By Mark Cotton, MarketWatch
Jan 5, 2006
U.S. stocks closed flat to higher Thursday, as technology sector strength
sent the Nasdaq Composite to its highest closing level in more than four
and a half years, although a disappointing profit outlook from Wal-Mart
Stores Inc. helped limit gains on the Dow Jones Industrial Average.
The Dow industrials closed up 2 points at 10,882.15.
The Nasdaq Composite Index rose 13.41 points to 2,276.87, its highest
closing level since May, 2001.
The S&P 500 Index gained just 0.02 point to 1,273.48.
Thursday's flattish performances for the Dow and S&P 500 followed gains
during the first two trading sessions of 2006.
"After a nice rally, investors are just taking a little bit of money off
the table," said Paul Nolte, director of investments at Hinsdale
Associates.
Stocks Thursday initially drew strength from a stronger-than-expected
Institute for Supply Management survey, and news showing that inflation
remained in check.
"The non-manufacturing ISM index came in perfect, with higher orders and
lower prices, and that has given the market more confidence to make the
assessment that Wal-Mart's problems were either Wal-Mart-specific or
retail-sector-specific and were not indicative of problems in the
economy," said Jim Awad, chairman of Awad Asset Management.
In other positive economic news, weekly jobless claims tumbled to a
five-year low. The number of people filing for U.S. state unemployment
benefits plunged by 35,000 to a seasonally adjusted 291,000 in the week
ending Dec. 31, the lowest since September 2000, the Labor Department
said.
On the broader market for equities, advancers outpaced decliners by 18 to
15 on the New York Stock Exchange, while winners had an 8 to 7 advantage
over losers on the Nasdaq.
By sector, semiconductor companies, networkers, Internet stocks and
computer hardware companies gained, helped in part by the positive
sentiment surrounding the annual Consumer Electronics Show being held in
Las Vegas.
A fall in crude-oil prices sent energy and oil services stocks lower.
Utilities also came under pressure.
Volume, which was heavy in the past two sessions, was 1.78 billion on the
Big Board and 1.91 billion on the Nasdaq.
Dollar, gold, bonds, oil
In the currency markets, the euro recovered from early session weakness to
trade flat against the dollar, after two days of hefty gains against the
greenback.
The euro was last off 0.04% at $1.2103, off an early low of 1.2063.
Against the Japanese yen, the dollar was down 0.3% at 115.90.
Gold futures closed lower, putting an end to an eight-session winning
streak that saw the precious metal gain more than $40 an ounce.
"Gold was overbought and the first quarter is a seasonally weak period for
gold, so no surprise there's profit-taking," said Peter Grandich, editor
of the Grandich Letter.
Gold for February delivery fell $7.80, or 1.5% to close at $527.80 an
ounce.
In the bond market, long-term Treasurys hovered around the flatline as
fixed-income traders held back ahead of the December jobs report on
Friday.
The benchmark 10-year note finished down 2/32 at 101 5/32 with its yield
at 4.35%.
Crude futures were lower as traders weighed a decline in last week's crude
inventories against gains in petroleum-product stocks. The benchmark
February contract closed 63 cents lower at $62.79 a barrel.
Retailers in the spotlight
The retail sector turned in moderate sales gains for December, many
slashing prices to lure shoppers in the final days before Christmas, but a
weak profit outlook from industry leader Wal-Mart had some investors
wondering about the outlook for 2006.
Shares of Wal-Mart Stores dipped almost 1.4% to $45.69 after it said it
expects fourth-quarter earnings to come in near the low-end of its profit
forecast. Its cautious outlook came as it reported a 2.2% rise in December
same-store sales, in line with the outlook it gave over the weekend.
Wal-Mart's arch-rival, Target Corp., posted a healthier 4.7% rise in
same-store sales and affirmed its full-year profit view. The stock closed
down 16 cents at $54.49.
General Motors Corp. was the biggest percentage gainer on the Dow,
finishing up 5.7% at $20.52 after Wednesday's release of its December
sales performance. Broker Bear Stearns noted the relative outperformance
of its truck division versus its rival Ford.. Goldman Sachs, meanwhile,
said sequentially stronger monthly sales offer room for optimism in 2006.
Intel was another significant gainer on the blue-chip index, rising 1.2%
to $26.23 amid a broad rally in the chip sector.
Brokers take down two Dow components
Shares of Boeing Co. fell almost 1.2% to $70.33 after Bank of America
downgraded the aerospace giant to neutral from buy. The broker says
declining aircraft orders in 2006, rising raw-materials prices and a risk
of component shortages will keep the company's stocks range bound.
Separately, Boeing said it received 1,002 net commercial airplane orders
in 2005, a high for the aircraft manufacturer and above its previous mark
of 877 orders in 1988.
Other stock standouts
On the merger and acquisition front, Blackstone Group and Hewlett-Packard
Co. are considering jointly buying Computer Sciences Corp., The Wall
Street Journal reported, citing anonymous sources.
Computer Sciences already held talks with a consortium that included
Lockheed Martin, Blackstone and other private equity groups, with a view
to buying it out, but those talks fell through. Computer Sciences closed
up 7.8% at $54.81.
Elsewhere, shares of Rambus Inc. soared 20.3% to $22.26 after it won the
right to pursue its patent dispute with Hynix Semiconductor.
This MarketWatch news update is provided to you courtesy of Thomson
Financial.
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SOURCE Thomson Financial Corporate Group
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