Traders-Blog.com

Stocks rallied today, reversing early weakness, as investors set aside recent jitters about the sub-prime mortgage market and hedge fund woes to focus on rebuilding their portfolios ahead of the end of the second quarter on Friday. Better-than-expected earnings from Oracle Corp. helped lift technology shares, while rising oil prices lifted energy stocks. Additionally, weak economic report on durable goods orders also helped to lower bond yields.

Today, the Dow Jones industrial average closed up 86.16 or 0.68% to 13,423.82, the broader S&P 500 closed up 13.45 or 0.90% to 1506.34, the tech-laden Nasdaq closed up 31.19 or 1.21% to 2605.35.

Market breadth was positive. Winners beat losers over 3 to 1 on volume of 1.75 billion shares on the New York Stock Exchange. On the Nasdaq, advancers topped decliners by 2 to 1 on volume of 2.05 billion shares.

Recent volatility was apparent today too, over concerns about the sub- prime mortgage sector and its impact on the recent buyout boom. This erratic behavior of stocks made sense at a time when second quarter earnings numbers and big economic reports like the June employment report, lay on the horizon - however, in the current times, it has been hard to get portfolio managers to make any big commitments. The weak economic reading on big-ticket item orders fell by a greater than expected 2.8% in May. However, investors appeared unfazed by manufacturing worries and a jump in the price of oil as trading continued.

Shares of Oracle closed up $0.54 or 2% to $19.70, after posting higher quarterly profit that beat Wall Street estimates. Its profit rose to $1.6 billion, compared with $1.3 billion a year ago. Revenue rose 20% to $5.83 billion from last year’s $4.85 billion. Oracle said new software contract sales, rose to $2.48 billion, up 17% from a year ago, and sales from software license updates and support climbed 21% to $2.27 billion.

Shares of Nike closed up $4.68 or 9% to $58.50, after reporting better than expected fourth-quarter profits on strong sales. Its profit surged 32%, net income rose to $437.9 million, from $332.8 million from a year earlier. Sales in the quarter increased 9.4% to $4.38 billion.

Shares of Best Buy closed up $1.58 to $46.57, after stating that it is planning a $5.5 billion stock buyback and raised its dividend by 30%. The company also said it planned to open more North American stores than previously planned.

Stock of Blackstone Group closed down $0.55 to $30.20, falling below last week’s initial public offering price of $31 a share, on worries that the private equity boom may be over.

Shares Guitar Center closed up $9.85 or 19% to $59.91, after the company said it agreed to a $2.1 billion buyout offer from private equity firm Bain Capital Partners.

U.S. light crude for August settled $1.20 to $68.97 a barrel on the New York Mercantile Exchange, after the latest report on U.S. oil and energy inventories revealed a drop in inventories.

All the best,
Manuel Jesus-Backus
The Portfolio Crafter