poor’s 500 index closed down 2.18 or 0.2% to 1,264.68, and the Nasdaq composite index closed down 4.60 or 0.2% to 2,260.65.
Market breadth was negative. On the New York Stock Exchange, losers eclipsed winners by 18 to 15 on volume of 1.92 billion shares. On the Nasdaq, decliners beat advancers by 16 to 13 on volume of 2.24 billion shares.
Investors reacted to a steep selloff in Treasury prices and that drove up the corresponding yields. The sell-off was likely a reaction to a lackluster two- year note sale. The bond market selloff, some negative earnings over the last few days and the poor housing report today have not helped improve investor confidence. However, the only positive today was that oil came down. While everyone expects a gradual slowdown in housing, they don’t want it to go too fast, and that’s causing agitation.
The biggest news today was the sell-off of Guidant. Boston Scientific is the winner to buy Guidant in a $27.2 billion cash-and-stock deal that ends a two- month bidding war with rival suitor Johnson & Johnson. However, stock of all three companies closed down with Boston Scientific down $0.46 to $23.54, Guidant down $1.59 to $75.19, and Johnson & Johnson closing down $0.86 to $58. 50.
Shares of Walt Disney slipped down $0.55 to $25.44, on announcement that it was buying Pixar in a $7.4 billion deal. Disney shares slipped more than 2%, while Pixar shares gained under 1%. McDonald’s lost $0.69 to $35.16, Exxon Mobil closed down $0.75 to $60.21, and housing stocks stumbled with the Dow Jones Home Construction index closing down $22.66 or 1.8% to $930.76.
Amongst gainers, Bristol-Myers Squibb closed up $0.64 or 3% to $21.97, on announcing that it earned 31 cents per share, up from a year ago and beyond Wall Street’s forecasts. RF Micro Devices closed up $1.01 or 16% to $7.38, after reporting higher third-quarter earnings that beat estimates. CheckFree gained $7.37 or 17% to $51.79, after reporting higher quarterly earnings and revenue that topped forecasts. AT&T gained $0.55 to $25.21, Verizon gained $0. 49 to $31.38, Caterpillar closed up $0.72 to $62.07, and General Motors closed up $0.80 to $23.85, all ahead of their quarterly earnings reports.
US light crude oil for March delivery fell $1.21 to settle at $65.85 a barrel on the New York Mercantile Exchange. Oil prices had lifted off their lows shortly after the release of the weekly oil inventory report at 10:30 a.m. ET, but then took a slide. That report showed a surprise decline in crude supplies and a rise in distillates.
All the best,
Manuel Jesus-Backus
The Portfolio Crafter
