DOW Fall - Bear Market Comparison

DOW - 8000

TO MOST casual observers, the fact that the Dow Jones Industrial Average (DJIA) has bounced back every time it dipped below 8,000 points (see attachment) over the past few months - even when there is bad news - suggests that the 8,000 mark is where the 'support' or the magical 'market bottom' lies. This means that as soon as the index nears 8,000 on the downside, chartists and traders will start calling a 'buy' on the market.

Closer examination, however, reveals that the bounces around the 8,000 mark are simply a function of the way the index is constructed. Because the Dow is price-weighted, it is also inherently flawed.

In Thoughts from the Frontline weekly newsletter dated Jan 23, writer John Mauldin correctly points out that the divisor for the DJIA is 7.964782, which means that for every dollar an index stock falls, the DJIA falls 7.964782 points, regardless of the stock's capitalisation.

As a result, if the stock of Microsoft, with a price of US$17 and a market cap of US$156 billion, was to crash to zero, the DJIA would only lose 135 points (17x7.964782). But if the same was to happen to IBM, with a smaller market cap of US$124 billion but a higher share price of US$92, it would cost the index to lose a whopping 700 points.

Now consider the four financial stocks currently in the DJIA - Citigroup (US$3.90), Bank of America (US$6.78) Amex (US$16.70) and JPMorgan (US$25.43) - using last Thursday's prices.

If all four stocks were to crash to zero, the DJIA would only lose 300 plus points, not that huge a loss in the context of the market, yet imagine the repercussions on the US and global economies if these four institutions collapsed totally.

Most of the news on Wall Street these days centres on the crippled financial and auto sectors. But because the share prices of these companies are now so low, these stocks do not affect the DJIA by much (General Motors' shares, for example, are now just above US$3).

In other words, because the index stocks most affected by bad news are already battered to rock-bottom levels, the DJIA doesn't seem to fall much when bad news is released, thus giving the mistaken impression of resilience to adverse news and of strong support around 8,000 points.

By right, these financial and auto stocks should have been removed from the index, given that it has been past practice to replace stocks whose prices drop below US$10.

For some reason, the DJIA's guardians have been reluctant to do the same now, possibly because of the political fallout that might ensue - imagine the repercussions of removing pillars like Citigroup or General Motors.

This then leads to the inevitable conclusions: the DJIA is not comparable over time; the only reason the DJIA appears well-supported around 8,000 is because the collapsed financial and auto components have not been replaced as they should have been; and that movements in large-price stocks are magnified because the index is heavily skewed in favour of these counters.

If the index was to be correctly re-balanced by removing the battered financials and autos and replacing them with stocks with prices above US$10, you'd have to wonder whether the 8,000 mark would hold as well as it has.

You'd also have to dismiss arguments that it is safe to buy since the index is at its lowest level in many years because historical comparisons are invalid - unless, of course, the same re-balancings that were done in the past are performed now.

via Business Times

DOW Jones After Hours Update

DOW Jones currently trading 47 pts up

NASDAQ 11 pts up

DOW slides again

Both the major US indices declined on Firday on worries over the tech sector and concerns on subprime losses.

While the Dow dropped 223 points to 13,043, the Nasdaq Composite was down 68 points at 2,628. For the week, the Dow dropped over 4% and the Nasdaq Composite Index declined 6.5% - its biggest weekly loss since 9/11.

Indian ADRs, too, declined on Friday. ICICI Bank plunged over 7% to $60.24. HDFC Bank, Tata Motors, Infosys and Wipro also declined.

DOW futures point to modest gains

DOW futures is showing modest gains after a 362 point fall

At 10.43 PM ET - DOW is up 27 pts, NASDAQ is up 2 pts

DOW, NASDAQ, S&P Futures

Dow Jones -24.00

NASDAQ -4.50

S&P 500 -3.10 1456.7

at the time of posting

Dow makes stunning comeback

Read here

Dow makes stunning comeback

Read here

DOW Pre-Market, After Hours Links

Check for DOW Pre-Market Rates

Check for DOW After Hours

US Market plunges on hedge fund woes

Worries about financial health of hedge funds and a near $70 crude hit stocks

A near $70 crude and worries about the health of hedge funds slammed US stocks today (Friday, 22 June, 2007). Renewed concerns about the impact of the subprime mortgage market prompted a major sell-off among US stocks. The annual rebalancing of the Russell indexes exacerbated the broad-based move to the downside.

Of all the 10 sectors finishing lower, Financials led the way. Selling remained the name of the game going into the closing bell. Growing fears following the subprime fallout at Bear Stearns led Investment Banks as today's worst performing S&P industry group.

All but one of 30 Dow stocks closed lower for the day. Twenty-two Dow stocks had losses of greater than 1%. The Dow Jones Industrials lost a whopping 185.58 points to close at 13360.26. Tech heavy Nasdaq shed 28 points to close at 2588.96. S&P 500 closed lower by 19.63 points at 1,502.56.

Du-Pont was the sole Dow winner. Exxon Mobil, Microsoft, Intel and Caterpillar were the major Dow laggards today.

The Dow is down 1.9% for the week. The S&P 500 is down 2% and the Nasdaq shed 1.4%.

But the widely anticipated IPO of The Blackstone Group got a warm reception amid the sell-off in today’s market. Its stock opened up about 18% at $36.45 and ended with a 13% gain. The offering raised $4.13 billion by pricing at the top of its estimated range as the sixth-richest IPO in U.S. history.

Microsoft’s 2% fall pushes Tech to the wall

When market opened in the morning, stocks opened lower across the board as rising interest rates continued to act as an overhang as the 10-year yield at 5.19% remained a concern for the economic outlook.

The market saw a brief afternoon reprieve after Bear Stearns said that all liquidations of assets from its two struggling hedge funds, which are tied to the distressed subprime mortgage market, would be put on hold.

Of all the 10 languishing sectors down more than 1% on the session, the biggest three disappointments were Financials, Technology and Health Care.

The benchmark 10-year bond reversed early losses to finish up 12/32 at 95 3/32, while its yield dropped to 5.141%.

Technology was a weak spot for the broader market for the entire day. A 1.7% decline in Microsoft made the situation even more difficult. Chip maker PMC-Sierra plunged 3.8% following reports that it will be removed from the S&P 500 next Friday.

Crude just below $70 on Nigeria strike

Crude oil futures strengthened today after the government of Nigeria failed to reach an agreement with unions to end a three-day-old general strike in the largest oil-producing country in Africa.

As per latest reports, yesterday, oil unions withdrew workers from export terminals in a bid to halt shipments. Nigerian unions increased pressure on the new government in the third day of the strike, protesting increases in taxes and fuel prices. Nigeria, a member of OPEC produced about 2.3 million barrels per day of crude oil in 2006.

Crude-oil futures for light sweet crude for August delivery closed at $69.14/barrel (higher by $0.49/barrel or 0.71%) on the New York Mercantile Exchange. Prices rose 0.9% this week and are down 2.4% from a year ago.

Trading volumes showed 2.6 billion shares on the New York Stock Exchange and 2.7 billion shares traded on the Nasdaq stock market. Declining issues topped gainers by 3 to 1 on the NYSE and by 20 to 9 on the Nasdaq.

The Federal Reserve will meet on Wednesday and Thursday next week to discuss the economy and interest rates. Among earnings reports expected, Oracle, RIMM and General Mills are the big names.

Stocks End Lower on Investor Worries

Wall Street ended a volatile week with a sharp decline Friday as investors again succumbed to nervousness about souring subprime loans and rising interest rates. The Dow Jones industrial average fell more than 185 points.

The steep pullback coming a day after a respectable gain was characteristic of the erratic sessions Wall Street has endured in recent weeks as it dealt with concerns ranging from interest rates to the health of hedge funds to, more recently, the prospects of unfavorable legislation from Washington.

Friday's session, unusually devoid of economic or earnings data, began with a focus on the initial public offering of a stake in the management arm of Blackstone Group LP. The most talked-about IPO since Google Inc. went public saw the buyout shop's stock open well above the $31 a share at which it had been priced late Thursday. The stock rose $4.15, or 13.4 percent, to $35.15. Enthusiasm over Blackstone wasn't broad enough to prop up the markets, however.

The Dow fell 185.58, or 1.37 percent, to 13,360.26. On Thursday, stocks had fluctuated before ending higher, with the Dow recovering 56 points following a 146-point tumble on Wednesday.

Broader stock indicators also dropped sharply Friday. The Standard & Poor's 500 index fell 19.63, or 1.29 percent, to 1,502.56, and the Nasdaq composite index fell 28.00, or 1.07 percent, to 2,588.96.

The week was a rough one on the stock market. The Dow lost 2.1 percent, while the S&P 500 fell 2 percent and Nasdaq lost 1.4 percent.

Stocks, which had risen in the past 13 Fridays, lost ground even as bond yields fell. The yield on the benchmark 10-year Treasury note fell to 5.14 percent from 5.20 percent late Thursday. The dollar fell against most other major currencies, while gold prices rose.

Light, sweet crude rose 49 cents to $69.14 per barrel on the New York Mercantile Exchange.

Investors have been grappling with concerns about whether the economy will heat up and prompt the Federal Reserve to put off cutting, or perhaps even raising, interest rates. Also, concerns about the health of Bear Stearns hedge funds involved with subprime loans, those made to people with poor credit, have weighed on the markets.

In addition, news from Washington has shown some lawmakers are impatient with some of the vast sums Wall Street investors have generated and could look to tamp down big payouts with higher taxes. Several House Democrats on Friday proposed an increase to the taxes paid by those who manage hedge funds and private-equity companies.

Bill Schultz, chief investment officer at McQueen, Ball & Associates, contends the pullback in stocks isn't unexpected given the sizable gains Wall Street has seen. Even with Friday's losses, the Dow is up 7.2 percent for the year, while the S&P 500 is higher by 5.9 percent and the Nasdaq is up 7.2 percent.

"There's a point where you need to see a pause before people get excited again. Do you commit at this point or do you wait for a pullback? There's a sense that maybe we may be a little bit overextended here," he said.

Friday's session brought added volatility for some stocks as the Russell indexes implemented changes, adding and subtracting some names. The changes can stir some unusual trading activity as investments that track the index try to square their holdings with the latest look of an index.

The Russell 2000 index of smaller companies fell 5.06, or 0.60 percent, to 834.75.

Neil Massa, senior trader at MFC Global Investment Management, contends stocks were showing volatility Friday in part because of the rebalancing of the Russell indexes. Even the moves among some smallcap companies can affect larger stocks, he said, as investors jockey for positions.

"I think it spills over and I think this is a little healthy pullback from the highs we've been seeing," he said.

The session comes ahead of a busy week in which the Federal Reserve meets and in which investors will receive several readings on the housing sector and the final report on economic growth in the first quarter with release of the gross domestic product.

In corporate news, Jabil Circuit Inc., a contract electronics manufacturer, rose $1.93, or 9.1 percent, to $23.13 after its fiscal third-quarter profit excluding items such as restructuring costs topped Wall Street's estimate.

Cognos Inc., a software maker and technology consultant, forecast a fiscal second-quarter profit that fell short of Wall Street's expectations. The stock fell 52 cents to $39.10.

Taser International Inc., the stungun maker, rose 80 cents, or 6.3 percent, to $13.43 after a court dismissed a lawsuit alleging the company's product resulted in an accidental death.

Declining issues outnumbered advancers by about 3 to 1 on the New York Stock Exchange, where volume came to a heavy 2.62 billion shares, compared with 1.6 billion traded Thursday.

Overseas, Japan's Nikkei stock average fell 0.28 percent, while the sometimes-volatile Shanghai Composite Exchange fell 3.3 percent. Britain's FTSE 100 fell 0.43 percent, Germany's DAX index fell 0.19 percent, and France's CAC-40 fell 0.11 percent

US Market stages a comeback

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.

A dismal day for US Market

Higher interest rate and hedge fund worries lead to a triple digit fall for Dow even as crude falls

US Market, today (Wednesday, June 20, 2007) witnessed a huge fall as stocks stumbled mainly in the final hour of trading. Morgan Stanley’s stupendous earnings report, lower crude prices and a buy back news from Home Depot failed to check the sliding stocks as investors once again became worried about the rising interest rate. News of Bear Sterns shutting two of its big hedge funds just made the situation further worse.

Twenty four of the 30 Dow stocks retreated back into red in the final hour of trading while going into close. The Dow Jones Industrial Average closed lower by a huge 146 points to close at 13489.42. Nasdaq slipped by 26.8 points to close at 2599.96. S&P 500 ended the day shedding 20.96 points to close at 1512.84.

Home-Depot, P&G and GM were the major Dow winners today. Exxon Mobil, Mc Donalds and JP Morgan Chase were the main Dow laggards. Without any sectoral leadership, all ten economic sectors ended lower with energy leading the way.

Rising bond yields have pressured the stock market over the past couple of weeks. Investors started worrying today after yield on the 10-year Treasury note started moving higher just after lunch hours and the yield hit as high as 5.142% before slipping back to 5.12%.

Home-Depot shares today surged 4.6% after the home-improvement announced it would buy back up to $22.5 billion of its own shares. The news comes a day after the company decided to sell its supply business for $10.3 billion.

Morgan Stanley announces blowing earnings report - drops 0.5% after rising 4%

When market opened in the morning, all the three indices were in green with Dow getting a major boost from Home-Depot.

The financial sector and the broad market also got a boost after Morgan Stanley said second-quarter earnings were up 40% from the year earlier, widely beating analysts estimates. Its shares rose by almost 4% at first, but ultimately closed down 0.5%.

But the strength from Home-Depot was not strong enough to lift the broader market which was down by a weak energy sector and the underperformance of the financial and health care sectors. REITs are the main pocket of weakness in the financial sector.

Among other earnings news, both FedEx and Circuit City had disappointing reports.

But after a brief period of time, the indices started paring their gains. Meanwhile, The Wall Street Journal reported that two big hedge funds run by Bear Stearns were close to being shut down as a rescue plan fell apart. Shares of Bear Stearns dropped 2.5%. This fuelled the selling activity further and indices just plummeted in the final couple of hours of trading.

Home Depot’s boost not sufficient enough to keep Dow in green

Crude oil futures slipped today and fell to almost $68/bbl after Energy Department was out with its weekly inventory report where it showed unexpected surge in crude inventories for the week ended 15 June. The expiration of the July contract at the trading session's close also likely exaggerated the moves in crude prices today.

Crude-oil futures for light sweet crude for July delivery closed at $68.19/barrel (lower by $0.91/barrel or 1.3%) on the New York Mercantile Exchange. The contract retreated from an earlier peak of $69 to trade as low as $67.35. As per today’s weekly inventory report, crude supplies climbed 6.9 million barrels for the week ended 15 June and stood at 349.3 million barrels. This was much above expectations (unchanged to 1 million barrel surge was expected).

Trading volumes showed 1.672 billion shares exchanging hands on the New York Stock Exchange and 2.034 billion on the Nasdaq stock market. Declining issues topped gainers by more than 3 to 1 on the NYSE and by 21 to 8 on the Nasdaq.

For tomorrow, investors will look for economic data to help set the tone of trading. The weekly Initial Claims report is expected to hit the wires at 8:30 ET. It will be followed by Leading Indicators and the Philadelphia Fed index after market opens in the morning.

US Market registers small gain

Housing report and higher crude prices try to put a brake on stocks

US stocks registered small gains today after yield on the 10-year note continued to drop and crude prices remained above $69/bbl. It was mainly because of GE and IBM that Dow posted a modest gain.

Nineteen of the 30 Dow stocks closed higher for the day. The Dow Jones Industrial Average closed higher by 22.44 points at 13635.42. Nasdaq closed marginally up by 0.16 points to close at 2626.76. S&P 500 ended the day up by 2.65 points to close at 1533.7.

GE, IBM and Verizon were the major Dow winners today. GE shares soared a 5 year high to $39.29 (3.2% gain). GE accounted for 11 point gain of Dow while IBM’s 1.1% rise accounted for another 9 point gain of Dow.

Before market opened today, the Commerce Dept reported that starts of new U.S. homes fell by 2.1% to a seasonally adjusted annual pace of 1.47 million in May, as building permits for new construction rose 3% to 1.50 million on a jump in multifamily dwellings. The figures were slightly stronger than market expectations.

Best Buy misses Wall Street Expectations, shares slip 5.8%

When market opened in the morning, it was a sluggish start for the major indices which edged lower at the start of trading. After lingering around the flat line for most part of the day, Dow went up by almost 20 points in the final hour of trading, mainly led by GE.

The bond market, where prices have come under pressure and yields have spiked over the past couple of weeks, failed to react much to the latest housing news. The yield on 10 year Treasury notes finished at 5.08%.

Led by GE and the airline stocks, the industrials sector was the best-performing sector today. Conversely, consumer staples were the worst-performing.

Home-Depot shares today rose almost 1% after reports that it has agreed to sell its building supply unit for $10 billion.

Best Buy was a notable laggard today after coming up shy of second quarter earnings estimates and issuing full-year EPS guidance that fell below the consensus estimate. Best Buy shares slipped by almost 6%.

Eyes will be on retailers as Circuit City announces earnings report

Crude oil futures were steady today ahead of tomorrow’s weekly inventory report by Energy Department but still remained above the $69/bbl mark. But concerns still persisted about Nigerian unions planning a strike this week, threatening supplies from Africa's biggest oil producer. As per latest reports, the strike is going ahead tomorrow.

Crude-oil futures for light sweet crude for July delivery closed at $69.10/barrel (higher by $0.01/barrel or 0.01%) on the New York Mercantile Exchange. The contract touched $69.56 during intra day trading. Prices are down just 1% from a year ago.

Trading volumes showed 1.4 billion shares exchanging hands on the New York Stock Exchange and 1.9 billion trading on the Nasdaq stock market. Gaining issues topped decliners by 19 to 13 on the NYSE and by 15 to 13 on the Nasdaq.

Companies that are expected to report their earnings on tomorrow include Circuit City, Morgan Stanley and FedEx. The Energy Department's weekly oil report will hit the wires at 10:30 ET.

A lackluster day for US Market

Stocks lose steam going into close as crude kisses $69 mark

US market witnessed a lackluster trading session today without any major catalyst rocking the market. Surprisingly, all the three indices ended in red in spite of the yield on the 10-year note dropping back to 5.14%. New concerns about subprime lending further made stocks stumble.

A report in a London paper that BHP Billiton is believed to be reconsidering a $40 billion bid for Dow component Alcoa cheered investors for a little time as oil prices kissing the $69/bbl mark pulled out steam from the stocks going into close.

Almost half of the 30 Dow stocks retreated into red in the final trading hour today. The Dow Jones Industrial Average closed lower by 26.5 points at 13612.98. Nasdaq slipped marginally by 0.11 points to close at 2626.6 and S&P 500 went down by 1.86 points to close at 1531.05.

Alcoa, Caterpillar, Walt-Disney and Coco-Cola were the major Dow winners today. Boeing, Honeywell and P&G were the main Dow laggards.

Among other merger related news, General Electric is reportedly pairing up with Financial Times publisher, Pearson to make an offer for Dow Jones.

New data shows continuing deterioration in the housing market

When market opened in the morning, the indices were sporting modest gains despite a lack of concerted leadership. Dow was up by almost 13 points at one point.

But within one hour of trading, the indices reversed their course of action and Dow remained in the red for major part of the day. Nasdaq, though crossed the flat line a couple of times, also slipped into red going into close.

New data showed continuing deterioration in the housing market. The National Association of Home Builders said the outlook for home building is the worst in 16 years. The builders' housing market index fell by two points to 28 in June, the lowest since February 1991.

The yield on the 10-year note stood at 5.17% during the first half of the day after hitting 5.14% earlier in the morning.

Energy was the best-performing sector today due to the jump in oil prices. Technology and Financials were mixed.

Yahoo shares up 8% on CEO resignation

Crude oil futures rose substantially today to their highest levels since September 2006. crude oil futures for light sweet crude for July delivery closed at $69.09/barrel (higher by $1.09/barrel or 1.6%) on the New York Mercantile Exchange. Prices are down just 1.1% from a year ago.

Crude prices surpassed $69/bbl on news that Nigerian unions planned a strike this week, threatening supplies from Africa's biggest oil producer. The strike is called for 20 June to protest increases in taxes and domestic fuel prices.

Trading volumes showed 1.206 billion shares exchanging hands on the New York Stock Exchange and 1.732 billion trading on the Nasdaq stock market. Declining issues topped gainers by 17 to 15 on the NYSE and by 15 to 13 on Nasdaq.

In after market trading hours, Yahoo shares were up 8% on news that company’s CEO, Terry Semel has resigned. For tomorrow, the economic data expected before market opens is Census Bureau’s report on May Housing Starts and Building Permits. On the earnings front, Best Buy is a major name to come out with its report.

Tame inflation reports put US Market in a partying mood

In spite of $68 crude, US stocks witness best three day rally since mid-March, 2007 as bond yields stabilize

After a slow start for the week, US stocks picked up momentum during the last three trading days for the week ended Friday, 15 June, 2007. Tame inflation figures and moderate economic growth portrayed by Fed’s Beige Book lifted stocks and the three day rally between 13June and 15 June, 2007 was the best rally for the market since 19-21 March, 2007.

Rising bond yields initially checked US market’s momentum on Monday and Tuesday. On Tuesday, the 10 year Treasury notes hit a all time high of 5.3% after crossing the psychological 5% mark for the first time last week. At the end of the week, it closed at 5.152%. Former Federal Reserve Chairman, Alan Greenspan, mentioning that the market might be limited for US securities also had a negative impact on stocks.

But once bond yields stabilized as the PPI and CPI report checked in better than expected, there was no looking back for the stocks. The Dow Jones Industrial Average added 215 points in its kitty for the week. Tech heavy Nasdaq gained 53 points while S&P 500 too gained 26 points.

On the economic news front, Commerce Department's May retail sales report came in better than expected. Fed's Beige Book report showed the U.S. economy continued to expand at a moderate pace in the first part of the second quarter and inflation remained under control.

Stocks continued their rally on Thursday following more good news on the inflation front. Total PPI rose a larger than expected 0.9% in May boosted by a big 4.1% increase in energy costs. But the core rate (excluding food and energy) rose 0.2%. That was in line with expectations and continued the benign trend from the previous month.

On Friday, Labor Department showed that total CPI rose 0.7% in May, marking the second largest monthly increase in 16 years. The core rate, which excludes the 5.5% spike in energy prices, increased by just 0.1% (consensus 0.2%).

On the earnings front, Lehman Brothers kicked off earlier this week handily beating estimates. Goldman Sachs too handily beat analysts' expectations, but investors were disappointed with the paltry 1% y-o-y rise in Q2 profits. Bear Stearns missed expectations.

During the week, the acquisitions news that hit the headlines were – Penn National Gaming confirmed it will be taken private for $8.6 bln. There was also some speculation that Nymex is exploring a possible sale. Also, Financial Times parent Pearson is supposed to be seeking partners for a possible bid for Dow Jones provided some spice to investors.

Executive Summary

For the week, DJIx is up by 1.6%, S&P 500 is up by 1.7% and Nasdaq is up by 2.1%. Last week’s sell-off was contained this week as bond yields stabilized after reaching an all time high on last Tuesday. Upbeat economic reports, mainly Thursday and Friday’s inflation reports gave a major boost to stocks. For the year, the Dow is up by 9.4%, Nasdaq is up by 8.8% and S&P 500 is up by 8.1%.

During the week, the inflation data put a check on rising bond yields and the yield on the 10-year note fell and closed at 5.152%. Stocks rallied in spite of crude crossing $68/bbl and gaining 5% for the week.

Trading volume on Friday, 15 Jun 2007, was heavier than usual, which was a function of the increased trading that took place with the expiration of stock options, index options, index futures and single stock futures.

US Market rallies for second consecutive day

Stocks rise in spite of higher crude, above expected inflation figures and disappointing earning reports

US stocks rallied for the second consecutive day today, Thursday, 14 June, 2007. Investors were thrilled when bond yields did not rise much even as producer price index for May went up beyond expectation. Stocks ended higher in spite of crude settling at $67.65/bbl though this gave Exxon Mobil shares a good boost.

Total PPI rose a larger than expected 0.9% in May boosted by a big 4.1% increase in energy costs. But the core rate (excluding food and energy) rose 0.2%. The yield on the 10-year note today closed slightly higher at 5.21%

Twenty-four out of the 30 Dow stocks closed higher for the day. The Dow Jones Industrial Average closed higher by 71.38 points at 13553.73. Nasdaq rose 17.1 points to close at 2599.41 and S&P 500 went up by 7.3 points to close at 1522.97.

GM, Caterpillar and Exxon Mobil were the major Dow winners today. Du-Pont, Wal-Mart, AIG and Merck remained the four Dow laggards.

On the earnings front, after Lehman Brothers kicked off earlier this week, Goldman Scahs and Bear Sterns reported their Q2 earnings today. Goldman Sachs handily beat analysts' expectations. However, given Goldman's first quarter results, investors were disappointed with the paltry 1% y-o-y rise in Q2 profits. Bear Stearns missed expectations. While Goldman shares dropped almost 3.5%, Bear Sterns was up marginally.

With today’s gain, Dow is up 258 points over two days, its biggest such advance since last July. But it is still about 120 points below the record close it hit on 4 June, 2007.

GM gains 4.7% on news of “deal” with United Auto Workers

When market opened in the morning, bond yields coming off their highs helped equities gain some traction. The indices extended their reach to the upside as the strength across the board in Technology acted as a source of notable support. A 3.5% advance in Intel shares gave semiconductors a lift. Financials sector also provided some influential leadership.

GM shares gained gained 4.7%. It was reported that Delphi and former parent GM are "very close" to reaching a deal with the United Auto Workers that would provide a cash payout to Delphi workers in exchange for lower hourly wages.

Bonds earlier advanced, sending yields lower, as yields in Europe seemed to stabilize in the wake of tame eurozone consumer prices. PPI rising a bigger-than-expected 0.9% in May failed to lift yields further. After trading higher earlier, the bond finished down 4/32 at 94 16/32, while its yield, which moves inversely, rose to 5.216%.

Of the eight sectors attracting buyers and providing a floor of support today, Energy paced the way.

Traders to focus on tomorrow’s CPI report

Crude oil futures rose today at their highest levels since September 2006 and gasoline futures finished near a two-week high. Violence in the oil-rich Middle East, particularly with Hamas fighters reportedly seizing control of almost all of the Gaza Strip, contributed to oil's rally. Yesterday’s weekly inventory report also contributed to some extent.

Crude-oil futures for light sweet crude for July delivery closed at $67.65/barrel (higher by $1.39/barrel or 2.1%) on the New York Mercantile Exchange. July reformulated gasoline gained 6.94 cents (3.2%) to close at $2.2247 a gallon. Natural gas for July delivery soared 20 cents (2.6%) to $7.808 per million British thermal units.

Trading volumes showed 1.4 billion shares trading on the New York Stock Exchange and 1.9 billion trading on the Nasdaq stock market. Advancing issues topped decliners by 21 to 11 on the NYSE and by 17 to 11 on the Nasdaq.

Tomorrow, traders will focus on the CPI report, given its influence on the market's outlook for the economy. Other than that, before market opens will be the NY Empire State Index, Q1 Current Account Deficit and Industrial Production. A preliminary read on sentiment, compiled by the University of Michigan, will be released at 10:00 ET.

US Market rallies as yield falls

Dow witnesses its best day since July, 2006 on strong retail data and bullish Fed outlook

US stocks rallied today, Wednesday, 13 June, 2007 as market got a break from rising bond yields. Falling interest rate and Fed’s Beige Book portraying a moderate growth of the economy gave the stocks a major boost today erasing all of yesterday’s loss.

The yield of the 10-year Treasury note fell to 5.22% after hitting a five-year high yesterday at 5.26%. In addition, the Commerce Department came out with a much better-than-expected report on retail sales for May.

Twenty-nine out of the 30 Dow stocks closed higher for the day. The Dow Jones Industrial Average soared by a huge 187.34 points to close at 13482.35. Nasdaq rose 32.54 points to close at 2582.31 and S&P 500 went up by 22.69 points to close at 1515.67.

Alcoa, Boeing, Intel, GM, Caterpillar and Citigroup were the major Dow winners today. All 10 economic sectors posted hefty gains while only four of the 147 S&P 500 industry groups closed lower.

In the post lunch session, The Beige Book showed that manufacturing activity was up in most districts while the majority of the 12 Fed regions also reported that overall wage pressures do not seem to be rising, even though hiring picked up in late April through May.

Today’s triple digit gain was the best day for Dow since July, 2006. For Nasdaq, it was the best day since March, 2007.

Boeing, Caterpillar and Alcoa - each rise more than 2%

When market opened in the morning, a sense that stocks are oversold gave buyers the green signal right out of the gate. A report showing that retail sales were surprisingly strong in May was an added good piece of news.

The Commerce Department reported that retail sales rose 1.4% in May - a healthy change from the revised 0.1% sales decline in April. It was also more than double what economists had predicted. Retail sales excluding automobiles rose 1.3% for the month. It was the strongest data in 16 months.

A reversal in Health Care sector removed some notable leadership during the afternoon hours. But stocks picked up momentum in the final couple hours of trading, mainly after the Beige Book release.

Among major Dow winners, Boeing surged 2.1% after raising its 20-year forecast for global aircraft deliveries. Caterpillar turned in a similar performance after backing its 2007 outlook. Alcoa was also up almost 3% after Alcan said that it might make a counteroffer for Dow component Alcoa.

Decent PPI and CPI reports expected to boost market

Of the 10 economic sectors trading closing higher today, Utilities led the charge followed by Materials.

Crude oil futures rose today after Energy Department came out with today’s weekly inventory report. The report showed a smaller than expected gain in U.S. supplies of crude for the week ended 8 June. Gasoline futures also rallied on the report after it failed to climb for first time in 6 weeks. Crude-oil futures for light sweet crude for July delivery today closed at $66.26/barrel (higher by $0.91/barrel or 1.34%) on the New York Mercantile Exchange.

Trading volumes showed 1.6 billion shares exchanging hands on the New York Stock Exchange and 2.1 billion trading on Nasdaq. Gaining issues topped decliners by 13 to 3 on the NYSE and by 20 to 9 on the Nasdaq.

Tomorrow PPI report will be closely watched and should help set the tone for the day's trading. Weekly Initial Claims will also be released before market opens. On the earnings front, Goldman Sachs and Bear Stearns are expected before the bell while Adobe Systems will report after the close.

US Market heaves a sigh of relief on Friday

Global growth and rising interest rates in Asia and Europe put the U.S. bond market under pressure

After a modest start for the week ignoring the China stocks sell-off, US market plunged during the mid-week trading days during the past week. But at the end, it did try to recoup back some of the week’s loss. Nevertheless, all the three indices lost 1.6% - 2% going into close at the week’s end on Friday, 8 June 2007.

Unforeseen strength in the services sector and comments from Fed Chairman Ben Bernanke about housing and the economy dashed investors' hopes for a reduction in interest rates any time soon. The rate fears coupled with rising oil and higher bond yield rattled the US market between Tuesday, 5 June and Thursday, 7 June. Yield on 10-yr note soared above psychological 5% level for the first time since August. It reached a level of 5.24% but closed the week at 5.11%.

All the three indices incurred substantial losses between Tuesday, 5 June 2007 and Thursday, 7 June 2007. DJIx itself lost 410 points between those three days. Nasdaq and S&P 500 lost 77 points and 47 points respectively. But on Friday, 8 June 2007, lower oil price and partial stabilization of bond yields powered a rally in the market and the indices closed higher for the day.

The Dow Jones Industrial Average lost 244 points for the week. Tech heavy Nasdaq lost 41 points while S&P 500 lost 29 points.

On the economic news front, mixed batch of May same-store sales came out that were impacted in part by rising gasoline prices. First quarter productivity was revised down to 1% from a previous read of 1.7%, while unit labor costs were shown to have risen a higher than expected 1.8% from the 0.6% rate initially reported.

During the week, the acquisitions news that hit the headlines were – Flextronics announced that it will acquire rival electronics manufacturer Solectron for approximately $3.6 billion. Steel stocks got a major boost on Friday after ThyssenKrupp reportedly said it is interested in U.S. Steel. Avaya also confirmed during the week that it is being taken private.

Executive Summary

For the week, DJIx is down by 1.8%, S&P 500 is down by 1.9% and Nasdaq is down by 1.6%. While the interest rate action weighed heavily on investor sentiment in the past week, the deal-making that helped fuel the recent rally in stocks continued. For the year, the Dow is up by 9.7%, Nasdaq is up by 6.6% and S&P 500 is up by 6.4%.

During the week, investors became quite worried after the European Central Bank raised its benchmark rate 25 basis points to 4%. Though the same is well below Fed’s 5.25%, it bothered traders who feared that a hike, here, is imminent.

Next week has options expirations that might push stocks in either direction as investors decide whether to leave options alone or exercise them. On the economic data front, the government will report on retail sales on Wednesday, 13 June, wholesale price inflation on 14 June and issue its monthly Consumer Price Index report on 15 June.

US Market rallies as oil slips and bond yields stabilize

Dow gains almost 158 points on Friday after incurring huge losses in previous three days

After incurring three days of big losses, US Market closed substantially higher today (Friday, 8 June 2007) and tried to regain back some of its week’s loss. Some merger & acquisition chatter, lower oil price and partial stabilization of bond yields powered the day’s rally.

All but two of the 30 Dow stocks closed higher for the day. The Dow Jones Industrial Average closed higher by a huge 157.66 points at 13424.39. Nasdaq closed higher by 32.16 points at 2573.54 and S&P 500 closed higher by 16.95 points at 1507.67.

GM, United Technologies, Boeing and IBM were the main Dow winners. Merck and Walt Disney were the only two laggards.

Technology turned in a strong performance and was an influential leader to the upside. Financials climbing back into positive territory for the year was also noteworthy.

But it was steel sector which was most in news on Friday. Steel stocks climbed up after ThyssenKrupp reportedly said it is interested in U.S. Steel. The news earmarked Steel as the day's best performing S&P industry group and helped Materials pace the way among all 10 sectors closing higher.

For the week, Dow, Nasdaq and S&P 500 dropped 1.8%, 1.6% and 1.9% respectively.

Bond yields soar to 5.24%, ends at 5.11%

When market opened in the morning, sense that stocks are oversold on a short-term basis provided a floor of buying support right out of the gate. Bond yields slipped from their morning highs and helped renew enthusiasm for equities.

The yield on the 10-year note was as high as 5.24% earlier but then fell at 5.15% in the course of the day after the trade deficit figure showed that it narrowed more than expected and this raised the likelihood that Q2 GDP forecasts will be revised upward. The 10 year note yield closed at 5.11% for the day.

Tech shares received a lift from the chip sector. National Semiconductor jumped almost 15% reaching an all-time high, after the company posted a smaller-than-expected drop in profit and said it was buying back $2 billion worth of shares.

Crude falls back below $65

Mc Donalds shares rose more than 2% today after saying global same-store sales rose 8.7% in May.

Crude-oil futures fell sharply in a broad commodities sell-off as traders rushed to lock in gains, sending most energy contracts down more than 3%. Crude for July delivery closed down $2.17 (3.24%) at $64.76 a barrel on the New York Mercantile Exchange. Prices plunged today on concern that rising interest rates may lead to slower growth in demand.

Trading volumes showed 1.231 billion shares changing hands on the New York Stock Exchange and 1.554 billion trading on the Nasdaq stock market. Advancing shares outpaced decliners by more than 2 to 1 on the NYSE, while gainers topped decliners by 9 to 5 on the Nasdaq.