PortfolioCrafter - Market Commentary 9/26/07
September 26th, 2007 / 11:32 pm / by portfoliocrafter
Stocks ended higher with the gains tied largely to a tentative deal ending a two day United Auto Workers strike against General Motors Corp. that could set the stage for other automakers to cut health-care costs. The rally got additional steam after a report said that Bear Stearns is in serious talks with Warren Buffett and other investors about selling a minority stake in the company.
The Dow Jones industrial average closed up 99.50 or 0.72% to 13,878.15, the broader S&P 500 closed up 8.21 or 0.54% to 1,525.42, and the tech-fueled Nasdaq composite closed up 15.58 or 0.58% to 2,699.03.
Market breadth was positive. On the New York Stock Exchange, winners topped losers by 2 to 1 on volume of 1.3 billion shares. On the Nasdaq, advancers beat decliners 4 to 3 on volume of 2.0 billion shares.
Economic reports expected later in the week on personal income and spending will give an indication of how the consumer has been holding up following the summer’s financial market turmoil. The August durable goods orders fell 4.9% in the month after rising 6.1% in the previous month. Economists thought orders would fall to 3.5%. However, investors took the weak report in stride, perhaps figuring that it adds ammunition to bets that the Federal Reserve can continue cutting interest rates.
Shares of Red Hat Inc. closed up $1.00 or 5.29% to $19.89, one day after the company reported that its second-quarter profit rose 59%, and sales slightly beat Wall Street analysts’ expectations. Its net income rose to $19.1 million, compared with $12 million in the same period a year earlier. Meanwhile, revenue rose 28% to $127.3 million.
Shares of Bear Stearns closed up $8.76 or 7.67% to $123.00, on news that it is in serious talks with a number of outside investors, including Warren Buffett, about selling as much as 20% of the firm. Stock of General Motors closed up $3.22 or 9.36% to $37.64, on news that United Auto Workers Union had reached a tentative agreement to end the two-day strike. This assisted other automobile stocks as well.
Shares of Merrill Lynch closed down $0.37 or 0.51% to $71.75, on negative brokerage notes from Credit Suisse First Boston and Goldman Sachs. U.S. light crude oil for November delivery rose 77 cents to $80.30 a barrel on the New York Mercantile Exchange. Prices had fallen in the morning after a government report showed weekly crude supplies showed a rise.
All the best,
Manuel Jesus-Backus
The Portfolio Crafter
