PortfolioCrafter - Market Commentary 3/27/07
March 27th, 2007 / 6:43 pm / by portfoliocrafter
Stocks closed lower as concerns about the stumbling housing market and the economy resurfaced after an uncertain outlook from homebuilder Lennar Corp showed widespread drops in home prices. The weak profit report revived worries about the housing sector and a big drop in consumer confidence fed concerns about the broader economy.
Today, the Dow Jones industrial average closed down 71.78 or 0.58% to 12,397.29, the broader S&P 500 closed down 8.89 or 0.62% to 1,428.61, and the Nasdaq closed down 18.20 or 0.74% to 2,437.43.
Market breadth was negative. On the New York Stock Exchange, decliners topped advancers 11 to 5 on volume of 1.382 billion shares. On the Nasdaq, losers beat advancers 19 to 9 on volume of 1.73 billion shares.
The March Consumer Confidence report added to the spate of weak economic inputs. The index fell to 107.2 from a downwardly revised 111.2 in February. Economists shad thought that it would fall to 109 in the month. The week will see reports on durable goods orders, the last revision to fourth-quarter GDP, personal income and spending, Chicago PMI, construction spending and University of Michigan consumer sentiment. Additionally, Federal Reserve Chairman Ben Bernanke’s testimony to Congress on Wednesday is also awaited. He is expected to clarify whether the central bank has leaned closer to cutting interest rates, should the economy weaken too much.
Stock of Lennar closed up $0.03 to $44.57, despite reporting a big drop in quarterly profit and withdrew its 2007 forecast due to housing weakness and uncertainty over the sub-prime mortgage mess. Its profit fell 73% in the latest quarter, and the net income sank to $68.6 million. Revenue dived 14% to $2.8 billion. Last year, the company had posted net income of $258.1 million, on revenue of $3.2 billion.
Stock of Bristol-Myers Squibb rose 0.6% after a report that Sanofi-Aventis is considering making a bid for its partner on the Plavix blood-thinning drug. It is reported that Sanofi’s chairman and chief executive are split on whether a bid should be launched, but the pro-deal chairman is reported to have greater sway on the board.
Shares of DaimlerChrysler rose 1.8%, after the company said it was pushing back its first-quarter results release date to May 15 from April 26, blaming the delay on the time needed to switch to IFRS accounting from U.S. GAAP accounting. It is also reported that the possible sale of Chrysler could occur within just a few weeks time, with the first bids due by week’s end.
Stock of biotech Nuvelo closed up $0.76 or 305 to $3.85, after the company’s experimental colon cancer drug received “fast-track” status from regulators. The process can speed up the review of drug marketing applications.
U.S. light crude oil for May delivery rose 14 cents to $63.05 a barrel on the New York Mercantile Exchange after hitting a high for 2007 Monday on heightened geopolitical fears.
All the best,
Manuel Jesus-Backus
The Portfolio Crafter
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