PortfolioCrafter - Market Commentary 5/24/06
May 24th, 2007 / 9:53 pm / by portfoliocrafter
Stocks closed lower as an unexpected surge in new home sales and signs of a pick-up in business spending both revived concerns that the Federal Reserve may raise interest rates.
Today, the Dow Jones industrial average closed down 84.52 or 0.62% to 13,441.13, the S&P 500 index closed down 14.77 or 0.97% to 1,507.51, and the tech-fueled Nasdaq composite closed down 39.13 or 1.52% to 2, 537.92.
Market breadth was negative. On the New York Stock Exchange, losers beat winners by more than 26 to 6 on volume of 1.77 billion shares. On the Nasdaq, decliners topped advancers by 22 to 7 as 2.39 billion shares traded hands.
Upbeat readings on durable goods orders and new home sales turned the tone negative as the focus turned to what stronger economic news might mean for rate cut hopes. While a number of profit warnings weighed on technology, the cautious comments from former Fed chief Alan Greenspan continued to reverberate the markets.
Alan Greenspan, said he’s concerned that Chinese markets could see another dramatic correction following the recent run. A 9% slump in the Shanghai market in late February sparked a global stock market sell off as investors worried about the outlook for growth. These comments and recent market behavior has made investors nervous.
Stock of Network Appliance closed down $6.30 or 16.6% to $31.76, after warning that first-quarter sales and earnings won’t meet estimates. The maker of computer network storage systems also reported higher quarterly earnings that met estimates on higher revenue that topped estimates.
Shares of Computer Associates closed down $2.27 or 8.2% to $25.57, after warning that fiscal 2008 sales and earnings won’t meet forecasts. The management software developer also reported a narrower fourth-quarter loss that was in line with forecasts.
Stock of Boeing closed up $1.85 or 2% to $97.42, after the company reaffirmed that it was on track to see strong earnings and revenue growth in 2007 and 2008.
U.S. light crude oil for July delivery fell $1.59 to settle at $64.18 a barrel on the New York Mercantile Exchange. Increases in U.S. supplies failed to fully offset concerns over renewed tension in the Middle East and a forecast for a particularly active Atlantic hurricane season.
All the best,
Manuel Jesus-Backus
The Portfolio Crafter
