Dec 7, 2005 (Thomson Financial): U.S. stocks closed lower Wednesday as the
market took a break from a five-week rally, although Dow component General
Motors got a late-session boost from news reports that there could be a change
on its board.
The Dow Jones Industrial Average closed down 45.95 points, after trading more
than 90 points lower at one point.
The S&P 500 and the Nasdaq Composite ended down 6.33 points at 1,257.37 and
down 8.75 points at 2,252.01.
Breadth was decisively negative, with about two declining stocks for every one
advancing share on the New York Stock Exchange, where there were more than
1.57 billion shares traded. There were 18 falling stocks for every 11 rising
shares in the Nasdaq market, where there were over 1.75 billion shares traded.
The market opened lower and remained lower throughout the session as investors
gauged the state of the recent year-end rally.
Barry Hyman, chief market strategist at Ehrenkrantz, King & Nussbaum, said
there is uncertainty about next week's Federal Open Market Committee rates
decision meeting.
The transition from outgoing Fed chief Alan Greenspan to incoming leader Ben
Bernanke - and the prospects of changes in Fed policy and a possible windup in
rates tightening - have put investors on edge, he said.
Jay Suskind, director of trading at Ryan, Beck & Co, said "I just think we are
stuck in a trading range. We just can't seem to break through to 11,000 on the
Dow. It seems to be impossible in the short-term."
Paul Nolte, director of investments at Hinsdale Associates, said a recent rise
in yields on the benchmark 10-year Treasury note led to some asset swaps out
of equities and into bonds this week, pressuring the major averages.
The Federal Reserve said Consumer credit posted a large, unexpected drop in
October, falling by $7.2 billion, or 4%, the largest monthly drop since the
Fed started to collect the data in 1943.
The equities market failed to benefit from news from the Energy Department of
a 2.7 million barrel climb each for crude, gasoline and distillate supplies
that eased supply anxieties.
Crude futures closed down 73 cents at $59.21, a three-session low, after the
bearish inventories numbers. January unleaded-gasoline futures finished down
1.59 cents at $1.5676 a gallon and heating-oil futures lost 3.54 cents to
close at $1.7366 a gallon.
Gold futures extended their recent rally, which is being fueled by heavy
physical demand and inflation fears. Some market participants now wonder if
the futures contract could hit the $600 an ounce level by year-end.
The front-month contract closed up $4 at $518.80 an ounce, nearly a 23-year
high.
Treasury prices closed under pressure, reversing some of Monday's gains,
sending yields higher. The benchmark 10-year note last was down 8/32 at 99-
26/32 with a yield of 4.52%, up from 4.49%.
The dollar benefited from a pullback in the euro from an all-time high against
the Japanese yen, as well as a favorable outlook for interest rate
differentials.
The dollar in late trade was up 0.2% vs. the yen at 120.95 and was 0.6%
stronger against the euro at $1.1720.
Stocks to note
General Motors threw off losses to close up 2.9% at $23.04 after late-day news
reports that its board invited an associate of billionaire investor Kirk
Kerkorian to become a member. Kerkorian wants a board seat and his investment
vehicle, Tracinda Corp., has been trying to up its stake in GM.
3M Co. fell 32 cents to $77.38. The manufacturing conglomerate named George
Buckley to serve as its chairman, president and chief executive. He replaces
interim CEO George Morrison.
Another down component, Microsoft rose 7 cents to $27.79 after South Korean
antitrust officials decided that it had abused its dominance in software.
Shares of Cisco Systems ended 1.3% higher at $17.77. J.P. Morgan upgraded the
stock to overweight from neutral, following its analysts' meeting.
Shares of Ford Motor Co. rose 1.1% to $8.20 after a news report that it will
slash up to 30,000 jobs and close 10 plants.
Leslie Wines is a reporter for MarketWatch in New York.
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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SOURCE Thomson Financial Corporate Group
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