By Mark Cotton, MarketWatch
Last Updated: 9:50 AM ET Jan 4, 2006
U.S. stocks edged higher in early trading Wednesday, helped by a dip in
crude-oil prices and a broker upgrade for Google Inc., with expectations
the current cycle of interest-rate hikes may be coming to an end, lending
further support.
The Dow Jones Industrial Average gained 11 points to 10,858 while the S&P
500 Index rose 2 points to 1,270.
The Nasdaq rose 10 points to 2,253.
On Tuesday, stocks kicked off 2006 with a rally, with the Nasdaq Composite
posting its largest one-day gain since last April, after a majority of
members of the Federal Reserve's interest-rate setting body hinted only a
few more rate hikes would be needed to keep inflation in check.
On the data front, November factory orders are slated for release at 10
a.m. Eastern. Economists polled by MarketWatch are expecting orders to
have risen 2.3%.
On the currency markets, the euro hit a more than two-month high against
the U.S. dollar, after the FOMC minutes hinted dollar-supportive
interest-rate hikes may be nearing an end.
At last check, the euro was up 0.5% at $1.2086. Against the Japanese yen,
the dollar was essentially flat at 116.07.
Gold futures were higher in morning trade. The benchmark February contract
was up $1 at $533.50 an ounce.
On the bond market, long-term Treasurys were modestly lower. The benchmark
10-year note was off 2/32 at 100 30/32, with its yield at 4.39%.
Oil futures edged lower after Russia and the Ukraine struck a complex deal
to end their crisis over gas prices that had temporarily affected European
supplies.
Crude for February delivery ended down 49 cents at $62.65 a barrel in
electronic trade. New York trading starts at 10 a.m. Eastern.
Google stays in the spotlight
Google shares were up $11.25 at $446.48 in early trading as Bear Stearns
became the latest broker to trumpet the upbeat outlook for the Internet
search company.
Analyst Robert Peck upgraded Google to outperform from peer perform,
citing confidence in its long-term fundamentals and its growing
interactive business community. He lifted his price target on the company
to $550 from $360.
On Tuesday, Piper Jaffray lifted its price target on the Internet search
company to $600, sparking a 5% rally in the stock.
Google is also expected to unveil this week a $200 computer that won't use
the Microsoft Corp system and be sold in Wal-Mart Stores Inc., the New
York Post reported, without attribution. The Los Angeles Times on Sunday
first reported speculation that Google may sell a cheap computer through
Wal-Mart, citing anonymous sources.
Other stock standouts
The automobile sector will be in focus amid expectations U.S. carmakers
are set to report weak vehicle sales for December.
Ford Motor Company shares, traded unchanged at $7.83 after confirming it
will announce details of its North American turnaround plan on Jan. 23
following the release of its fourth-quarter financial results.
Shares of Estee Lauder Cos. rallied 6.5% to $35.50 after the maker of
cosmetics and personal-care products was designated for inclusion in the
S&P 500 index.
International Coal Group slipped 14 cents to $9.22 after news that only
one miner out of 13 survived a blast at one of its mines. The news comes
after relatives were initially told that twelve had survived. Chief
Executive Ben Hatfield said in a press conference that the company never
confirmed that 12 survived, which several media outlets reported.
Broker calls
Citigroup Inc. was down 37 cents at $48.92 after Bank of America
downgraded the bank to neutral from buy, citing valuation and a more
cautious view on bank stocks. The broker also cut its rating on Wells
Fargo. Wells Fargo shares fell 36 cents to $63.44.
In another recommendation change from Bank of America, the broker upgraded
Exxon Mobil Corp. to buy from neutral, citing relative valuation,
continued strong returns on capital employed and clarity on production
growth. The stock was off 26 cents at $58.19 after rallying 4.1% in the
prior session, boosted by a surge in crude-oil prices.
Both Citigroup and J.P. Morgan lowered their recommendation on Engelhard
Corp. following BASF's offer to buy the company for $4.9 billion. Neither
broker sees any rival bidders for Engelhard. Engelhard shares dipped 14
cents to $37.86 after surging 26% on Tuesday in the wake of the buyout
offer. BASF shares fell $1.69 to $75.82.
J.P. Morgan also cut its rating on Lowe's Cos. to neutral from overweight,
citing a slowdown in home sales. The home improvement retailer's shares
were off 1.5% at $66.10 out of the gate.
This MarketWatch news update is provided to you courtesy of Thomson
Financial.
This is Thomson Financial's Market Commentary, which is issued three times
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p.m.). The information herein is believed to be true and accurate. We
take no responsibility for inaccurate information and reserve the right to
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SOURCE Thomson Financial Corporate Group
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