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Stocks rallied allowing the Dow Jones Industrial Average to finish above the key 13,000 level for the first time, after news of better-than-expected orders for durable goods in March, a possible asset sale at Alcoa Inc. and surging profits at Amazon.com lifted spirits. Positive momentum helped the market focus on evidence of stable consumer prices in the Federal Reserve’s latest Beige Book of economic conditions, while ignoring the survey’s conclusion that the economy isn’t showing any signs of picking up.

Today, the Dow Jones industrial average closed up 135.95 or 1% to 13,089.89, and crossed the 13,000 level within the first 90 seconds of trading. It later hit a new intraday high of 13,107.45 in the afternoon. The broader S&P 500 index closed up 15.01 or 1% to 1,495.42, and the Nasdaq closed up 23.35 or 0.9% to 2,547.89, also ending at a new six-year high.

Market breadth was positive. On the New York Stock Exchange, winners topped losers by 11 to 5 on volume of 1.68 billion shares. On the Nasdaq, advancers beat decliners 3 to 2 on volume of 2.71 billion shares.

Trading volumes showed 1.678 billion shares exchanging hands on the New York Stock Exchange and 2.677 billion trading on the Nasdaq stock market. Advancing issues topped decliners by 23 to 9 on the NYSE and by 17 to 12 on the Nasdaq.

Market continues to be driven by the earnings, which have been good. Investors should be able to absorb any expected slowdown in earnings growth in 2007, as it follows 3-1/2 years of double-digit percentage growth. Earnings are currently on track to have grown 6.2% from a year ago. The forces in the market include the promise of economic expansion, probability that inflation will continue to be subdued and a still confident consumer.

The strong reading on demand for durable goods which rose 3.4% gave a boost to the market. In the afternoon, the Fed’s “Beige Book” periodic reading on the economy showed that most areas of the country saw only moderate expansion.

Shares of Alcoa closed up $1.81 or 5.3% to $35.76, after the aluminum maker said it was considering selling its packaging and consumer segment, responsible for about 10% of its 2006 revenue.

Stock of Amazon closed up $12.06 to $56.81, after reporting higher quarterly sales and earnings that topped estimates. Revenue rose 32% to $3.02 billion, and net sales rose 29%. For the full year, Amazon predicted revenue of $13.4 to $14 billion. The company also announced a stock buy back of $500 million.

Stock of Boeing closed up $1.02 to $94.69, reported higher quarterly sales and earnings that topped estimates. Its first-quarter profit rose a 27% to $877 million, helped by higher commercial airplane deliveries and sales of military equipment. Sales rose 8% to $15.4 billion, ahead of analysts’ estimate of $15.04 billion.

U.S. light crude oil for June delivery rose $1.26 to settle at $65.84 a barrel on the New York Mercantile Exchange after the release of the mixed weekly oil inventories report.

All the best,
Manuel Jesus-Backus
The Portfolio Crafter
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