PortfolioCrafter - Market Commentary 9/28/06
September 29th, 2006 / 12:02 am / by portfoliocrafter
Stocks posted their fourth straight session of gains, though the Dow Jones Industrial Average stopped a bit short of reaching a fresh closing high. Stocks have continued to rally with investors welcoming falling oil prices, signs that the economy is slowing, not heading for a recession, and relief that the Federal Reserve has halted its interest-rate hiking campaign.
Today, the Dow Jones industrial average closed up 29.21 or 0.25% to 11,718.45. For a little while, the Dow briefly topped the record closing high of 11,722.98, hit on Jan. 14, 2000. The broader S&P 500 index closed up 2.56 or 0.19% to 1,339.15, and the Nasdaq composite closed up 6.63 or 0.29% to 2,270.02.
Market breadth was negative. On the New York Stock Exchange, losers beat winners by a narrow margin of 17 to 15 on volume of 1.485 billion shares. On the Nasdaq, decliners beat advancers 15 to 13 on volume of 1.859 billion shares.
The market is definitely moving higher on momentum, and the chances are that the Dow could reach a new record in the next day or two. Investors have been prodding stocks higher on the back of “lower energy prices and a refocus on the fact that earnings growth has been much stronger than expected. Investors have shown they’re undeterred by nagging questions about economic growth.
In data news, second-quarter U.S. growth increased at a rate of 2.6%, slightly lower than previous estimates of a 2.9%. This is far lower than the 5.6% reported in the first quarter. Despite the weaker report, investors took it in their stride, as it further attesting to the ability of the Federal Reserve to keep interest rates unchanged.
Shares of General Motors closed up $0.74 or 1.5% to $33.02, on news that billionaire investor Kirk Kerkorian’s Tracinda Corp. is seeking to boost its holdings of the automaker’s stock by about 12 million shares. Additionally, the CEO Rick Wagoner said that talks on joining the Renault-Nissan alliance may extend beyond a mid-October deadline set by the companies.
Shares of Hewlett-Packard Co closed up $0.58 or 1.6% to $35.97, as executives invoked their right not to testify at a congressional hearing on the company’s boardroom leak probe. Ex-Chairwoman Patricia Dunn testified that she did not know of any potential illegal tactics used by the company until late June.
Stock of Time Warner closed down $0.39 or 2.1% to $18.20, after the company was downgraded to neutral from overweight at J.P. Morgan. They cited concerns over continued challenges for the company’s AOL Internet unit, slowing movie revenue and relatively high valuation. The film and television studio is expected to see revenue growth of 3.8% over the next five year period, down from the 8.9% it experienced from 1995 to 2005.
U.S. light crude oil for November delivery rose 74 cents to $63.70 a barrel on the New York Mercantile Exchange.
All the best,
Manuel Jesus-Backus
The Portfolio Crafter
30-day risk-free trial
