A $70 below crude and upgrade on semiconductor stocks act as the main fuel for today’s rally
After an entire day of volatile trading, US Market, closed higher today (Thursday, 21June, 2007). Lower crude prices and a better-than-expected report on manufacturing from the Philadelphia Federal Reserve Bank helped offset the rise in bond yields that had pulled down market yesterday. Bond yields stabilized today.
Dow traded within a 165 point range during the day and was down by 90 points before staging a recovery. Nine out of ten economic sectors posted gains today with Energy leading the way. Technology too was a bright spot today.
Sixteen out of 30 Dow stocks closed higher for the day. The Dow Jones industrials finished the day with a 56 point gain to 13,545.46. The Nasdaq rose a healthy 17 points to 2,616.96. S&P 500 closed up 9.4 points to 1,522.19.
Exxon Mobil, Boeing, CoCo-Cola and American Express were the major Dow winners today. Wal-Mart, Mc Donalds, Honeywell, P&G and Verizon were the main Dow laggards.
During the lunch hours, the day’s only economic data hit the wires. The Philadelphia Federal Reserve's index of manufacturing activity jumped to 18 in the month of June, up from 4.2 in May. That was its strongest growth since April 2005, and came in well above analysts' expectations for a reading of 9.
Upgrade on Advanced Micro Devices and Nvidia give Technology the boost
When market opened in the morning, stocks opened relatively flat. The indices were extending their reach to the downside as the bulk of early leadership was negative. Of the eight economic sectors trading lower, Financials led the way.
Interest-rate concerns and possible spillover from the near collapse of two Bear Stearns hedge funds continued to act as an overhang for Financials.
But further appreciation in Technology fueled by a rally in chip stocks during pre-lunch hours led to a recovery effort among the indices. The Financials sector also nearly halved its decline and this coupled with turnarounds in Health Care and Consumer Staples also contributed to the market's improved stance.
In the post lunch hours, though the indices were off their highs but buyers remained in control of the afternoon's action. Semiconductor Equipment and Semiconductors were among the day's top performers following analyst upgrades of Advanced Micro Devices and Nvidia and these sectors gave Technology the required boost.
Traders to eye Treasury market action for tomorrow
There was some M&A related news also in the market today. Equity Inns is going private for $2.2 bln and Luxottica Group agrees to buy Oakley for $2.1 bln. As per latest reports, GE and Pearson have opted out of bid for Dow Jones.
Crude oil futures further slipped today and closed 21 cents lower as against yesterday. It was first full day of trading for the August contract. Crude continued to slip on yesterday’s weekly report on unexpected surge in crude inventories. Lack of any evidence about the impact of Nigerian strike also led traders stop worrying a bit and prices relaxed.
Crude-oil futures for light sweet crude for August delivery closed at $68.65/barrel (lower by $0.21/barrel or 0.3%) on the New York Mercantile Exchange. The contract retreated from an earlier peak of $69.85 reached earlier in the day. Prices are down 2.4% from a year ago. Yesterday, August crude had closed down 68 cents at $68.86.
Trading volumes showed 1.603 billion shares exchanging hands on the New York Stock Exchange and 2.037 billion trading on the Nasdaq stock market. Gaining issues topped decliners by 17 to 14 on the NYSE and by 15 to 14 on the Nasdaq.
For tomorrow, investors will look for trading in Treasury market to set the tone for the day’s trading as no economic data and earnings report is expected tomorrow.