PortfolioCrafter - Market Commentary 8/28/06
August 28th, 2006 / 8:41 pm / by portfoliocrafter
Stocks closed sharply after a weakening of Tropical Storm Ernesto relieved investors and sent crude prices lower. Positive momentum was reinforced by news upbeat corporate news energy transporter Kinder Morgan accepting a $22 billion buyout and by other bits of mergers and acquisition news.
Today, the Dow Jones industrial average closed up 67.96 or 0.6% to 11,352.01, the broader S&P 500 index closed up 6.69 or 0.52% to 1,301.78, and the Nasdaq composite index closed up 20.41 or 0.95% to 2,160.70.
Market breadth was positive. On the New York Stock Exchange, winners beat losers by 23 to 9 on volume of 1.2 billion shares. On the Nasdaq, advancers beat decliners also by 9 to 5 as 1.4 billion shares changed hands.
The three major factors that regulated the market today were, the decline in crude prices, the strong sales news from Wal-Mart, and the continued resiliency of mergers and acquisitions. The market will however, continue to wait for more information about the economy. Investors are looking forward to the employment report due Friday and it is expected that jobs will increase by 130,000 this month. The jobless rate is also expected to be down at 4.7%. The PCE index is expected to show an advance of 0.2%. Additionally, tomorrow investors will see the minutes from the Fed’s August 8 meeting and the August report on Consumer Confidence.
Shares of eBay closed up $0.49 to $25.79, and that of search engine Google ramped up $7.69 to $380.95, on announcement of a mutual deal. Google Inc. has gained exclusive rights to display text advertisements on the auction sites of eBay Inc. outside the U.S., giving eBay access to the Internet’s largest inventory of search-based ads and Google more Web pages on which to display them.
On buy back news, stock of Amazon.com closed up 0.88 to $28.91, after its board of directors authorized the company to buy back up to $500 million in common stock. Shares of Intel gained $0.48 to $19.38, after Friedman Billings Ramsey’s Chris Caso upgraded it to “Outperform” from “Market Perform.”
Stock of Ford Motor Co. gained $0.05% or 0.6% to $8.05 on news that it is considering a sale of a stake in its financing arm. This is a part of a sweeping restructuring plan for the company.
Shares of Wal-Mart Stores Inc. closed up $0.55 or over 1% to $44.43, after the company estimated that August sales rose 2.7% at its U.S. stores open at least a year, near the high end of its forecast.
U.S. light crude fell $1.90 to $70.61 a barrel on the New York Mercantile Exchange. The news that Ernesto has weakened and veered away eased supply worries. Hurricane Ernesto has been downgraded to tropical storm status and forecasts suggest it will miss oil facilities in the Gulf of Mexico and hit South Florida instead.
All the best,
Manuel Jesus-Backus
The Portfolio Crafter
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