By Tomi Kilgore, MarketWatch
Dec 27, 2005
U.S. stocks were off to a brisk start Tuesday, as a sharp drop in energy
prices and an assertion from retailing giant Wal-Mart that December sales
would rise in line with forecasts lifted sentiment.
Volumes were expected to remain light throughout the session as many Wall
Street traders remained on holiday, the economic calendar was barren and
corporate news slowed to a trickle.
The Dow Jones Industrials Average climbed 44 points to 10,927, with 25 of
30 components contributing to gains.
Within the Dow, Caterpillar added 1.3% and DuPont advanced 1.1% to pace
the gainers, while Exxon Mobil slid 0.8% to lead the losers.
Wal-Mart was up 0.2%.
The Nasdaq Composite gained 10 points to 2,259 and the S&P 500 Index
tacked on 3 points to 1,272.
The early gains revived hope that a so-called "Santa Claus" rally, a
phrase attributed to the Stock Trader's Almanac, was in the works. The Almanac
indicates that the average gain over the last five trading days of the year
and first two days in January has produced an average gain of 1.7% for the S&P
500 since 1969.
"We won't know about that until next week," said Phil Roth, chief
technical market analyst at Miller Tabak. "For now, we give the benefit of the
doubt to the upside and still look for nominal additional gains early in
2006."
Investor sentiment got a boost from sharp drop in energy prices, which
came amid forecasts of warmer-than-normal temperatures across the U.S. in the
coming week. The January natural gas futures contract tumbled $1.062, or 8.6%,
to a 4-week low of $11.34 million British thermal units in electronic trading.
See.
February crude slid 63 cents to $57.80.
The U.S. National Weather Service had said over the weekend that demand
for heating fuels could be 25% below normal this week, with natural gas
heating demand almost 28% below average, as most of the country will see
unseasonably mild temperatures.
Investors were also pleased to hear that Wal-Mart, the world's biggest
retailer, said Saturday it sees December same-store sales rising 2% to 4%,
which was in line with previous forecasts, after rising 3.8% in November.
Retailers in general had been hoping that busy pre-Christmas shopping
would salvage what has otherwise been a lackluster holiday sales period.
Overall market breadth was firmly positive, with advancers outnumbering
decliners by a 8 to 5 margin on the NYSE and by a 5 to 3 score on the Nasdaq
stock market.
In sector action, airline, metals miners, biotech and semiconductor stocks
enjoyed the biggest gains, while oil, oil services and natural gas stocks were
the biggest decliners.
Outside of equities, the bond market made headlines when the yield curve,
or the spread between the yields on shorter-term and longer-term maturities,
inverted briefly in European trading for the first time in five years, when
the 2-year Treasury note yielded 4.41% vs. the 10-year Treasury note yield of
4.405%.
In recent trade, the benchmark 10-year note was down slightly, with the
yield up 0.015 percentage points at 4.395%. The 2-year note was yielding
4.385%.
The U.S. dollar was mixed, rising 0.4% vs. the Japanese yen to 116.96 but
slipping 0.1% against the euro to $1.1855.
Within the metals, February gold climbed $4.30 to $509.50 an ounce, amid
forecasts of continued strong demand from China. Silver futures added 13.5
cents to $8.78 an ounce and copper hiked up 2.45 cents at $2.0640 a pound.
Companies in focus
Guidant shed 2% after the company said it received a warning letter from
the U.S. Food and Drug Administration regarding a facility in St. Paul, Minn.
The FDA was requesting additional action to address certain quality system
concerns.
In addition, the medical device maker said in a filing with the Securities
and Exchange Commission late Friday that it expected 2006 adjusted earnings of
$1.65 to $1.75 a share and revenue of $3.8 billion to $4 billion. Analysts
surveyed by Thomson First Call had been expecting earnings of $2.43 a share
and revenue of $4.11 billion, on average.
Bristol-Myers Squibb rallied 2.4% after the company said late Friday that
Orencia, a treatment for rheumatoid arthritis, had been approved by the U.S.
Food and Drug administration.
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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The information herein is believed to be true and accurate. We take no
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reports. If you have any questions please e-mail James Sang at
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SOURCE Thomson Financial Corporate Group
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