PortfolioCrafter - Market Commentary 2/23/06
February 24th, 2006 / 2:37 am / by portfoliocrafter
Rising bond yields and concerns that the Federal Reserve will persist in lifting interest rates lead the markets southwards. The Dow industrials backed off from 4-1/2 year highs that were hit yesterday and glee of yesterday turned to gloom following the increased jobless numbers.
Today, the Dow Jones industrial average closed down 67.95 or 0.6% to 11,069.22, the Standard & Poor’s 500 index closed down 4.88 or 0.4% to 1,287.79, and the Nasdaq composite index closed down 3.85 or 0.2% to 2,279.32.
Market breadth was negative. On the New York Stock Exchange, losers topped winners nine to seven on volume of 1.57 billion shares. On the Nasdaq, decliners topped advancers eight to seven on volume of 1.79 billion shares.
The daily reaction continues with the investors reacting in part to strong economic data, including the jobless claims numbers for the latest week, which may further encourage the Fed to keep lifting rates. The jobless claims report showed a surprisingly large drop in the number of Americans filing new claims for unemployment last week. The strong labor market read was followed by the jump in treasury bonds yield which did not help the market. However, there was a glimmer of good news when Philadelphia Federal Reserve Bank President Anthony Santomero said he sees productivity growth at about 2.5%. It appears to be a foregone conclusion that the central bank will boost short-term interest rates at the next meeting in March. Whether the market can recharge in the short term is unclear. February is a notoriously choppy month on Wall Street, and the major gauges have been hitting up against key technical levels.
Some of the losers today included Merck down $0.51 to $35.41, General Motors closed down $0.60 to $20.59, Hewlett Packard closed down $0.57 to $32.37, and IBM lost $1.15 to $80.20. Stock of Viacom closed down $0.94 to $40.96, after reporting lower quarterly profit and issuing fiscal 2006 earnings guidance below current estimates. Sherwin-Williams closed down $1.15 to $42.05, NL Industries closed down $0.61 to $12.60.
While the Philadelphia Semiconductor index closed down 6.30 or 1.2% to 524.48, Intel gained $0.14 to $20.29. Google closed up $12.58 to $378.07, and Apple Computer closed up $0.43 to $71.75. Stock of Toll Brothers closed up $1.05 to $33.54, after reporting higher-than-expected quarterly earnings and issuing a mostly upbeat 2006 forecast.
U.S. light crude oil for April delivery fell 47 cents to settle at $60.54 a barrel on the New York Mercantile Exchange.
All the best,
Manuel Jesus-Backus
The Portfolio Crafter
