PortfolioCrafter - Market Commentary 6/28/06
June 28th, 2007 / 11:08 pm / by portfoliocrafter
Stocks finished mixed after the Federal Reserve left interest rates unchanged and said economic growth should continue at a moderate pace, while inflation remained its top concern. A surge in crude oil prices, which briefly topped $70 a barrel, had a mixed impact on the energy sector, with shares of oil producers rising, while providers of oil service fell sharply.
Today, the Dow Jones industrial average closed down 5.45 or 0.04% to 13,422.28, and the broader S&P 500 closed down 0.63 or 0.04% to 1,505.71. The tech-heavy Nasdaq closed up 3.02 or 0.12% to 2,608.37.
Market breadth was positive. On the New York Stock Exchange, winners beat losers 18 to 13 on volume of 1.5 billion shares. On the Nasdaq, advancers topped decliners by 15 to 14 1.9 billion shares changed hands.
In addition to keeping the fed funds rate steady at 5.25%, the Fed also dropped the word “elevated” from its description of core inflation. However, it added that “sustained moderation in inflation pressures has yet to be convincingly demonstrated.” It is an indication that the statement is less hawkish, but inflation is still on their minds.
While this was not unexpected, the statement is closely watched by investors since inflation and rate hike fears have rattled markets in recent weeks. Investors dislike rising interest rates since they make borrowing more expensive, eating into corporate profits.
Shares of General Motors closed up $0.74 or 2% to $38.15, after it agreed to sell its Allison transmission unit to private-equity firms Carlyle Group and Onex for $5.6 billion.
Shares of KB Home closed down $0.54 to $39.89, after reporting an unexpected quarterly net loss of $1.93 a share as revenue tumbled due to the weak housing market.
Stock of Capital One Financial closed up $0.87 to $79.67, after it declared plans to cut about 2000 jobs or 6% of its work force, as it struggles with mortgage banking losses and higher credit costs. It expects pre-tax savings of $400 million in 2008 and another $300 million in 2009.
U.S. light crude gained 60 cents to settle at $69.57 a barrel on the New York Mercantile Exchange.
All the best,
Manuel Jesus-Backus
The Portfolio Crafter
