PortfolioCrafter – Market Commentary 2/28/07
Wednesday, February 28th, 2007
Stocks rallied and rebound from their biggest one-day point drop in over five years in the previous session, although the major averages all closed lower on the month. Investors found comfort in a partial recovery of the Shanghai stock market, and soothing words from Federal Reserve Chairman Ben Bernanke.
Today, the Dow industrials closed up 52.39 or 0.46% to 12,268.63, the broader S&P 500 closed up 7.78 or 0.53% to 1,406.82, and the Nasdaq closed up 8.27 or 0.34% to 2,416.13. For the month, the Dow finished down 2.8%, the S&P 500 lost 2.2% and the Nasdaq declined 1.9%.
Market breadth was positive. On the New York Stock Exchange, winners topped losers by a margin of 22 to 11 on volume of 2.246 billion shares. On the Nasdaq, advancers beat decliners by a margin of 16 to 13 as 2.638 billion shares changed hands.
Bernanke calmed investors after he informed a House Panel that while there was no single trigger to Tuesday’s market slide, financial markets “seem to be working well.” He said that the economy may strengthen later this year, that there was no liquidity problem in financial markets, and that troubles from the sub-prime mortgage markets are not impacting the broader economy. He reiterated that the sell-off hasn’t altered the Fed’s view on U.S. economic growth.
Yesterday’s decline of 3.3% tells investors that stocks historically go through extremely rough periods, and that those perilous interludes usually follow strong markets that push prices to the limit. The underlying sentiment still seems to be bullish, but now that the upward trend has been broken, it’s made investors put the thinking cap on.
On the economic front, new home sales fell 16% in January. New homes sold at an annual rate of 937,000, against the expected 1.08 million pace. The percentage decline was biggest for a single month in 13 years, since the record 23.8%t decline seen in January 1994.
Shares of Home Depot dropped 0.6% after saying the housing market won’t get better until the second half of 2007 or early 2008. Its forecasts found echo in a report showing that new homes sales plunged 16.6% in January to their lowest sales pace in four years. It was the lowest sales pace in four years and represented the biggest percentage decline in 13 years. Sales were down 20.1% compared with January 2006.
Stock of Apple Inc. shares rose after the CEO Tim Cook reiterated that the company remains on track to release its iPhone mobile-phone product in June, and that Apple expects to sell 10 million of the devices in 2008.
Integra LifeSciences said fourth-quarter net income slipped to $10.1 million, from $10.6 million, while revenue climbed 72% to $125 million on sales of acquired products, surgical instruments and ultrasonic surgical systems. Analysts expected revenue of $121 million. For 2007, revenue is seen to be between $508 million and $520 million.
U.S. light crude oil for April delivery rose 33 cents to settle at $61.79 a barrel on the New York Mercantile Exchange.
All the best,
Manuel Jesus-Backus
The Portfolio Crafter
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