By Leslie Wines, MarketWatch
Dec. 22, 2005
U.S. stocks closed at their best levels of the session Thursday, aided by
data showing tame inflation, with Dow components Caterpillar and American
International Group marked higher after being named sector favorites by
research firms.
The Dow Jones Industrial Average closed 55.71 points higher at 10,889.44.
The S&P 500 rose 5.33 points to 1,268.12 and the Nasdaq Composite gained
14.83 points to 2,246.49.
There were more than 1.34 billion shares traded on the New York Stock
Exchange, with 20 rising stocks for every 12 decliners. In the Nasdaq
market, more than 1.51 billion stocks traded, with 18 advancing stocks for
every 11 falling shares.
Peter Cardillo, chief market analyst at S.W. Bach, said the market drew
support from a favorable November report on U.S. personal income and
consumer spending.
This week the stock market has not registered the vigorous gains seen in
November, but some analysts still hold out hope for a year-end "Santa
Claus rally" Friday and next week.
Marc Pado, U.S. market strategist at Cantor Fitzgerald, said: "The one
thing about the Santa Claus rally is that it is not driven by fundamentals
or technicals. It is mostly driven by year-end bonus money, re-upped
401(k) and IRA money, and window dressing."
However, Ken Tower, chief market strategist at CyberTrader said market
direction remains somewhat mysterious, a factor which inhibits some
investors.
"With the technical picture so cloudy you may be tempted to sit this one
out and wait for clear evidence of whether market direction is naughty or
nice before initiating either long or short positions," Tower said.
The Commerce Department said consumer spending grew 0.3% last month,
mirroring the 0.3% increase in incomes. Economists surveyed by MarketWatch
had forecast that incomes would rise by 0.4% in November and that spending
would increase 0.3%.
Initial jobless claims in the latest week fell 13,000 to a seasonally
adjusted 318,000, according to the Labor Department.
The Conference Board's leading economic indicators headline index rose
0.5% last month, marking the second straight strong monthly gain.
The January natural-gas contract closed down $1.35 at $12.92 per million
British thermal units after news that U.S. gas inventories declined 162
billion cubic feet in the latest week, although supplies remained above
their five-year average.
Crude futures ended down 28 cents at $58.28 a barrel, firmly below the
psychologically significant $60-a-barrel level.
The February gold futures contract closed up $9.70 at $505 an ounce,
bolstered in part by news that Barrick Gold will buy fellow miner Placer
Dome Inc. for an increased price of $10.4 billion.
Treasurys gained strength, pushing yields lower, after news that core
inflation in the personal-spending report registered its smallest gain
since March 2004. The benchmark 10-year note closed up 14/32 at 100-16/32
with a yield of 4.43%, down from 4.5% at Wednesday's close.
The dollar backed off its recent highs, somewhat rattled by the lower bond
yields, according to Action Economics. It last was down 0.7% at 116.66
yen, as the euro rose 0.04% to $1.1871.
Stock action
Within the Dow, Caterpillar trotted 2.4% higher to close at $58.45. Credit
Suisse First Boston called the stock its top large-cap machinery choice
for 2006. AIG, also in the Dow, rose 2.2% to $67.90, after Merrill Lynch named
it one of its favorite large-cap insurance stocks.
Placer Dome fell about 1.4% to $22.34 and Barrick Gold fell 10 cents to
$27.12 after their merger terms were announced.
Micron Technology Inc. ended 3.5% lower at $13.64. Late Wednesday, the
company reported a 60% drop in quarterly profit, but better sales of its
chips for personal computers and digital-media devices boosted overall
revenue. Earnings of 9 cents a share missed the Thomson First Call-derived
average forecast of 11 cents.
Research In Motion rose almost 11% to $68.31. The company late Wednesday
said third-quarter profit rose by a third as sales of its popular
BlackBerry e-mail device surged.
ConAgra Foods Inc. sank 1.6% to $20.60 after news that its quarterly
profit fell below the year-earlier level due to weaker sales.
General Mills Inc. rose 1.5% to $50.10. The company's second-quarter
earnings and revenue exceeded Wall Street expectations.
American Greetings Corp. gave up initial gains to finish about 3.4% lower
at $22.19. The company's third-quarter earnings dropped below year-earlier
levels, but it lifted its fourth-quarter outlook.
This is Thomson Financial's Market Commentary, which is issued three times
daily; Pre-Open ( 9:00 a.m.), Post-Open (10:15 a.m.), and Close (5:00
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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