PortfolioCrafter - Market Commentary 11/30/06
Thursday, November 30th, 2006
Stocks closed little changed today but sharply higher on the month. Today’s session featured early weakness caused by soft economic data and disappointing retail sales as well as a late-session spurt of buying. Investors were unwilling to make any decisive moves amid higher oil prices and a big rally in the bond market.
Today, the Dow Jones industrial average closed down 4.80 or 0.04% to 12,221.93, the broader S&P 500 closed up 1.15 or 0.08% to 1,400.63, and the Nasdaq composite closed down 0.46 to 2,431.77. For the month, the Dow gained 1.2%, the S&P 500 gained 1.6% and the Nasdaq gained 2.7%.
Market breadth was positive. On the New York Stock Exchange, winners beat losers 7 to 4 on volume of 1.97 billion shares. On the Nasdaq, advancers topped decliners 8 to 7 on volume of 2.09 billion shares.
Treasury prices rallied as investors eyed weak reads on the economy and opted to move money into the safe haven of bonds. Oil and gold prices gained, boosting stocks in those sectors, but dragged on the rest of the market. The slew of discouraging economic reports, including a surprisingly weak read on manufacturing, sluggish November retail sales, higher oil prices and further signs of erosion in housing.
Tomorrow, trading will be influenced by the November ISM national manufacturing survey, the October construction spending report and November sales results from automakers. Additionally, Federal Reserve Chairman Ben Bernanke, would also give a short welcoming speech at a monetary policy conference in Washington.
The Chicago PMI read on manufacturing in the Midwest region, had the index fall to 49.9 in November, below the level of 50 that is seen as indicating expansion. Economists thought it would rise to 54.5 from 53.5 in October. October personal income rose 0.4%, just short of economists’ forecasts, after rising 0.5% in September. Personal spending rose 0.2%, versus an upwardly revised rise of 0.1% the previous month. Economists thought spending would rise 0.1%. Another report showed that home prices rose in the third quarter, but at a slower pace than in the second. In corporate news, November sales readings seemed to suggest that although many chains did well in the key post-Thanksgiving holiday period, including Black Friday, overall sales gains for the month were muted.
Shares of Wal-Mart Stores closed down $0.79 or 1.7% to $46.10, on news that November same-store sales fell 0.1% and that December sales would be flat to up 1%. This has been blamed on weakness in its home and apparel businesses. November’s total sales, which include contributions from both Wal-Mart and Sam’s Club stores, climbed 11.9% to $28.57 billion.
Stock of Microsoft Corp. closed down 0.7% despite announcing that it will begin shipping its next-generation Vista OS to corporate customers. It’s taken five years for Microsoft Corp. to roll out a new version of its Windows OS, so it’s understandable that CEO Steve Ballmer is celebrating its release by ringing the bell at the Nasdaq stock market. However, no one is predicting that its launch will have much of an impact on Microsoft’s finance, especially for the fiscal year ending in June.
Shares of Pfizer closed up $0.42 or 1.6% to $27.49, after the company boosted its fiscal 2006 earnings forecast, reflecting lower costs and higher revenues in the fourth quarter. It expected the adjusted diluted EPS to be at least $2.05, compared with a prior forecast of about $2. The higher forecast comes on the heels of its plans to cut 20% of its U.S. sales force, part of its ongoing effort to streamline operations and cut costs.
U.S. light crude oil for January delivery gained 67 cents to settle at $63.13 a barrel on the New York Mercantile Exchange.
All the best,
Manuel Jesus-Backus
The Portfolio Crafter
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