10:23 AM ET Jan 13, 2006
NEW YORK (MarketWatch) -- U.S. stocks turned lower Friday as good news on
wholesale inflation data was tempered by a profit warning from Tyco
International, a formal probe for International Business Machines, and a lower
revenue forecast from Lucent Technologies.
The Dow Jones Industrial Average was off a session high of 10,992.69, down 7
points at 10,955.
The Nasdaq Composite Index fell 2.8 points to 2,314 after climbing as high as
2,320.89 out of the gate.
The S&P 500 Index put in a fractional loss, down 0.65 point at 1,285.33.
"The core PPI came in a little better than expected and even though retail
sales were a little weaker, November's number was revised upward," said Owen
Fitzpatrick, head of U.S. equity group at Deutsche Bank.
"On the earnings front, we've had a couple of disappointments but they seem
isolated to certain sectors. People are still optimistic we're going to have a
decent earnings season, with 14% growth year over year."
Inflation, retail sales and inventory data
The Labor Department reported that prices of raw materials and other
producers' inputs jumped 0.9% in December, marking the biggest gain since
September.
However, excluding food and energy costs, the core PPI rose a modest 0.1%.
Economists polled by MarketWatch were expecting the December PPI to rise 0.5%
and the core rate to rise 0.2%.
Retail sales, meanwhile, increased a seasonally adjusted 0.7% in December as
auto and gasoline sales strengthened, the Commerce Department said. Excluding
the 2.6% gain in auto sales, seasonally adjusted retail sales rose 0.2% in
December.
Taking past month revisions into account, retail sales were slightly stronger
than the 0.9% gain expected by economists surveyed by MarketWatch.
Also, U.S. business inventories increased 0.5% in November, while sales grew a
tepid 0.1%, the Commerce Department reported. Economists expected inventories
to increase 0.4% in November, according to a survey conducted by MarketWatch.
Oil, dollar, gold, bonds
Crude futures backed off recent peaks in premarket trade, although they
remained not far from their historic highs, as the market took in supply
considerations and the Iran news.
Front-month crude was down 64 cents at $63.30 a barrel in New York trading.
The dollar fell after the relatively tame inflation report, which implied that
the U.S. may be nearly done with its interest rate increases.
The dollar fell 0.2% to 114.41 yen as the euro rose 0.05% to $1.2077.
Gold also was retreating a bit, after earlier in the week reaching a 25-year
high. The benchmark February contract last was down 20 cents at $549.10 an
ounce.
Treasurys were lifted by the tame inflation news. However, Chicago Federal
Reserve President Michael Moscow last night said inflation is nearing the top
end of the comfort zone and that rates are at the bottom end of the neutral
range, according to news reports.
Moscow also said more interest rate hikes are needed to ward off inflation.
The benchmark 10-year Treasury last was up 3/32 at 100 26/32 with a yield of
4.39%, down from 4.41% in late trade Thursday.
Stocks in view
Dow component IBM shares dipped 58 cents to $82.99. The company late Thursday
said the SEC's informal probe into IBM's disclosures of its expensing of
equity compensation is now a formal investigation.
General Motors, also in the Dow, fell 56 cents to $20.40 as the carmaker
pledged improved results for 2006, but declined to provide a specifice
financial outlook for the year, citing a number of uncertainties that could
affect its business. These include issues with parts supplier Delphi , the
potential sale of a stake in GMAC, its financing arm and the timing of the
implementation of a new healthcare agreement with the United Auto Workers
Union.
Shares in Hewlett-Packard Co. rose 2% to $31.63 after Goldman Sachs upgraded
the computer and printer maker to outperform from in-line, given improvements
in all of the company's businesses.
Shares in American International Group were up 37 cents at $70.63, weathering
the insurer's announcement that it will pay a $1 billion government fine to
settle civil-fraud investigations
Tyco was down 9% at $27.57 amid a negative response to the lowered outlook and
questions about the split into three companies.
Lucent was off 5.9% at $2.54. The company cut its 2006 outlook, citing sales
in the U.S. and China.
Mark Cotton is a reporter for MarketWatch in New York.
This MarketWatch news update is provided to you courtesy of Thomson
Financial. The information herein is believed to be true and accurate. We take
no responsibility for inaccurate information and reserve the right to update
our reports. If you have any questions please e-mail James Sang at
james.sang@thomson.com or call 646.822.6233. For more information about
Thomson Financial visit us at http://www.thomson.com/financial.
SOURCE Thomson Financial Corporate Group
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