PortfolioCrafter - Market Commentary 9/19/07
September 19th, 2007 / 10:05 pm / by portfoliocrafter
Stocks closed higher, capping a rally that thrust the Dow industrials to near two-month highs, amid optimism sparked by the Federal Reserve’s larger than expected answer to Wall Street’s call for a cut in interest rates. The Feds have reassured investors who were worried that the mortgage and credit market malaise could send the economy into recession.
Today, the Dow Jones industrial average closed up 76.17 or 0.55% to 13,815.56, the broader S&P 500 closed up 9.25 or 0.61% to 1,529.03, and the tech-heavy Nasdaq composite closed up 14.82 or 0.56% to 2,666.48.
Market breadth was positive. On the New York Stock Exchange, winners trounced losers by almost two to one on volume of 1.67 billion shares. On the Nasdaq, advancers beat decliners by more than three to two on volume of 2.21 billion shares.
The Fed’s decision to cut 50 basis points means central bankers opted to stay in front of any credit pressures on the consumer and will now sit back and watch the impact, hoping that inflation remains low and the economy continues to grow. Not only has the stock market reacted well, but there is relief in the credit markets also, since the fed funds rate impacts a variety of consumer loans. The move was important for the economy and for stock investors, as it is very positive and shows that the Fed stands ready to act.
Shares of Morgan Stanley closed down 2.7% after reporting a drop in quarterly earnings versus expectations for a rise, and a smaller-than-expected rise in quarterly revenue. Its income from continuing operations fell to $1.47 billion, from $1.59 billion a year earlier. Revenue climbed 13% to $8 billion from a year earlier.
Stock of Plexus Corp. climbed $1.86 or 7.82% to $25.66, after J.P. Morgan raised its rating on the stock to overweight from neutral, saying the electronics contract manufacturer is likely to see its sales outpace the industry average over the next 12 months.
Shares of Accredited Home Lenders Co. closed up $1.78 or 18.2% to $11.56, after it agreed to be acquired by private-equity group Lone Star for $11.75 a share in cash. The deal represents a 20% premium to the share price at Tuesday’s close, and resolves litigation between the two companies.
U.S. light crude oil for October delivery rose 42 cents to settle at $81.93 a barrel on the New York Mercantile Exchange, briefly hitting a fresh record trading high of $82.50 after a report showed a tepid rise in weekly crude oil and gas inventories.
All the best,
Manuel Jesus-Backus
The Portfolio Crafter
