By Leslie Wines, MarketWatch
Dec 19, 2005
U.S. stocks closed near their worst levels of the day Monday, after
morning gains fizzled and market players questioned whether a late-year
rally has unwound, although Pfizer Inc. managed to rally on a legal
victory.
The Dow Jones Industrials last closed 39.06 points lower at 10,836.53.
Earlier the Dow rallied more than 30 points.
The S&P 500 fell about 7.40 points to 1,259.92, while the Nasdaq Composite
fell 29.74 points to 2,222.74.
More than 1.65 billion shares traded on the New York Stock Exchange, with
declining stocks outnumbering advancers by 24 to 9. More than 1.73 billion
shares traded in the Nasdaq market, with 21 issues in retreat for every
nine on the rise.
Stocks opened the week higher, on the back of the Pfizer patent victory
and an $11 billion merger of FPL Group and Constellation Energy, but by
afternoon all the indices had turned lower.
Analysts have expressed disappointment that the gains seen so far in
December have not been as vigorous as those registered during November,
calling into question the state of the late-year rally.
Art Hogan, chief market strategist at Jefferies & Co., said, "Stronger
gains were seen in November. I think we got a month ahead of ourselves on
the Santa Claus rally."
But Jay Suskind, director of trading at Ryan Beck & Co., said, "There are
greater odds the market will rally, rather than fall, because there is a
sense that the Federal Reserve will halt the rate hikes and the economy
will remain strong in 2006."
There were no economic reports to lend direction to trade Monday, but
investors will keep an eye out for the November producer price report on
Tuesday and gross domestic product data on Wednesday.
Energy prices gave up their opening gains. The front-month crude contract
closed 73 cents lower at a three-week low of $57.33 a barrel, responding
to mixed weather forecasts.
The gold futures contract closed up 20 cents at $506.10 an ounce. Analysts
predict the contract will attempt to consolidate above $500 an ounce
before making any move higher in the new year, when it could aim for $600
an ounce.
Long-term Treasurys gave up gains after an afternoon auction of new three-
and six-month notes. The benchmark 10-year note closed down 1/32 at
100-14/32 with a yield of 4.45%.
The dollar regained some of the strength it lost last week, after Federal
Reserve officials signaled that an end to U.S. interest-rate increases may
be in sight. The dollar rose 0.4% to 116.01 yen as the euro fell 0.08% to
$1.2005.
Stocks of note
Pfizer zoomed nearly 8% to close at $24.32 a share.
Late Friday, a U.S. judge ruled for Pfizer in its patent dispute with
Ranbaxy Laboratories Ltd. over Lipitor, the world's top-selling
prescription medication.
Other pharmaceutical stocks were swept higher too, including fellow Dow
component Merck & Co., which rose about 7.5% to $32.25, and Bristol-Myers
Squibb Co., up 2.1% at $22.49.
Elsewhere on the Dow, American International Group ended 1% higher at
$65.82, after Barron's published a prediction the blue-chip stock could
soar to $80 in 2006.
Among other Dow components, Caterpillar dropped 4.7% to $56.83. Neither
Suskind nor Hogan knew of any news or research to explain the drop. Shares
of embattled General Motors declined 3.8% to $21.05.
FPL Group and Constellation announced a stock-swap merger that will create
a company with a market capitalization of about $28 billion, annual
revenue of $27 billion and $57 billion of assets.
FPL shares closed 19 cents lower at $42.76, as Constellation Energy
dropped 4% to $59.10.
Cablevision Systems ended off about 3.5% at $23.15 after the company said
it would not proceed with a proposed $3 billion special dividend.
The Internet sector was in focus. Google Inc. reportedly plans to buy a 5%
stake in the AOL division of Time Warner, a move that would edge out
Microsoft.
Time Warner Inc. shares finished 5 cents lower at $17.95.
Shares of Circuit City Stores gained 6.8% to $22.70. The retailer swung
into the black in the third quarter and named a new chief executive.
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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