By Leslie Wines, MarketWatch
Dec 15, 2005
U.S. stocks gave up most of their initial gains Thursday morning, after
strong data sparked declines in the Treasury market, spooking equities
investors, although Altria advanced on a favorable verdict and Bear
Stearns rose on strong earnings.
The Dow Jones Industrial Average was off its highs, up about 13 points at
10,896.
The S&P 500 was off almost 2 points at 1,270 as the Nasdaq Composite lost
early gains to trade down almost 7 points at 2,255.
The market initially shot higher on positive data, including the largest
decline in consumer inflation since 1949, but the S&P 500 and Nasdaq
Composite soon fell into positive territory.
"The stocks moves are almost mystifying because most of the news is very
good, " said Jim Awad of Awad Asset Management.
"The only possible explanation is that Treasurys sold off a lot after the
strong data, which spooked the stock market," Awad said. "But it is still
early in the day and the market could try to rally again later."
John Forelli, portfolio manager with Independence Investments, suggested
that the strong economic reports could have upset the stock market because
they strengthen the argument for more rate hikes. The Fed this week
dropped new hints that a halt to the hikes is in sight.
The Labor Department reported that consumer prices plunged 0.6% on a
retreat in energy prices last month, marking the largest drop in 56 years.
Excluding volatile food and energy prices, the core consumer price index
rose 0.2%.
In other positive economic news, the New York Fed said general business
conditions in its state in December rose to 28.7, the highest level of the
year, from 22.8 in November.
In addition, the Federal Reserve said industrial production rose 0.7% in
November, and capacity utilization rose to 80.2%. Economists were
expecting production to rise 0.5% and capacity utilization to rise to
79.7%.
The Labor Department also reported that applications for state
unemployment benefits increased by 1,000 to a seasonally adjusted 329,000
in the latest week.
The Philadelphia Federal Reserve's survey of manufacturing for December
will be out at noon. The headline figure should be 13.6, up from 11.5 in
November, according to MarketWatch.
Investors also will eye the prices paid component of the Philly Fed survey
for indications of inflation.
Natural gas futures reversed early losses to trade up 21 cents at $14.70
per million British thermal units, after the Energy Department said
natural-gas stocks fell by 202 billion cubic feet for the week ended Dec.
9.
Crude futures rose 15 cents to $61 a barrel.
The gold futures contract backed off its recent peaks and last was down
$1.50 at $508 an ounce. On Monday the contract touched a 25-year high of
$543.
The dollar was mixed, after suffering a rout earlier in the week after the
Federal Reserve sent strong signals it may stop lifting interest rates
soon.
The dollar was off almost 1% at 116.64 yen, as the euro fell 0.05% to
$1.1941.
Treasurys sold off after the strong factory-sector readings offset the
tame inflation news. The 10-year note last was down 8/32 at 100-2/32 with
a yield of 4.495%.
Stocks on the march
Altria was up 4.3% at $78.09 after the Illinois Supreme Court held that
the company had a right to market certain cigarettes as being light in
nicotine.
Shares of Bear Stearns rose 2.8% to $113.27. The broker reported quarterly
net income of $407 million, or $2.90 a share, up from $352.6 million, or
$2.61 a share, a year before. Wall Street had expected earnings of $2.63 a
share.
Goldman Sachs dropped 1.4% to $128.27. The company's fourth-quarter net
income rose 36% to $1.63 billion, or $3.35 a share, from $1.19 billion, or
$3.25 a share. The results matched analyst's estimates as measured by
Thomson First Call.
J.P. Morgan rose 1 cent to $39.58. The company will pay $633 million in
cash to buy Collegiate Funding Services as the financial-services giant
moves to expand its student-lending business.
Merck & Co. Inc advanced 2% to $29.80 after announcing new restructuring
efforts that it calculates will yield $1 billion in savings.
Microsoft was down 24 cents at $26.86 after the software maker raised its
dividend by 12.5%.
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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