Financial, Technology and Energy sectors help stocks rally at close
US Market overcame early weakness today, Wednesday, 27 June 2007 and stocks rallied after good earnings report from Oracle and higher crude prices lifted Technology and Energy stocks respectively. Investors kept aside subprime concerns and hedge fund worries. A weak durable goods report also helped bond yields close lower.
All three indices snapped a three-day losing streak and closed near their best levels of the day. Of the other nine sectors closing higher, Energy was the only other than Financial to sport a gain of more than 1%.
Twenty six out of 30 Dow stocks closed in the green today. The Dow Jones Industrials reversed its way from a 78 point loss to close higher by 90 points at 13427. Tech heavy Nasdaq gained 31.2 points to close at 2605 while S&P 500 closed higher by 13.4 points at 1506.
Exxon Mobil, Intel, 3M and Microsoft were the main Dow winners today. Caterpillar was a notable laggard.
The financials sector today got a new lease of life after Bear Stearns made a number of moves to convince investors that its problems in some of its hedge funds are under control. Bear Stearns jumped 2.8% today to $143.31. The firm's Private Equity Fund today defended its financial strength saying it has confronted many storms in its 80-year history.
The Commerce Department reported that orders for durable goods fell 2.8% in May, the first decline in four months. Market had been expecting a 1% drop. Orders for durable goods rose a revised 1.1% in April.
Brokerage stocks get a good push as CEOs speak
When market opened in the morning, stocks opened lower across the board. Of the eight economic sectors losing ground, Materials paced the way with a 1.3% decline, due largely to a nearly 3% plunge in Monsanto ahead of its Q3 earnings report tomorrow morning. Dow was down by as much as 90 points at one point.
An afternoon rally in Financials helped the indices reverse their course. Higher oil prices helped it further. Brokerage stocks were a bright spot today following several upbeat remarks from company executives. Merrill Lynch CEO sees "well contained" risk from subprime fallout and Goldman Sachs CEO said private equity hasn't peaked.
Oracle shares today gained 2.8%. The company quarterly earnings before special items beat expectations, as did its revenue. The profit was 23% higher on y-o-y basis. Nike shares gained 8.3%. The company's fourth-quarter earnings were in line with analysts' expectations, while revenue was a bit above forecast.
Merck shares today gained 2.5% after the pharmaceutical giant said that its HIV drug, Isentress, was granted a priority review status by the Food and Drug Administration.
Another round of M&A activity also offered some assurance to investors. CommScope is reported to pay about $2.6 bln for Andrew Corp while Guitar Center agreed to go private for $2.1 bln.
Traders will focus on interest rates for tomorrow
Crude oil futures witnessed a rally today, Wednesday, 27 June 2007, as the weekly inventory report by Energy Department showed that gasoline inventory and distillate supplies registered an unexpected fall for the week ended 22. Crude stockpiles rose for the week, as expected. But gasoline stock fell despite an increase in refinery activity.
For the day ending Wednesday, 27 June, 2007 crude-oil futures for light sweet crude for August delivery closed at $68.97/barrel (higher by $1.2/barrel or 1.8%) on the New York Mercantile Exchange. Futures touched $67.07. Prices are up 4% from a year ago.
As per today’s weekly inventory report, Motor gasoline supplies unexpectedly declined by 700,000 barrels in the latest week, 22 June, to stand at 202.6 million. They are 5.5% below the year-ago level. Crude-oil supplies rose 1.56 million barrels to 350.9 million barrels last week.
Trading volumes showed 1.7 billion shares exchanging hands on the New York Stock Exchange and 2.0 billion trading on the Nasdaq stock market.
A final read on Q1 GDP and Initial Claims will hit the wires tomorrow at 8:30 ET. As policy makers wrap up a two-day FOMC meeting, interest rates will be on the minds of investors tomorrow. On the earnings front, reports from Monsanto, Research in Motion and Solectron are expected.