PortfolioCrafter - Market Commentary 5/21/07
May 22nd, 2007 / 12:10 am / by portfoliocrafter
Stocks closed mixed, while the broad S&P 500 index briefly touched a record level, as a sustained flow of deal making — including the $27.5 billion acquisition of mobile phone provider Alltel — continued to fuel buying interest.
Today, the Dow Jones industrial average closed down 13.65 or 0.10% to 13,542.88, the broader S&P 500 index closed up 2.35 or 0.15% to 1,525.10, and the tech-fueled Nasdaq composite closed up 20.34 or 0.80% to 2,578.79.
Market breadth was positive. On the New York Stock Exchange, winners beat losers 19 to 13 on volume of 1.5 billion shares. On the Nasdaq, advancers beat decliners by a margin of more than 20 to 9 on volume as 1.95 billion shares changed hands.
Merger news helped buoy stocks most of the session, as has been the case for the last two months. However, by late afternoon, investors began to show some weariness. The markets are continuing to gain ground on lesser volumes. The lesser trading volume can indicate a less enthusiastic involvement than would seem to be the case.
Shares of Alltel closed up $4.33 or 7% to $69.54, after it agreed to a private equity buyout worth almost $25 billion. This would make it the latest U.S. corporate giant to fall into private equity hands. Including the assumption of debt, the deal is worth around $27.5 billion.
Stock of General Electric closed up $0.14 to $37.10, after it confirmed that it is selling its plastics business to manufacturer Saudi Basic Industries for around $11.6 billion. The profits from the sale will allow it to increase its share repurchase plans to between $7 billion to $8 billion, up from the $6 billion it had previously announced plans to repurchase.
Stock of EGL closed up $1.64 or 4% to $46.91, as it got an improved offer from Apollo Management, which is looking to buy it through its U.K.-based CEVA Group.
Shares of Lowe’s closed down $0.83 to $31.84, after the home improvement retailer posted quarterly earnings that missed estimates and issued a forecast for the current quarter that disappointed some investors.
U.S. light crude oil for June delivery rose $1.33 to settle at $66.27 a barrel on the New York Mercantile Exchange.
All the best,
Manuel Jesus-Backus
The Portfolio Crafter
