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A pullback in crude-oil prices, strong earnings from Lowe’s Cos. and an upbeat profit outlook from Verizon Communications enabled investors to shrug off weaker-than-expected housing data. This sparked a broad stock rally with the S&P 500 index closing just below a 4-1/2 year high.

Today, the Dow Jones industrial average closed up 35.70 or 0.3% to 11,097.55, the Standard & Poor’s 500 index closed up 4.69 or 0.4% to 1,294.12, and the Nasdaq composite index closed up 20.14 or 0.9% to 2,307.18.

Market breadth was positive. On the New York Stock Exchange, winners topped losers by more than nine to seven on volume of 1.43 billion shares. On the Nasdaq, advancers topped decliners three to two on volume of 1.75 billion shares.

Certainly falling oil prices played a big role in the day’s advance. Additionally, people think that the economy is doing well, there has been positive geopolitical news out of Iran over the weekend, and the fact that the market for the most part is between earnings reports and Fed meetings. It is evident from the housing data, that some slowing is currently taking place. Sales of new homes in the United States fell 5% in January to a seasonally adjusted annual rate of 1.233 million, the lowest in a year. Economists had been expecting home sales to remain level at about 1.27 million.

Some gainers today included Hewlett Packard (NYSE:HPQ) closed up $1.39 to $33.41, Microsoft (Nasdaq:MSFT) closed up $0.42 to $27.05, Caterpillar (NYSE:CAT) gained $0.80 to $73.50, and Intel (Nasdaq:INTC) closed up $0.16 to $20.52. Walt Disney (NYSE:DIS) gained $0.40 to $28.38, on news that Apple might try and buy out Disney now that Apple founder Steve Jobs has joined Disney’s board and is its biggest individual shareholder. Stock of Apple (Nasdaq:AAPL) closed down $0.47 to $70.99. Lowe’s (NYSE:LOW) closed up $3.78 to $69.30, after reporting higher-than-expected fiscal fourth-quarter earnings. Home Depot closed up $0.82 to $42.45. Verizon Communications (NYSE:VZ) gained $0.25 to $34.06, after the company said that 2006 profits will narrowly beat analysts’ current forecasts.

British utility National Grid (NYSE:NGG) said it will buy natural gas distributor KeySpan for $7.3 billion in cash plus assumed debt of $4.5 billion. Shares of KeySpan (NYSE:KSE) closed lower $0.65 to $40.76. In another news, Armor Holdings, which makes vehicle-armor and other security products said it would buy military truck maker Stewart & Stevenson Services for about $1.1 billion in cash. Shares of Armor (NYSE:AH) closed up $3.67 or 6.6% to $59.13, while shares of Stewart & Stevenson (NYSE:SVC) closed up $7.23 or 27% to $34.33.

Amongst losers, Advanced Energy Industries (Nasdaq:AEIS) closed lower by 7.1% at $14.49. Applied Materials (Nasdaq:AMAT) fell 2.1% at $18.40, Mattson Technology Inc. (Nasdaq:MTSN) lost 4.27% to $11.88, Asyst Technologies (Nasdaq:ASYT) closed lower 1.41% to $9.81, and Lam Research Corp (Nasdaq:LRCX) closed lower 3.11% to $42.39.

Easing of concerns about Iran potentially developing nuclear weapons and reports on progress in talks between Russia and Iran propelled the U.S. light crude oil for April delivery to fall $1.91 to settle at $61 a barrel on the New York Mercantile Exchange. Ample U.S. supplies and overall weakness in petroleum trading sent prices for the April contract to their lowest level in almost a year. Natural-gas futures closed more than 7% lower.

All the best,
Manuel Jesus-Backus
The Portfolio Crafter