PortfolioCrafter - Market Commentary 4/24/07
Tuesday, April 24th, 2007
Stocks closed mixed after the Dow Jones Industrial Average spent the session flirting with, but not overtaking, the 13,000 level. Trading activity was uncertain throughout the day, as a positive outlook from Texas Instruments Inc. and upbeat news from IBM were at odds with disconcerting news of a plunge in existing home sales in March and a further drop in consumer confidence in April.
Today, the Dow Jones industrial average closed up 34.54 or 0.27% to 12,953.94, the broader S&P 500 closed down 0.52 or 0.04% to 1,480.41, and the Nasdaq closed up 0.87 or 0.03% to 2,524.54.
Market breadth was negative. On the New York Stock Exchange, losers beat winners by 9 to 7 on volume of 1.650 billion shares. On the Nasdaq, decliners topped advancers by 16 to 13 on volume of 2.287 billion shares.
The markets remained choppy, yet shrugged off the bad news on the home sales front, because a lot of concern about the housing market has already been priced in. On the earnings, there has been a lot of upside news. S&P 500 earnings are currently on track to have risen 5.2% from a year ago. As the Dow tries to surpass 13,000, stocks could be choppy, however, there are no technical market factors that would impede its progress in the short term.
In economic news, existing home sales came in lower than expected, falling to a 6.12 million unit annual rate in March from a 6.69 million unit rate in February. Economists thought sales would fall to a 6.45 million unit rate. The Consumer Confidence index fell to 104 in April from a revised 108.2 in March. Economists thought it would fall to 105. Both reports increased worries about the pace of the economic growth slowdown, ahead of the first-quarter GDP report, due Friday.
Shares of Apple closed down $0.27 to $93.24, after the former finance head Fred Anderson blamed the company’s CEO, Steve Jobs, for 2001 options grants that were backdated. In a related move, the SEC it filed a lawsuit accusing Nancy Heinen, the former general counsel of Apple Inc. of participating in the fraudulent backdating of stock options granted in 2001 to Jobs and other senior executives. Under his settlement with the SEC, Anderson agreed to a fine of about $150,000 and to repay option gains of about $3.5 million.
Stock of IBM closed up $3.28 or 45 to $98.49, after announcing that it was increasing its quarterly dividend to 40 cents per share from 30 cents per share. The company also said it has authorized an additional $15 billion for stock repurchases in addition to $1.4 billion that remained at the end of March from a previous
authorization.
Shares of Texas Instruments closed up $2.51 or 95 to $34.92, after reporting lower quarterly earnings and revenue that topped estimates. The chipmaker issued second-quarter earnings per share and revenue forecasts in a range that could meet or exceed analysts’ expectations.
Shares of AT&T closed down $0.47 or2% to $39.30, despite reporting higher quarterly earnings that topped estimates. AT&T’s first quarter profit doubled and beat analyst estimates, helped by the purchase late last year of BellSouth, but revenue and wireless growth were weaker than expected. Its first-quarter profit rose to $2.8 billion, from $1.4 billion in the year-ago quarter, before it bought BellSouth. Operating revenue rose to $28.97 billion from $15.76 billion, before the company owned BellSouth.
U.S. light crude oil for June delivery fell $1.32 to $64.57 a barrel on the New York Mercantile Exchange.
All the best,
Manuel Jesus-Backus
The Portfolio Crafter
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