By Leslie Wines, MarketWatch
Dec 8, 2005
U.S. stocks closed lower Thursday, undone by worries about weak energy
supplies and unusually cold winter weather, with the Dow Jones Industrial
Average turning negative for the year.
An uncertain outlook on the housing market from Toll Brothers,
disappointing sales from McDonald's, and a less-than-enthusiastic Treasury
auction further dented sentiment.
The Dow Jones Industrial Average closed down 55.79 points at 10,755.12;
the blue chip index began 2005 at 10,783. Earlier Thursday the Dow was
more than 30 points higher.
The Nasdaq Composite ended down 5.56 points at 2,246.45 and the S&P 500
off 1.53 points at 1,255.84.
There were more than 1.65 billion shares traded on the New York Stock
Exchange, where falling shares outnumbered rising stocks by a ratio of 18
to 14. More than 1.93 billion shares traded in the Nasdaq market, with 15
declining stocks for every 14 on the rise.
January natural gas soared 9.5% to close at $14.994 per million British
thermal units, following an Energy Department report that natural gas
supplies fell 59 billion cubic feet for the week ended Dec. 2.
Crude futures rose in tandem, finishing above the psychologically critical
$60 a barrel level, rising $1.45 to $60.66.
The major averages were unstable Thursday, flitting back and forth often
between positive and negative territory. Stocks were driven decisively
lower in afternoon trade by the vigorous energy commodities rally.
"The market's decline today is consistent with higher energy prices," said
Barry Hyman, chief market strategist at Ehrenkrantz, King & Nussbaum.
He predicted the market will consolidate further, before players attempt a
revisit of the year-end rally that began about five weeks ago.
Despite Thursday's price action, some analysts believe the market remains
in rally mode.
"This is still a liquidity-driven market and the business and interest
rates outlooks are benign," said Michael Metz, chief investment strategist
at Oppenheimer & Co.
"And there are trillions of dollars under management at hedge funds - if
managers can't show gains by the end of the year, there will be no
paychecks for them," Metz said. "They are under considerable pressure."
Jim Awad, chairman of Awad Asset Management, predicted the major averages
will close the year at new highs.
The Labor Department reported that first-time filings for state
unemployment benefits rose 6,000 to 327,000 in the latest week, marking
the highest level since the week to Nov 19.
Economists polled by MarketWatch had expected the level of claims to drop
by 2,000.
The dollar was under pressure, after the Bank of Japan and European
Central Bank officials making somewhat hawkish comments to reverse recent
gains for the greenback.
The dollar last was down almost 0.8% at 120.26 yen as the euro rose 0.01%
to $1.1819.
Treasury prices closed higher, and yields lower, despite a somewhat
disappointing auction of $8 billion in 10-year notes. Analysts said the
gains were fueled by hopes the Federal Open Market Committee will hint at
a more dovish policy stance at its meeting next week.
The benchmark 10-year note closed up 14/32 at 100-9/32 with a yield of
4.465%.
Gold futures continued their recent rally, which is driven by strong
physical demand and inflation fears. The futures contract closed up $4.90
at $522.70. its best level since April, 1981.
Stocks on the march
McDonald's, a Dow component, closed down 1.25% at $34.82. The fast-food
company said its global same-restaurant sales rose 4% in November, citing
its breakfast menu and extended hours. However, sales were flat in Europe.
Prudential Equity Research had expected McDonald's global same-restaurant
sales to rise 5% and its European sales to rise 2%.
Toll Brothers finished up 3.6% at $35.55. The home builder said its
quarterly profit vaulted 72% to record levels on higher home sales, but
indicated it sees signs of a slowdown in the housing market. The housing
sector has been one of the drivers of the economy.
The Philadelphia Exchange Semiconductor Index closed down 1.7% at 488.41
after good news for some chips companies failed to lift many of the
biggest companies in the sector.
Intel stock closed down 1.5% at $25.74, making the fourth day in a row of
declines for the stock, ahead of its mid-quarter business updates. Intel
has forfeited more than 6% in the last four sessions, despite predictions
by several analysts that it will raise its earnings guidance.
Xilinx finished down 2.27% at $25.85. Late Wednesday the designer of logic
chips lifted its sales guidance for its current quarter, citing
stronger-than-expected demand.
Taiwan Semiconductor lost 9 cents to close at $9.81. Overnight the company
reported record revenue for November.
Texas Instruments, the supplier of mobile phone chips, dropped 2.77% to
$32.63 after Wednesday lifting the low end of its quarterly earnings
forecast range and narrowing its sales range outlook.
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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