By Leslie Wines, MarketWatch
Dec. 20, 2005
U.S. stocks opened mixed Tuesday, as some strategists suggested the
year-end rally is all but over, although Morgan Stanley moved higher on a
robust earnings report.
A New York City transit strike could curtail trading volume in the
pre-holiday week.
The Dow Jones Industrial Average Dow Jones Industrial Average was up 1.36
points at 10,837.89.
The S&P 500 was up 0.21 point at 1,260.13 and the Nasdaq Composite down
4.54 points at 2,218.20. .
Some strategists suspect that the better part of the year-end rally took
place in November and the market might be in for a dull remainder of the
year.
"A lot of people are asking why the market has been off," said Todd Leone,
head of listed trading at S.G. Cowen. "But the market has had a tremendous
runup and the Fed is still raising rates. I think it's healthy
consolidation."
Leone noted that market players in recent sessions have tended to become
leery whenever the Dow Jones Industrials approach the 10,900 level.
Tamer-than expected manufacturing level inflation failed to inspire a
rally.
The Labor Department reported that prices of raw materials and other
producers' inputs fell 0.7% in November, the largest monthly decline since
April 2003.
Economists polled by MarketWatch were expecting the PPI to fall 0.3%.
Excluding food and energy costs, the core PPI rose 0.1%; economists
expected the core rate to rise 0.2%.
Separately, the Housing Department said U.S. housing starts rose 5.3% to
2.123 million units in November, confounding the expectations of
economists surveyed by MarketWatch who had expected a reading almost
unchanged from October.
Investors also are eager for the third-quarter gross domestic product
report on Wednesday.
Crude futures were on the rise, but were beneath the psychologically
significant level of $60 a barrel. The front-month contract last was up 36
cents at $57.70 a barrel.
Gold also was on the rise with the February futures contract up $2.10 at
$508.20 an ounce. Some analysts believe gold will consolidate in the $500
an ounce neighborhood during the last weeks of the year, then test the
$600 level in the new year.
The dollar improved after the unexpectedly sharp drop in producer-level
inflation, and last traded up 0.5% at 116.68 yen. The euro fell 0.07% to
$1.1922.
Treasuries were trending lower, sending yields higher. The benchmark
10-year Treasury note last was down 8/32 at 100-8/32 with a yield of
4.468%.
The tame producer price report was supportive of Treasurys. But the robust
housing starts figure suggested that housing will continue to power the
economy and indications of economic strength tend to send capital out of
the bond market and toward higher-risk instruments.
Stocks in focus
Morgan Stanley rose 2.1% to $57.90. The investment bank reported a 49%
increase in fourth-quarter net income on growth in its institutional
securities and fixed income businesses.
Both Morgan Stanley's net income and revenue surpassed analysts'
predictions.
Dow component Wal-Mart Stores Inc., which had previously disclosed a
criminal probe into its handling of hazardous waste, revealed a new
criminal probe over possible violations of the Resource Conservation and
Recovery Act.
Wal-Mart stock was down 6 cents at $48.90.
Among other Dow components, embattled General Motors was off 1.9% at
$20.65.
According to the Wall Street Journal, Tyco International is near a deal to
sell its plastics unit to private equity group Apollo Advisers for around
$1 billion. Tyco shares rose 1.3% to $28.84.
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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