By Mark Cotton, MarketWatch
Jan 4, 2006
U.S. stocks finished higher Wednesday, as the S&P 500 set a four-and-a-
half year closing high, after Fed remarks hinting at an end to interest-rate
rises powered a second day in a row of gains.
The Dow Jones Industrial Average closed 32.74 points higher at 10,880.15.
The Nasdaq Composite rose 19.72 points to 2,263.46, while the S&P 500
Index ended up 4.66 points at 1,273.46, marking its highest closing level
since mid-2001.
"It looks like the market is probably going to tread water until we get
the next big economic piece of data which will be Friday's job report," said
Michael Sheldon, chief market strategist at Spencer Clarke LLC.
On Tuesday, stocks kicked off 2006 with a solid rally, the Nasdaq
Composite posting its largest one-day gain since last April. The gains came
after a majority of members of the Fed's interest-rate policy panel hinted
that only a few more rate rises would be needed to keep inflation in check.
"If we can build on Tuesday's significant intraday turnaround, you could
see buyers start coming back into the market and you could see a further push
higher over the next several days," Sheldon added.
In the broader market for equities, advancers outpaced decliners by more
than 24 to 9 on the New York Stock Exchange and by 18 to 11 on the Nasdaq.
More than 1.82 billion shares traded on the NYSE and over 1.90 billion shares
in the Nasdaq market.
By sector, airlines surged on a downturn in crude-oil prices, with
Continental Airlines Inc. leading the gainers after it reported higher
December traffic.
Moreover, semiconductor stocks, drug companies, networkers and computer-
hardware shares were all posting solid advances.
Conversely, retailing, and banks were some of the notable declining
groups.
On the economic front, orders for U.S.-made factory goods rose 2.5% in
November, led by a jump of nearly 16% in demand for transportation equipment,
the Commerce Department said
The rise was slightly higher than economists expected. October orders were
revised to 1.7% growth after having been initially estimated at 2.2%
higher.
On the currency markets, the euro hit its highest in more than two months
against the U.S. dollar, after the Federal Open Market Committee's minutes
hinted that dollar-supportive interest-rate increases may be nearing an end.
In late trade the euro was up 0.6% at $1.2088. Against the Japanese yen,
the dollar was lower, down 0.2% at 115.96.
Gold futures closed at their highest level since April 1981, with the
March contract up 0.6% to close at $535.60 an ounce. Copper futures,
meanwhile, rallied to a fresh record, supported by a strike at the world's
biggest copper mine, in Chile.
On the bond market, long-term Treasurys turned higher in choppy trading as
investors positioned themselves ahead of the U.S. employment data for December
due out Friday.
The benchmark 10-year note closed up 2/32 at 101 5/32, with its yield at
4.35%.
Oil futures turned higher after spending most of the session in negative
territory as traders weighed the settlement of a dispute between Russia and
Ukraine over natural-gas prices, against expectations the Energy
Department will report on Thursday a decline in crude inventories.
Crude for February delivery closed up 28 cents at $63.42 a barrel, off a
session low of $62.26. Natural gas ended down 42.9 cents at $10.197 per
million British thermal units.
Google stays in the spotlight
Google shares finished up 2.4% at $445.76 as Bear Stearns became the
latest broker to trumpet an 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 stock to $600,
sparking a 5% rally.
Google's also expected to unveil this week a $200 computer that won't use
the Microsoft Corp. operating system and will 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
Pfizer was the Dow's biggest gainer, closing up 3.2%. at $24.55. Pfizer,
Schering-Plough and Merck & Co. made presentations at a Morgan Stanley
conference on the pharmaceutical industry.
The automobile sector was in focus as carmakers' December vehicle sales
trickled in.
Ford Motor Co. finished 18 cents higher at $8.01 after the carmaker
reported a smaller-than-expected decline in December sales. Total unit sales
fell 9% compared with a Thomson First Call average estimate of an 11.2%
decline.
Earlier, the company confirmed it will announce details of its North
American turnaround plan on Jan. 23, after it reports fourth-quarter financial
results.
General Motors Corp. gained 2.7% to finish at $19.41 amid some relief the
company's December performance came in no worse than expected. The carmaker
reported a 10.3% drop in December sales over year-ago levels.
DaimlerChrysler, meanwhile, posted a 2% decline in December. The
carmaker's stock closed off 24 cents at $53.51.
Estee Lauder Cos. rallied almost 5% to $35 as the maker of cosmetics and
personal-care products was designated for inclusion in the S&P 500 index.
Broker calls
Citigroup Inc. ended down more than 1.8% at $48.38 after Banc 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, shares of
which fell 82 cents to $62.98.
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 24 cents to $37.76 after surging 26% on Tuesday in
the wake of the buyout offer. BASF shares fell $1.23 to $76.28.
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 fell
1.2% at $66.24 in afternoon trading.
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
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SOURCE Thomson Financial Corporate Group
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