3SOF

Stocks End Week With Gains.......


Friday  9/21/2007


Stocks in New York rose for the third time in four sessions Friday, as strong profit reports after the last close brought buyers back into the market.

The Dow Jones Industrial Average gained 53.49 points, or 0.39%, to 13,820.19. The S&P 500 was up 7 points, or 0.46%, to 1525.75. The Nasdaq Composite was better by 16.93 points, or 0.64%, to 2671.22.

For the major indices, it was their second winning week in a row, mostly thanks to the Federal Reserves 50-basis-point interest rate cut on Tuesday. The Dow and the S&P 500 both climbed 2.8% for the week, and the Nasdaq added 2.7%.

"Today was a continuation of this week's good news, carrying us and allowing the rally to continue," said Paul Nolte, director of investments with Hinsdale Associates. "Next week there's a mess of earnings and data, so it will be tough to reconcile what the market has done this week. All in all, this was a positive end to a very good week."

Breadth was positive. On the New York Stock Exchange 3.72 billion shares changed hands, as advancers topped decliners by a 5-to-3 margin. Volume on the Nasdaq reached 2.36 billion shares, with winners outpacing losers nearly 8 to 7.

Crude oil pulled back a day after setting yet another record. The newly benchmarked November contract finished down 16 cents to $81.62 a barrel, but ended 4.5% higher on the week.

Gold lost $1 at $738.90 an ounce, while silver rose 15 cents to end the day at $13.62 an ounce. The dollar again was weaker against most other major currencies, including the euro and the Canadian dollar.

U.S. Treasury prices were stronger after a multisession slide. The 10-year note was up 16/32 in price, yielding 4.63%. The 30-year bond was adding 1 4/32, reducing the yield to 4.89%.

Meanwhile, traders also had to deal with options expiration. Derivatives contracts on single-stock futures, stock options, index futures and index options all traded for the last time. The simultaneous expiration happens quarterly and can lead to considerable swings in the market.

The economic docket was empty, but there were several Fed officials out with comments. Fed Governor Fred Mishkin delivered a speech on monetary policy in Germany, referencing the latest policy meeting when he said that the central bank needs to make "informed guesses" about policy.

Fed Vice Chairman Donald Kohn was also in Germany, and he defended the recent rate cut as a benefit for the global economy, dismissing notions it was a bailout for the U.S. stock market.

"Federal Reserve policymakers have not been asymmetrical in intent or in actions, in that we have always focused sharply on the macroeconomy," said Kohn. "Policy was motivated not by the desire to achieve any particular level of asset prices, but rather by the Federal Reserves assessment of how changes in asset prices were affecting the forecast of growth and inflation."

Fed Governor Kevin Warsh was speaking in New York State, and he offered his own comments on subprime and credit.

"Reduced liquidity conditions in markets today stem from a pullback in investors'' willingness to take risks, which may have been triggered, but I argue not caused, by losses in subprime-mortgage markets," he said. "Thus, a broader reassessment of risk positions appears at work, especially for products that are opaque or complex."

Following the previous close, software developer Oracle (ORCL:) posted a fiscal first-quarter profit that rose 26% from a year ago, beating the Thomson First Call consensus by a penny. Shares rose 93 cents, or 4.4%, to end at $21.97.

Another late-day reporter, Nike (NKE:) handily beat fiscal first-quarter earnings and revenue targets. However, Nike was off $1.06, or 1.8%, closing at $57.26.

Elsewhere, Texas Instruments (TXN:) was up after the chipmaker raised its dividend by 25% to 10 cents a share. TI also added a buyback of up to $5 billion in stock. Shares climbed 85 cents, or 2.4%, to $36.62.

On the other hand, gold-related stocks faced pressure after Merrill Lynch downgraded Barrick Gold (ABX:) to neutral from buy, citing valuation. The firm also cut Agnico-Eagle Mines (AEM:) to neutral from buy. Barrick lost 2.2% to $40.06, and Agnico-Eagle was down 3.1% to $49.81.

Overseas markets were mixed. Overnight in Asia, Japan's Nikkei 225 slipped 0.6% while Hong Kong's Hang Seng rose 0.6%. In Europe, London's FTSE 100 added 0.4% and Germany's Xetra Dax tacked on 0.2%.

Downbeat Day for Stocks.......


Monday  9/24/2007


Stocks in the U.S. closed lower Monday as early optimism touched off by a series of tech upgrades faded following news of a nationwide auto workers strike at General Motors (GM:) .

The Dow Jones Industrial Average was down 61.13 points, or 0.44%, at 13,759.06. The S&P 500 was 8.02 points, or 0.53%, lower at 1517.73, and the Nasdaq Composite was down 3.27 points, or 0.12%, to 2667.95.

On the Dow, shares of GM pulled back after United Auto Workers members walked off the job at 11 a.m. EDT following the union's failure to get a labor agreement. GM had traded up roughly 5% earlier in the session, but its shares lost momentum and finished off 20 cents, or 0.6%, at $34.74.

Rival Ford (F:) also made headlines after CEO Alan Mulally said North American operations could return to profitability in 2009 despite a weak forecast for the American auto industry. Shares were up 25 cents, or 3%, to $8.48.

On the bright side, tech shares finished higher thanks in part to EMC (EMC:) . Bear Stearns and Citigroup both upgraded the stock because of valuation. Citi also reiterated a buy on Apple (AAPL:Nasdaq) and lifted its target by $25 to $185. Shares of EMC jumped 7.8% to $20.51, and Apple gained 2.9% to close at $148.28.

Elsewhere, RBC Capital Markets upgraded Motorola (MOT:) to outperform from sector perform, citing improvements in the company's handset unit. Motorola climbed 16 cents, or 0.9%, to $18.05.

Microsoft (MSFT:) rose 1.5% ahead of the launch of the video game Halo 3, a title that's expected to boost sales of the Xbox 360 console. Separately, The Wall Street Journal reported that the software giant is considering buying a stake in the social-networking site Facebook for $300 million to $500 million. Shares added 43 cents to $29.08.

Breadth was negative to start the week. On the New York Stock Exchange 3.13 billion shares changed hands, as decliners topped advancers by a 5-to-3 margin. Volume on the Nasdaq reached 1.82 billion shares, with losers outpacing winners nearly 3 to 2.

U.S. equities had started the session with momentum carrying over from a strong finish Friday, when the Dow added 53.49 points, or 0.39%, to 13,820.19. The S&P 500 was up 7 points, or 0.46%, to 1525.75, and the Nasdaq was better by 16.93 points, or 0.64%, to 2671.22.

The indices notched their second winning week in a row, thanks to the Federal Reserves 50-basis-point interest rate cut last Tuesday. The Dow and the S&P 500 both climbed 2.8% for the week, and the Nasdaq added 2.7%.

"The market is very calm and is still digesting gains from last week," said Robert Pavlik, chief investment officer with Oaktree Asset Management. "Traders are still grappling with recession vs. inflation, even after the Fed rate cut. Worries about the credit problem and a slowing economy cannot be erased overnight."

As the week progresses, investors will be getting another batch of economic data that they will use to guess how the Fed will act next. Although no releases were out Monday, reports on existing-home sales, new-home sales, durable-goods orders, second-quarter gross domestic product and others are due later this week.

Fed Chairman Ben Bernanke delivered a speech on education in Washington, but he made no mention of monetary policy. Richard Fisher, president of the Dallas Fed, said that the central bank can alter monetary policy in either direction if necessary and that recent trends in inflation and expectations provide "wiggle room" for adjustments.

Fed Governor Fred Mishkin will speak Thursday and Friday on globalization and monetary policy.

The earnings docket was relatively empty, but plenty of reports are due by week's end. Homebuilders Lennar (LEN:) and KB Home (KBH:) , along with Bed Bath & Beyond (BBBY:) and Paychex (PAYX:) , are set to release quarterly results during the next few sessions.

Away from stocks, Treasury prices were mixed. The 10-year note was flat in price, yielding 4.62%, while the 30-year bond added 4/32 to yield 4.88%. The dollar continued its free fall, hitting a new record low against the euro.

Marc Pado, U.S. market strategist with Cantor Fitzgerald, said that after the initial Fed-inspired rally, the market is worried about the repercussions of a weaker dollar.

"The dollar has been in a major decline since 2002 but broke to a new 15-year low on the Dollar Index on Friday," he said. "The euro traded over $1.40, the highest on record. Talk that the Saudis may move away from a dollar peg has many worried that we could see continued pressure on the dollar, and maybe even a move away from crude being priced in dollars."

Commodity prices were mixed. The front-month November crude contract lost 67 cents to close at $80.95 a barrel. Gold and silver futures inched higher on the day.

Overseas, Hong Kong's Hang Seng jumped 2.7%, and London's FTSE 100 added 0.1%. Germany's Xetra Dax slipped 0.1%.

Stocks Set to Dive.......


Tuesday  9/25/2007


Stocks in the U.S. were set to open lower Tuesday as weak results from homebuilder Lennar (LEN:) and several profit warnings had traders taking cover.

Futures on the S&P 500 were losing 7.90 points to 1523.80 and were 14.36 points below fair value. Nasdaq 100 futures were down 7.75 points at 2072 and were 2.20 points under fair value.

Before the opening bell, Lennar posted a third-quarter loss of $513.9 million, or $3.25 a share, reversing a year-ago profit due to write-offs and adjustments. Revenue plummeted to $2.34 billion from $4.18 billion, falling short of consensus estimates.

Lennar's results come ahead of the 10 a.m. release of the National Association of Realtors'' existing home sales report for August. Economists are forecasting a 4.3% decline to 5.50 million annualized units.

Also influencing the action were warnings from two big retailers. Lowe's (LOW:) issued a profit warning after the last close, saying it now expects fiscal-year earnings at the low end, or slightly below, its previous guidance due to regional drought conditions hurting its outdoor offerings.

Target (TGT:) , meanwhile, reduced its forecast for September same-store sales growth to a range between 1.5% to 2.5%, compared with the previous forecast of 4% to 6%.

Elsewhere, energy concern BP's (BP:) chief executive Tony Hayward said the company's third-quarter results are expected to be "dreadful."

If stocks do open lower it would be a continuation of Monday's late-session weakness. Last time out, stocks lost early momentum and ended lower following a strike at General Motors (GM:) .

The Dow Jones Industrial Average was down 61.13 points, or 0.44%, at 13,759.06. The S&P 500 was 8.02 points, or 0.53%, lower at 1517.73, and the Nasdaq Composite was down 3.27 points, or 0.12%, to 2667.95.

GM and the United Auto Workers union are heading back into negotiations on a new labor deal, which has been on the table for three weeks. A deadline to get the deal done passed at 11 a.m. EDT during the previous session, and roughly 73,000 workers walked off the job to picket at GM plants.

Overseas, foreign markets were mainly weaker. Japan's Nikkei 225 added 0.6% overnight, while Hong Kong's Hang Seng eased 0.5%. In Europe, London's FTSE 100 fell 1%, and Germany's Xetra Dax slipped 0.7%.

Treasury prices rallied, cutting yields. The 10-year note rose 14/32 in price to yield 4.57%, and the 30-year bond jumped 23/32 in price, yielding 4.84%. The dollar continued its decline, hitting another record low against the euro.

Commodity prices were lower. The front-month November crude contract was losing 82 cents to $80.13 a barrel, and gold and silver futures were also dropping.

The  (DJIA) declined below 13,800 yesterday, taking its first step down from its uptrend pause, and is expected to find its low point later this week.
Near-term indicators synchronize their movements and head down, the market indices will accelerate downward sharply before settling down, around 13,500 for the (DJIA).
These intermediate-term indicators movements are in line with expectations, and give no signal of any meaningful curtailment of the intermediate term uptrend, which continues to be expected to resume after the near-term correction is over.

It is the near-term trend that is in need of and is expected to correct downward over the next few trading days. The sharpest decline looks possible today and tomorrow, with Thursday and Friday showing a slowing of downtrend momentum. This could change and the near-term downtrend correction could be sharper and longer, but current indications are that the (DJIA) will find support at 13,500 near the end of this week. This analysis is premised mainly on the movements of the four near-term indicators, which are in nearly synchronized states of retreat from having become overbought late last week.

Very often the intraday movements of the market indices, which are driven by the forces that earlier drive the near-term indicators, and thus render them predictive, will disguise the significant multi-day trend direction of the market indices. This was not the case yesterday as intraday the market indices declined shortly after the trade-term indicators did, a process that is expected to continue today as the trade-term indicators are not yet in oversold territory. It is rare for the market indices to move smoothly in one direction or the other for very long, and this week is likely to be no exception. This is often due to the trade-term trend, which frequently overreacts to catalytic news. Some of the news events coming up today, which could be catalytic and precipitate a sharp move by the indices, most probably downward, are discussed below, along with a listing of the stocks making news this morning.

In light volume yesterday, markets backed off last week's Fed-led rise, closing off 0.44% on the DJIA, 0.53% on the S&P 500 and 0.12% on the Nasdaq. Today's sentiment continues less euphoric, with investors looking beyond the broad brush of general enthusiasm to specific stock stories. Today investors will be following the trail of the housing numbers to their impact on consumer confidence and finally the end result of key consumer spending patterns. Both consumer confidence and existing home sales data are slated for 10:00 ET release, with August existing home sales expected to fall, with estimates of 5.55 million from 5.75 million, generating a string of six consecutive lower reports to a 5-year low. Conference Board's Consumer Confidence for September is also expected to head lower, to 104.5 from 105.0, with gains from the Fed cut expected to have been offset by higher energy prices. Both Target and Lowe's provided less optimistic forecasts on the consumer segment as well. Target reduced its same-store-sales for September to 1.5%-2.5%, down from its prior 4-6% target, compared to gains of 6.7% a year ago. And Lowe's estimates its full year results likely to come in at the low end or below prior guidance of $1.97-$2.01 versus consensus estimates of $1.99. Moreover, Lennar's third quarter missed widely with a loss of $3.25 versus $1.30 a year ago and estimates of a 55 cent loss. Financial shares remained under pressure, and IMF's Global Financial Stability Report pointed to protracted credit-market turmoil, with an estimated cost of subprime mortgage problems of $200 billion. Major investment banks fell with Morgan Stanley off 3.3%, Lehman Brothers off 2.5%, Citigroup off 2%; Goldman Sachs, however, bucked the trend, closing up 0.2%. Among airline shares, hit by the rise in oil prices, AMR Corp plummeted 14.4% to a 1-year low on updated third quarter American Airlines guidance showing increased costs and reduced revenues. US Airways fell 12% and Continental dropped 6.9%. Tech shares provided the market limelight. Apple and Google hit record highs. A Citigroup analyst hiked its price target and earnings estimate on Apple. Microsoft shares advanced 1.5% as gamers lined up to purchase its Halo 3 video game, and rumors circulated the company was planning up to a 5% stake in Facebook for $300-$500 million. Dell shares gained 0.4% on its announcement of China sales plans, and EMC shares gained 7.8% on analyst upgrades.

In the corporate corner, Ford's CEO Mulally expects the company's North American operations to become profitable by 2009. GM's 73,000 workers went on strike as talks with UAW broke down over job security issues; no more than a week or two strike is expected. BP's new CEO, pointing to a "dreadful" third quarter, plans to reveal restructuring and consolidation efforts to reduce management layers and the company's excessive complexities. Speculation centers on ValueClick as a potential takeover target with Time Warner believed to be the interested party.


Stocks mentioned today.......

Ticker         Trend Direction

AAPL               Uptrend
AMR                Uptrend 
BP                   Uptrend 
CAL                 Uptrend
C                  Downtrend 
DELL               Uptrend
EMC                Uptrend
F                     Uptrend
GS                  Uptrend 
GOOG             Uptrend
TGT                 Uptrend 
LOW               Uptrend 
LEN               Downtren
LEH                Uptrend
MS                  Uptrend 
LCC              Downtrend 
VCLK            Downtrend 
TWX             Downtrend 

Stocks Overcome Soft Profits.......


Tuesday 9/25/2007


Tech stocks rose Tuesday while blue chips were little changed, as traders appeared generally unaffected by weak results from homebuilder Lennar (LEN:) and profit warnings from the retail and energy sectors.

The Dow Jones Industrial Average started the day in negative territory before pushing above the flatline, closing up 19.59 points, or 0.14%, at 13,778.65. The S&P 500 lost 0.52 point, or 0.03%, to 1517.21. The Nasdaq Composite climbed 15.50 points, or 0.58%, to 2683.45.

"We've been expecting a pullback because the market is extended. We ran up too far, too fast," said Paul Mendelsohn, chief investment strategist with Windham Financial. "The Federal Reserves 50-basis-point rate cut put a floor in the market. Since then, there has been a lot of buying on the dips, which is why we've had this uneven trading."

Breadth was slightly negative. On the New York Stock Exchange, 3.20 billion shares changed hands, as decliners topped advancers by a 10-to-7 margin. Volume on the Nasdaq reached 1.90 billion shares, with losers outpacing winners nearly 4 to 3.

Earlier, Lennar posted a third-quarter loss of $513.9 million, or $3.25 a share, reversing a year-ago profit due to write-offs and adjustments. Revenue plummeted to $2.34 billion from $4.18 billion, falling short of consensus estimates. Lennar lost 96 cents, or 4%, to $23.22.

Lennar's results came on the same day that the National Association of Realtors said existing-home sales for August fell 4.3% to 5.50 million annualized units, as expected. Existing-home sales are now at their lowest in five years.

Also on the economic front, the Conference Board said its consumer confidence index slumped to a reading of 99.8 in September from a revised 105.6 in August. It was the lowest reading on consumer confidence in two years.

"The turmoil of the subprime crisis has shaken business and consumer confidence," said Bruce McCain, senior vice president and head of strategy for Key Private Bank's Investment Management unit. "Still, because the economy was actually gathering strength before the current crisis, we believe the Fed cut improves what were already reasonably good odds that the economy will avoid recession."

The Day's action was also influenced by warnings from two big retailers. After the last close, Lowe's (LOW:) said it now expects fiscal-year earnings at the low end or slightly below its previous guidance due to regional drought conditions hurting its outdoor offerings. Lowe's slumped $2.04, or 6.7%, to $28.51.

Target (TGT:) , meanwhile, reduced its forecast for September same-store sales growth to between 1.5% and 2.5%, compared with the previous projection of 4% to 6%. The stock dropped $2.95, or 4.6%, to close at $61.35.

Elsewhere, energy concern BP's (BP:) chief executive, Tony Hayward, said the company's third-quarter results are expected to be "dreadful." BP fell by $1.91, or 2.7%, to $69.33.

General Motors (GM:) and the United Auto Workers union headed back to negotiations on a new labor deal, but about 73,000 workers remained on strike for a second day at GM plants. Shares finished down 32 cents, or 0.9%, to $34.42.

Microsoft (MSFT:) rose 1.7% after The Wall Street Journal reported that the software giant is considering buying a stake in the social-networking site Facebook for $300 million to $500 million.

The software giant was also celebrating the launch of the video game Halo 3, a title that's expected to boost sales of the Xbox 360 console. Microsoft was higher by 48 cents at $29.56.

Treasury prices were mixed on the long-end. The 10-year note rose 4/32 in price to yield 4.61%, and the 30-year bond eased by 2/32 in price, yielding 4.89%. The dollar continued its decline, hitting another record low against the euro.

Commodity prices ended lower. The front-month November crude contract dropped $1.42 to end at $79.53 a barrel, and gold and silver futures also lost ground.

Overseas, foreign markets were mostly weaker. Japan's Nikkei 225 added 0.6% overnight, while Hong Kong's Hang Seng slipped 0.5%. In Europe, London's FTSE 100 and Germany's Xetra Dax both fell roughly 1%.

Bear Stearns Awakens Bulls.......


Wednesday 9/26/2007


Stocks in the U.S. closed higher Wednesday, driven by the end of a two-day strike at General Motors (GM:) and word that one of the world's most prominent investors is considering buying a big stake in Bear Stearns (BSC:NYSE) .

The Dow Jones Industrial Average gained 99.50 points, or 0.72%, to 13,878.15, its best finish in two months. The S&P 500 was up 8.21 points, or 0.54%, at 1525.42, and the Nasdaq Composite was better by 15.58 points, or 0.58%, at 2699.03.

Bear Stearns soared 7.7% following a report in The New York Times that said Warren Buffett was among those contemplating the purchase of up to 20% of Bear Stearns, a Wall Street bank hit hard by the recent troubles in the financial markets.

The article also named Bank of America (BAC:) , Wachovia (WB:) and two Chinese firms as potential investors.

The news lifted the broader financial sector and proved more than enough to offset Goldman Sachs'' decision to lower its earnings numbers on Merrill Lynch (MER:) . The Nasdaq Financial 100 rose 0.9%, and the NYSE Financial Sector Index was up 0.6%. Merrill, though, lost 0.5%.

Stock indices were already rallying, even before the Bear Stearns development, after a tentative labor deal ended a two-day strike by General Motors (GM:) production workers.

The contract puts the responsibility for retirees'' health care into the United Auto Workers Union's hands, while certain jobs were guaranteed by the automaker. GM, a component of the Dow, ended 9.4% higher at $37.64.

Rival Ford (F:) gained 6.5%, and parts makers such as Lear (LEA:) , Johnson Controls (JCI:) and Visteon (VC:) finished stronger by between 2% and 6%.

"While everyone knew GM and the UAW were headed to an agreement, traders were very heartened by the news," said Larry Wachtel, senior market analyst with Wachovia Securities. "The Bear Stearns news jolted the financial sector late in the day. That one-two punch really pushed this market higher. It was encouraging, even as traders ignored souring economic data today."

On the economic front, durable-goods orders for August were weaker than expected, falling 4.9%. Excluding transportation, orders declined 1.8%. Orders advanced 5.9% in July.

Ian Shepherdson, chief economist with High Frequency Economics, said that traders ignored the poor durable-goods number because it will have little influence on the Federal Reserves rate policy.

"These data capture little, if any, of the impact of the market turmoil," said Shepherdson. "The September and October numbers will be key inputs for the Fed's Dec. 11 meeting."

Meanwhile, Philadelphia Fed President Charles Plosser commented late Tuesday about economic activity in the U.S., stating that "last week's action to lower the fed funds rate target was appropriate."

Plosser, who usually delivers hawkish commentary, added that he does not take moderating inflationary data as a sign that inflation is no longer a risk, although he does find it encouraging.

Breadth was positive, and on the New York Stock Exchange 3.17 billion shares changed hands, as advancers topped decliners by a 2-to-1 margin. Volume on the Nasdaq reached 2.01 billion shares, with winners outpacing losers nearly 3 to 2.

One of the Day's laggards was SLM (SLM:) , better known as Sallie Mae, who said a buyout group led by J.C. Flowers, Bank of America and JPMorgan Chase (JPM:) doesn't expect to complete the acquisition of the company under the existing terms of the agreement.

Sallie Mae said it would "pursue all remedies available to it to the fullest extent permitted by law." Shares fell 2.7% to $45.01.

Aside from Goldman's move on Merrill, several other analysts offered coverage changes, including JPMorgan, which downgraded office supply retailer Staples (SPLS:) to underweight from neutral. The firm raised Office Depot (ODP:) to overweight from neutral. Staples eased 0.1% to $21.45, while Office Depot jumped 5.4% to close at $20.25.

The broker also raised its rating for CVS (CVS:) to overweight from neutral, but cut Walgreen (WAG:) to neutral from overweight. CVS rose 0.8% to $39.19, and Walgreen gained 1.8% at $47.71.

Citigroup initiated coverage of several handset companies. The firm started coverage of Palm (PALM:) as a sell, Motorola (MOT:) as a hold and Research In Motion (RIMM:) as a buy. Separately, Lehman raised its price target on RIM.

Palm shed 2.2% to $15.43, while Motorola finished higher by 0.5% at $18.72. RIM advanced 2.3% to $99.

Away from stocks, oil pushed back above the $80-a-barrel level despite a bearish inventory report from the Energy Department. The front-month November contract added 77 cents to close at $80.30 a barrel.

The Energy Department's weekly inventory report showed that crude stocks unexpectedly rose by 1.8 million barrels last week. Gasoline stocks rose by 600,000 barrels, and distillates increased by 1.6 million barrels.

Treasury prices crept higher, with the 10-year note up 3/32 in price, yielding 4.62%. The 30-year bond added 6/32, yielding 4.89%. The dollar was mixed against other major world currencies.

Overseas indices were mostly higher. Japan's Nikkei 225 tacked on 0.2% overnight, London's FTSE 100 added 0.6%, and Germany's Xetra Dax was up 0.5%.

Stocks in the Green Again.......


Thursday 9/27/2007


Stocks in the U.S. closed slightly higher Thursday as the momentum from the previous session continued despite another round of poor housing data.

The Dow Jones Industrial Average gained 34.79 points, or 0.25%, to 13,912.94, putting the index a mere 91 points below its record close. The S&P 500 was up 5.96 points, or 0.39%, at 1531.38. The Nasdaq Composite added 10.56 points, or 0.39%, to 2709.59.

"Technically, the market is extended and is pushing up under resistance," said Marc Pado, U.S. market strategist with Cantor Fitzgerald. "I don't foresee a pullback until next week, and then only for a week or two, as earnings become the main focus."

Breadth was positive, while volume was weaker than previous sessions this week. On the New York Stock Exchange, 2.81 billion shares changed hands, as advancers topped decliners by a 5-to-3 margin. Volume on the Nasdaq reached 1.72 billion shares, with winners outpacing losers nearly 8 to 7.

Last time, a late-session rally fueled by speculation over billionaire investor Warren Buffett potentially buying a stake in Bear Stearns (BSC:) led the major averages to strong finish.

Before the opening bell, KB Home (KBH:) released its quarterly results. The homebuilder swung to a third-quarter loss due to "seriously challenging market conditions" and said it expects industry conditions to continue to worsen. Despite the loss, KB Home finished the session with a gain of 62 cents, or 2.6%, to $24.71.

Meanwhile, the Census Bureau said new-home sales data fell a disastrous 8.3% in August to 795,000 annualized units. Economists had anticipated a 5.2% decline.

Additionally, there was a net downward revision of 34,000 homes to the previous three months. Already this week, a report showed that existing-home sales fell 4.3% last month.

Ian Shepherdson, chief economist with High Frequency Economics, said that the housing slump is nowhere near a bottom, and that traders should still be concerned about its wider impact.

"The really bad news is that these data largely predate the market turmoil and subsequent tightening of lending standards, so sales have further to fall," he said. "People don't like borrowing to buy depreciating assets, and lenders don't like to lend on them either."

Pado added that the fact that new home sales fell below the 800,000 level should "worry sectors other than those that are directly housing-related."

Despite the loss at KB Home and the weak housing data, the Philadelphia Housing Sector Index rose 1.6% for the day.

Traders also had to digest several other economic reports. The Commerce Department said second-quarter gross domestic product was revised to a weaker-than-expected final read of 3.8%. It was expected that GDP rose 3.9% last quarter, compared with a 4.0% preliminary figure.

Additionally, the Labor Department said initial jobless claims dropped by 15,000 to 298,000 claims last week. Economists had expected claims to rise to 320,000.

On the equity side, traders focused on SLM (SLM:) , commonly known as Sallie Mae, who said late Wednesday that a buyout group led by J.C. Flowers, Bank of America (BAC:) and JPMorgan Chase (JPM:) won't complete the acquisition of the student lender under the existing terms of their agreement.

Sallie Mae said it would "pursue all remedies available to it to the fullest extent permitted by law." After falling nearly 3% during the previous session, shares of SLM jumped $4.11, or 9.1%, to $49.12 on hopes the deal would be reworked and go through after all.

Microsoft (MSFT:) eased slightly despite news it sold $170 million worth of the Xbox 360 video game Halo 3 in the first 24 hours after its launch Tuesday. Shares dipped 3 cents to $29.49.

Starbucks (SBUX:) was one of the session's notable losers, dropping 2.6% to $26.97, after Bank of America came out with pessimistic comments and put a sell rating on the coffee purveyor.

Elsewhere, AMR (AMR:) was told by Icelandic investor FL Group to spin off its frequent-flier program, saying the move would support its share price. The stock added 25 cents, or 1.2%, to $22.02.

Altria (MO:) submitted a preliminary registration statement to spin off its Phillip Morris International arm in order to separate its businesses. Altria rose 88 cents, or 1.3%, to $69.48.

Commodities were stronger. The front-month November crude contract surged $2.58 to close at $82.88 a barrel. Gold and silver futures also advanced.

U.S. Treasury securities rallied on the long end. The 10-year note was up 13/32 in price to yield 4.57%. The 30-year bond added 28/32, cutting the yield to 4.84%. The dollar touched a new low against the euro before rebounding after the Day's economic releases.

Overseas markets jumped, following gains in U.S. equities during the previous session. Japan's Nikkei 225 and Hong Kong's Hang Seng both soared 2.4% overnight. In Europe, London's FTSE 100 was up nearly 1%, and Germany's Xetra Dax gained 0.8%.

Stocks Slip as Quarter Ends.......


Friday 9/28/2007


Stocks in the U.S. closed the third quarter with minor losses Friday, as market participants digested a host of economic data and a string of comments about the possibility of a recession.

The Dow Jones Industrial Average lost 17.31 points, or 0.12%, at 13,895.63. The S&P 500 was off 4.63 points, or 0.3%, at 1526.75, and the Nasdaq Composite was 8.09 points, or 0.3%, lower at 2701.50.

Breadth was negative and volume was weaker. On the New York Stock Exchange, 2.98 billion shares changed hands, as decliners topped advancers by a 9-to-7 margin. Volume on the Nasdaq reached 1.91 billion shares, with losers outpacing winners almost 3 to 2.

For investors, the day started with new observations from the former Federal Reserve chief, Alan Greenspan, on the problems facing the economy. During an interview on a BBC radio program, he said that the chance the U.S. sinks into a recession is less than 50%, although he is more uncertain of how strong world economies are.

With his latest musing, the ex-central banker said he sees a serious downturn as more likely than he did before. Previously, had guessed that the odds of a recession were one in three.

The head of Freddie Mac (FRE:) echoed Greenspan's concerns, according to an article in Financial Times. CEO Richard Syron put the probability of a recession in a range between 40% and 45%.

"There is always a chance of a recession, and we won't know the effects of the Fed rate hikes for a year or more," said Linda Duessel, senior portfolio manager and market strategist with Federated Investors. "However, there is no evidence we've gone into a recession. The second-quarter GDP report earlier this week showed a rise of 3.8%, and that means we are nowhere near a recession."

The outlook for economic growth also took a blow at Goldman Sachs, which reduced its projection for 2008 U.S. gross domestic product to 1.8%.

Dennis Lockhart, president of the Atlanta Fed, said during a speech that he foresees a "soft landing" for the economy, but that more turbulence could await. William Poole, who runs the St. Louis Fed, argued that the bank did the right thing in cutting rates by 50 basis points earlier this month, but he said investors shouldn't simply assume more easing is assured.

Meanwhile, there was a torrent of data to contend with. The Commerce Department said personal income rose 0.3% last month, slightly below expectations. Consumer spending was up 0.6% in August, greater than the 0.4% forecast. On the positive side, the year-over-year reading on the core deflator fell 0.1 percentage point to 1.8%.

"The Federal Reserve closely watches the price index for personal consumption expenditures, less food and energy," said Peter Morici, professor at the University of Maryland School of Business and former chief economist at the U.S. International Trade Commission, in an emailed statement.

"Oil and other commodity prices continue to surge on international markets, and this is likely to feed U.S. inflation," he added. "The Federal Reserve, by constraining U.S. economic activity, can do little to slow rising commodity prices, and will likely continue to focus on stabilizing credit markets and avoiding recession."

Also on the docket, the Chicago purchasing managers'' index, a measure of Midwestern factory activity, rose to 54.2 this month from 53.8 in August. Analysts had anticipated a slight decline.

"The trend in the survey has certainly softened since the middle of the year," said Ian Shepherdson, chief economist with High Frequency Economics. "But it is certainly not in free fall, and it suggests little change in the national Institute for Supply Management next week."

Construction spending was better than expected, rising 0.2% month over month and exceeding forecasts of a 0.3% drop. Finally, the University of Michigan's consumer sentiment reading slipped to 83.4 from 83.8 previously, and was a bit short of what was predicted.

Despite the sluggishness, the major averages still had a winning three months. The quarter was a wild one, as crude oil touched a record, gold hit its highest point since 1980, the dollar slumped and the subprime mortgage crisis rattled markets around the globe.

The Dow rose 487 points, or 3.67%, for the quarter. The S&P 500 added 1.5%, and the Nasdaq climbed 3.8%.

Among stocks, Jabil Circuit (JBL:) swung to a fiscal fourth-quarter profit, topping Wall Street's estimates by a penny. However, first-quarter revenue guidance was a bit below forecasts, and the shares were off $1.66, or 6.8%, to close at $22.84.

Shares of 3Com (COMS:) soared 34.2% after private-equity group Bain Capital said it would acquire the company for $2.2 billion, a value of $5.30 per share. 3Com ended up $1.26 to $4.94.

Turning to analyst changes, UBS reiterated a buy rating on IBM (IBM:) and initiated 3M (MMM:) as a buy. IBM was 15 cents, or 0.1%, higher at $117.86. Fellow Dow component 3M tacked on 21 cents, or 0.2%, to $93.60.

Commodities were mixed. A day after shooting more than 3% higher, crude oil lost $1.22 to $81.66. Gold and silver futures finished with sharp gains.

U.S. Treasury securities rallied early, but momentum faded late. The 10-year note was down 7/32 in price to yield 4.59%, and the 30-year bond fell 10/32 to yield 4.85%.

As for the currency market, the euro hit yet another record high against the dollar, climbing past $1.42.

Overseas markets were generally weak. In Asia, Japan's Nikkei 225 eased 0.3% overnight, while Hong Kong's Hang Seng was up 0.3%. London's FTSE 100 lost 0.3% after word that embattled mortgage lender Northern Rock sought additional liquidity from the Bank of England. Other European bourses were also lower.

Stocks Eye More Gains.......


Tuesday 10/2/2007



Stock futures were pointing to more gains for the U.S. market Tuesday, a day after the Dow Jones Industrial Average closed at its highest level ever.

Futures on the S&P 500 were adding 2.10 points to 1558.70 and were 3.94 points above fair value. Nasdaq 100 futures were up 3.25 points at 2138.50 and were 4.96 points better than fair value.

On Monday, the major indices started October and the fourth quarter on an upbeat note. Though both Citigroup (C:) and UBS (UBS:) warned that the summer credit meltdown would hurt their profits, traders still sent the financials and the broader market higher.

The Dow jumped 191.92 points, or 1.38%, to 14,087.55, a record finish for the blue-chip index. The Dow was last above the 14,000 level on July 19, the only time it had ever gone out above that mark.

At the same time, the S&P 500 was up 20.29 points, or 1.33%, at 1547.04, and the Nasdaq Composite rose 39.49 points, or 1.46%, to 2740.99.

Citi was in the news again, this time saying it will acquire the rest of Nikko Cordial, a Japan-based broker, for $4.6 billion.

Another deal in the financial sector will see Commerce Bancorp (CBH:) , a New Jersey bank, acquired by Canada's TD Bank (TD:) for $8.5 billion in stock and cash.

Meanwhile, major overseas markets were higher across the board. Tokyo's Nikkei advanced 1.2%, and Hong Kong's Hang Seng surged 3.9%. London's FTSE rose 0.3%, and Frankfurt's Dax was up 0.6%.

Treasury bonds were declining in price. The 10-year note was down 7/32, yielding 4.58%, and the 30-year bond was losing 11/32 to yield 4.81%.

Bulls Rest After Big Run.......


Tuesday 10/2/2007


Stocks in the U.S. closed narrowly mixed Tuesday, as traders kept from making further big bets a day after the Dow Jones Industrial Average closed at its highest level ever.

The Dow slipped about 40.24 points, or 0.29%, to 14,047.31. The S&P 500 lost 0.41 point, or 0.03%, to 1546.63. The Nasdaq Composite added 6.12 points, or 0.22%, to 2747.11.

The session included news of several mergers in the financial sector, as well as another bleak report on the housing market. But overall traders marked time following Monday's blowout start to the fourth quarter.

In the prior session, the Dow jumped 191.92 points, or 1.38%, to 14,087.55, a record finish for the blue-chip index and the first time it closed above 14,000 since July 19. The S&P 500 added 20.29 points, or 1.33%, at 1547.04, and the Nasdaq rose 39.49 points, or 1.46%, to 2740.99.

"Today was essentially a push, but after an incredible up move yesterday it was good we didn't retrace the gains," said Art Hogan, chief market analyst with Jefferies. "There weren't too many drivers today. We took a pause after the big run-up to digest ahead of a plethora of economic data due later this week, all coming to a crescendo with Friday's jobs report."

Breadth was mildly positive Tuesday. On the New York Stock Exchange 3.20 billion shares changed hands, as advancers topped decliners by a 9-to-7 margin. Volume on the Nasdaq reached 1.78 billion shares, with winners outpacing losers nearly 3 to 2.

"This kind of action is what we see in the latter stages of an advance," said Phillip Roth, chief technical market analyst with Miller Tabak. "Laggards are the only stocks higher today, which suggests that traders are panicking that the blue chips are making new highs and are looking for easy profits. The rally may not be through, but it's tough to make progress now."

The big headlines of the day came from the financial sector. Commerce Bancorp (CBH:) , a New Jersey bank, agreed to be acquired by Canada's TD Bank (TD:) for $8.5 billion in stock and cash. Shares of Commerce were off 0.3% to $39.47, and TD Bank shares slid 5.6% to $72.65.

Financial giant Citi (C:NYSE) said will acquire the rest of Nikko Cordial, a Japan-based broker, for $4.6 billion. Earlier this year, Citi spent close to $8 billion to acquire a 68% stake in Nikko.

In addition, Royal Bank of Canada (RY:) laid out plans to buy a Caribbean bank, RBTT Financial Group, for roughly $2.2 billion. Shares of Royal Bank of Canada added 29 cents, or 0.5%, to $56.68.

On the economic front, the National Association of Realtors said its pending home sales index dropped a greater-than-expected 6.5% in August. Economists expected the index to decline 2%.

"This is still absolutely awful, confirming that the existing homes market is now in freefall," said Ian Shepherdson, chief economist with High Frequency Economics. "Moreover, there is no sign yet that the bottom of the market is near. With price declines accelerating, real mortgage rates are very high and rising further."

Even so, the sector was strong, and the Philadelphia Housing Sector Index jumped 2.9%. Hovnanian (HOV:) , Toll Brothers (TOL:) , D.R. Horton (DHI:) , and Lennar (LEN:) all climbed 6% or more.

In the tech sector, Palm (PALM:) reported a fiscal first-quarter loss after the previous close. Excluding items, the smartphone maker beat Wall Street's estimates by a penny, but disappointing guidance for the second quarter sent the stock down 55 cents, or 3.4%, to $15.45.

Rival Research In Motion (RIMM:) shed 2.4% after Raymond James downgraded the stock to market perform from outperform. RIM eased $2.40 to end the session at $96.26.

Elsewhere, Pepsi Bottling (PBG:) said its third-quarter earnings jumped more than 25% from a year ago, surpassing the Thomson First Call average estimate. Revenue for the quarter also topped forecasts. Shares advanced 78 cents, or 2.1%, to $37.97.

Throughout the session, major automakers reported their September sales data. General Motors (GM:) said vehicle sales rose 4% on an adjusted basis last month. Shares of the Dow component climbed $1, or 2.8%, to $37.05.

On the other hand, Ford (F:) reported a 20.5% drop in last month's sales, and Toyota (TM:) posted a 4.4% decline.

Meanwhile, major overseas markets were mostly higher. Tokyo's Nikkei advanced 1.2%, and Hong Kong's Hang Seng surged 3.9%. London's FTSE eased 0.1%, while Frankfurt's Dax rose 0.3%.

Treasury bonds reversed early losses and climbed. The 10-year note ended up 6/32, reducing the yield to 4.52%, and the 30-year bond added 9/32 to yield 4.77%. The beaten-down dollar was rising against foreign currencies.

Commodities ended the day lower. The front-month November crude contract dropped close to $79 a barrel before closing down 19 cents at $80.05 a barrel. Gold and silver futures finished sharply lower.

Semi Sector Weighs on Market.......


Wednesday 10/3/2007


Stocks in the U.S. ended lower Wednesday as a downturn in chip shares and transports more than offset the gains recorded by retailers and homebuilders.

The Dow Jones Industrial Average lost 79.26 points, or 0.6%, to 13,968.05, and the S&P 500 was down 7.04 points, or 0.5%, at 1539.59. The Nasdaq was off 17.68 points, or 0.6%, at 2729.43.

Leading the way lower was a 2.1% drop in the Philadelphia Stock Exchange Semiconductor Sector index. Among the weakest names was Micron (MU:) , which fell 9% on the heels of its quarterly loss that was announced following the previous close.

Also hurting the group were declines of 2% in Intel (INTC:) and 4% in Nvidia (NVDA:) , who were started with underweight ratings at Morgan Stanley. Morgan gave the same treatment to Advanced Micro Devices (AMD:) , but that stock ticked higher.

The firm was kinder to Altera (ALTR:) , PMC Sierra (PMCS:) and ON Semiconductor (ONNN:) , upgrading each to overweight from equal weight, but the individual stocks were mixed nonetheless.

Elsewhere, the Dow Jones Transportation Average surrendered 1.5%, owing to selloffs in Overseas Shipholding (OSG:) , CSX (CSX:) and C.H. Robinson (CHRW:) .

While both the Philadelphia Housing Sector index and the S&P Retail index advanced roughly 0.9%, it wasn't enough to overcome the broader selling pressure on the market.

Earlier, Automatic Data Processing was out with its monthly survey on employment, a report that always comes two days before the government's closely watched payrolls number.

The ADP data showed that nonfarm private employment rose by 58,000 workers last month, as expected, while August's growth was revised down by 11,000 to 27,000. Employment in the service sector grew by 97,000 last month, ADP said, but the goods-producing part of the economy lost 39,000 jobs.

Separately, the Institute for Supply Management said its services index fell to 54.8 from 55.8 a month ago and was slightly under the 55 consensus. Investors will use the most recent figures to help them get a better gauge on the health of the economy and try to determine which way the Federal Reserve is leaning on rates.

Meanwhile, another big bank laid out details of its exposure to the troubled parts of the credit market. Deutsche Bank (DB:) said it will record charges of potentially more than $3 billion related to leveraged loans, structured credit products and mortgage-backed securities.

However, it still expects to post a profit of roughly $2 billion in the third quarter because of gains.

Earlier this week, both Citigroup (C:) and UBS (UBS:) said they would take sizable hits because of the freeze-up in the credit markets a few weeks ago.

General Motors (GM:) provided limited support for the Dow, rising 1.2% to $37.49 on word that Bank of America upgraded the stock to neutral from sell and lifted its price target by $12 to $37.

On the fixed-income side, Treasury prices were tripping. The 10-year note was down 8/32 in price, yielding 4.55%, and the 30-year bond was falling 13/32 to yield 4.80%. The greenback was mixed against other major currencies.

Energy futures weakened after the government's weekly inventory numbers showed a build of 1.1 million barrels of crude in the nation's stockpiles. Analysts had been looking for a draw of 550,000 barrels.

Distillate and gasoline stores fell, whereas increases had been anticipated. Oil was down 11 cents at $79.94 a barrel. Gold edged down, and silver prices rose.

Stocks overseas were divided. Tokyo's Nikkei advanced 0.9%, but Hong Kong's Hang Seng slumped 2.6%. London's FTSE, Frankfurt's Dax and the Paris Cac improved.

Stocks Steady Before Jobs Data.......


Thursday 10/4/2007


The action in U.S. stocks was muted Thursday as traders elected to hold their ground ahead of the monthly jobs report.

The Dow Jones Industrial Average rose 6.26 points, or 0.04%, to 13,974.31, and the S&P 500 added 3.25 points, or 0.21%, at 1542.84. The Nasdaq Composite was up 4.14 points, or 0.15%, at 2733.57.

Declines in transportation sector indices matched advances in utilities, which lead to the weak advances of the major averages. The Nasdaq Transportation Index slid 0.6% and the Dow Jones Transportation Average slipped 0.2%. On the other hand, the Dow Jones Utilities Average rose 1% and the Philadelphia Utility Index added 0.9%.

Breadth was positive. On the New York Stock Exchange, 2.73 billion shares changed hands, as advancers topped decliners by a 5-to-3 margin. Volume on the Nasdaq reached 1.71 billion shares, with winners outpacing losers nearly 8 to 7.

Early on, traders were treated to another round of economic data. In one report, the Labor Department said initial jobless claims rose a greater-than-expected 16,000 to 317,000, above the consensus 310,000.

Ian Shepherdson, chief economist with High Frequency Economics, said the increase in jobless claims "restores claims more or less to their trend level, after two unexpected declines. These declines were due in part to relatively friendly seasonals but more to a drop in unadjusted claims compared to their prior trend. This has now largely reversed."

While the claims data won't affect Friday's nonfarm payrolls data for September, it is the last available information on the job market before the key report. The release is expected to show that the U.S. economy added 100,000 jobs last month after an abysmal August number, when 4,000 jobs were lost.

Many cite that weak nonfarm payrolls report as the reason the Federal Reserve cut its fed funds target rate by 50 basis points when it last met on Sept. 18. The September data should figure prominently when the Federal Open Market Committee next convenes for a two-day meeting on Oct. 30.

"Tomorrow's employment report should help provide more light on the health of the all-important U.S. jobs market and economy," said Michael Sheldon, chief market strategist with Spencer Clarke LLC. "Despite the many headwinds out there, the Fed is now in the game, and I still think the economy avoids a recession and instead muddles through a few more quarters of subtrend growth."

Also on the economic docket, the Census Bureau said factory orders slid 3.3% in August, after a 3.4% rise in July. Analysts were looking for a 2.8% decline.

Overseas, the European Central Bank left interest rates unchanged as it gathered in Vienna. Separately, the Bank of England came out with an announcement that it would not change key interest rates. The euro climbed against the dollar on the news.

European bourses finished little changed following the announcement from the ECB. London's FTSE 100 climbed 0.2%, while Germany's Xetra Dax was flat.

Asian markets, on the other hand, lost ground overnight. Japan's Nikkei 225 dropped 0.6%, and Hong Kong's Hang Seng surrendered 1.8%.

Among U.S. equities, several companies were out with earnings. Family Dollar (FDO:) said fiscal fourth-quarter earnings rose 17% from a year ago and topped the Thomson First Call estimate by a penny. Constellation Brands (STZ:) posted a second-quarter profit that beat expectations, and the company lifted its full-year outlook.

Despite the earnings beat, Family Dollar shed 91 cents, or 3.3%, to $26.53. Constellation, on the other hand, rose 38 cents, or 1.5%, to close at $25.

Elsewhere, Marriott International (MAR:) fell 4.6% after the hotel operator said third-quarter profit fell 7% from a year ago, although results did beat Wall Street's target. However, Marriott offered fourth-quarter guidance below estimates, and the stock eased $2.04 to $42.28.

Other companies were out with profit warnings. Retailer Wet Seal (WTSLA:) cut its third-quarter forecast after the last close, and shares tumbled 18.6%. NutriSystem (NTRI:) dove 33.6% after it also offered a weak third-quarter outlook.

Among analyst calls, Wachovia initiated coverage on several tech names. The firm gave an outperform rating to Intel (INTC:) , Nokia (NOK:) , Dell (DELL:) and Hewlett-Packard (HPQ:) .

Wachovia also started coverage of IBM (IBM:) , Sun Microsystems (JAVA:) , Qualcomm (QCOM:) , Motorola (MOT:) and Texas Instruments (TXN:) at market perform.

Commodities were stronger. Crude oil overcame early weakness and finished up $1.50 to $81.44 a barrel. Gold and silver finished the day with gains.

U.S. Treasury securities rallied on the long end. The 10-year note was up 11/32 in price, cutting the yield to 4.52%. The 30-year bond added 21/32, yielding 4.76%.

The mini-uptrend pause, which started Tuesday, caused the market indices to test their support levels, and the INDU (DJIA) fell slightly below 14,000. Nevertheless, indications are that this near-term correction in the market will be short, shallow and mainly sideways.


There are some early signs that the indices may stop correcting downward, and start to ratchet up again, maybe sometime today. The trade-term indicators are mixed. Some are neutral and some are oversold. An upward rotation in the QQQQ started about 3PM yesterday, and INDU and INX formed bases at the same time. Whether and when intraday the three indices carry through with a rally, as early as today, may depend on catalytic economic news this morning. News with such potential is discussed below along with several stocks in the news.

With a near-term rally expected shortly, this is a good time to examine uptrending stocks.
Absent the recent strength in tech and energy shares.

Technology issues were battered by weakness in semiconductor shares as Morgan Stanley initiated coverage of Intel , Advanced Micro Devices and Nvidia, with underperform ratings due to an "aggressive price environment" and an inventory glut. SanDisk shares dropped 2.9% in concert with weakness in Micron Technology, off 7.7%, which printed its third straight quarterly loss on Wednesday. Energy shares came under pressure as the US Energy Department's weekly inventory report disclosed an unexpected gain of 1.2 million barrels in crude, and oil prices dropped 28 cents to below $80 per barrel. Exxon Mobil shares fell 1%, after reaching another 52-week high Tuesday. And ConocoPhillips shares fell 1.7% on company assertions that refining margins in the third quarter would widely miss second quarter levels. In case readers need any reminder of the Fed's import on equity market prices, a recap may be in order. Following Fed interest rate cuts on September 17, the ensuing rally in equity markets generated 4.8% gains in the DJIA, 6.4% in the Nasdaq, and 4.7% in the S&P 500. It was a dismal August nonfarm payroll and its attendant recession concerns that catalyzed Fed members to adopt its more dovish tone, addressing growth concerns at the expense of inflationary ones, and presenting the Street with unexpected 50 bp rate cuts. With the worst of the credit crunch believed behind us, tomorrow's jobs figure may once again prove pivotal to the Fed decision on October 30-31. Yesterday's data suggest nonfarm payrolls have recovered from August lows, growing in line with expectations of 115K, although perhaps indicating a step-up in unemployment to a 4.7% rate. ADP's healthy 58K adds, in line with expectations, do not include government hirings, which are expected to have rebounded in September; initial jobless claims held steady at 317K, up 16K, still signaling a strong jobs market; Challenger job cuts have declined 9.7% from August levels, and 8.1% from a year earlier. Besides the benign jobs data, yesterday's ISM service index further dampened expectations for an additional interest rate cut as it pointed to improved employment and rising inflation numbers, with the index printing at 54.8 in September, well beyond the 50 point expansion level. Both the Bank of England and European Central Bank held rates at current levels, as expected. 

In the corporate corner, Pier 1 shares advanced 9.8% due to insider buying and improved turnaround prospects. Radian shares fell 9.5% on news that Deloitte and Touche had quit as company auditors; the firm recently reported one of its market value collateralized debt obligations of asset-backed securities was in trouble, although S&P has maintained the company's AA-rating. CSX shares fell 2.6% on a lower rating by Morgan Stanley. Bear Stearns (off 0.7%) announced 310 mortgage-business firings; the company will host its semi-annual investor meeting today. Credit Suisse added to its 150 job cuts with 170 more in its commercial mortgage business. Las Vegas Sands shares fell 11.8% as investors realized the rumored 100% revenue gains likely to come in at a still-healthy 55% from Macau growth; Wynn shares dropped 9.9%. However, over the past 52 weeks Las Vegas Sands' shares are up 90%, and Wynn's up 120%. Marriott International posted third quarter results of 31 cents adjusted, topping estimates by one cent.

Jobs Report Brings Out Bulls.......


Friday 10/5/2007


Stocks jumped Friday after a stronger-than-expected report on U.S. job growth helped soothe fears of a broad economic slowdown.

The Dow Jones Industrial Average rose 91.70 points, or 0.66%, to 14,066.01, having touched a record intraday high of 14,124.54. The S&P 500 added 14.75 points, or 0.96%, to 1557.59, an all-time closing high.

The Nasdaq Composite surged 46.75 points, or 1.71%, to 2780.32, boosted by a strong earnings report from big tech name Research In Motion (RIMM:Nasdaq) .

Paul Nolte, director of investments with Hinsdale Associates, said that even though the averages lost some steam before the close, it was a positive end to a strong week that may carry over to next week, when earnings season unofficially kicks off with Alcoa's (AA:) report Tuesday.

"The earnings reports next week may actually trump estimates and the market will sustain," said Nolte. "Expectations are pretty low and investors have discounted the financial sector, so we may look at the other sectors like industrials and health care do."

The major indices notched their fourth winning week in a row. The Dow added 1.2%, the S&P 500 climbed 2%, and the Nasdaq jumped 2.9% for the week.

Breadth was overwhelmingly positive Friday. On the New York Stock Exchange 3.04 billion shares changed hands, as advancers topped decliners by a 3-to-1 margin. Volume on the Nasdaq reached 2.02 billion shares, with winners outpacing losers nearly 7 to 3.

Stocks'' gains came after a Labor Department report said that the U.S. economy added 110,000 workers last month, easing, at least momentarily, the worst concerns about the health of the job market. Economists had expected 100,000 jobs to be added last month, according to Bloomberg.

August's number was revised higher and now shows a gain of 89,000 jobs. Last month, the Labor Department said 4,000 jobs were lost. Many market participants cited August's weak nonfarm payrolls report as the reason the Federal Reserve slashed its fed funds target rate by 50 basis points when it last met on Sept. 18.

While stocks climbed on the new data, the numbers suggest that the Fed will be reluctant to cut rates again. The policymaking Federal Open Market Committee next convenes for a two-day meeting on Oct. 30.

"As much as the employment report was good news for the market, we're now dealing with the fact that a rate cut was premature," said Nolte. "Should the Fed still cut rates over the next few months? This is the conundrum the market has found itself in. We're seeing some large month-to-month swings in revisions, so we'll be looking for confirming factors."

Marc Pado, U.S. market strategist with Cantor Fitzgerald, argued that the revision to August's data should excite investors.

"Think of the fact that we got a 50-basis point rate cut based on August's decline of 4,000 jobs. That number was revised to 89,000. Now we got lower rates and a modest growth economy. It doesn't get any better than that," he said.

As expected, the unemployment rate rose to 4.7% from 4.6%, while average hourly earnings rose 0.4%, slightly above expectations.

"A rising unemployment rate is more or less a done deal," said Ian Shepherdson, chief economist with High Frequency Economics. "Nothing motivates the Fed to cut rates more than a loosening labor market."

Shepherdson added that investors should ignore the increase in average hourly earnings, as this will slow as unemployment rises.

U.S. Treasury prices were sharply lower on the data. The 10-year note was off 1-2/32 in price, pushing the yield to 4.65%. The 30-year bond was tumbling 1-24/32 in price, yielding 4.87%.

Several equity names were in the headlines. Merrill Lynch (MER:) said that it will record nearly $5.5 billion in writedowns tied to the Summer's subprime mortgage meltdown and credit crunch. The charges will result in a third-quarter loss of 50 cents a share, the financial giant said. Merrill Lynch gained $1.89, or 2.5%, to $76.67, as investors hoped the worst was behind the company.

Another big bank, Washington Mutual (WM:) , also warned of heavy writedowns and projected a 75% decline in third-quarter profits. WaMu, however, ended up 79 cents, or 2.2%, to $36.07.

Also in the financial sector, ABN Amro's (ABN:) shareholders are set to vote on a $101 billion offer for the bank made by a consortium led by the Royal Bank of Scotland. A published report said a competing bid from Barclays (BCS:) is likely to be unsuccessful.

Research In Motion surged nearly 13% after the BlackBerry maker posted in-line fiscal second-quarter results and guided higher for the current quarter. RIM added $12.83 to $113.37.

Also after last close, Alcoa said it would incur a charge of $845 million in the third quarter due to restructuring costs. The company expects to sell its packaging and consumer businesses by next year. Alcoa rose $1.13, or 3%, to $38.79.

Fellow Dow component General Electric (GE:) was also out with news late, saying it will eliminate 1,400 jobs. The cuts come as GE plans to close several plants in its lighting business as it shifts focus away from incandescent bulbs to more-energy-efficient products. Shares of GE advanced 7 cents, or 0.2%, to $41.77.

The dollar rose, while commodities were mixed. Crude oil slid 11 cents to close at $81.22 a barrel. Gold was tacking on $3.40 to $747.20 an ounce.

Overseas indices were mostly higher. Hong Kong's Hang Seng Index jumped 3.2%, and both London's FTSE 100 and Germany's Xetra Dax added 0.7%. Japan's Nikkei 225 slipped 0.2% overnight.

Stocks Sluggish to Start the Week.......


Monday 10/8/2007


Stocks were struggling early Monday as traders turned cautious at the start of the first busy week on the earnings front.

The Dow Jones Industrial Average was down 9 points at 14,057, and the S&P 500 was losing 2 points at 1556. The Nasdaq Composite was up 4 points to 2784, as Google (GOOG:) rose 1% and topped the $600 level for the first time.

Last time out, a stronger-than-expected September jobs report helped the major averages close out the week with gains.

The Dow rose 91.70 points, or 0.66%, to 14,066.01, having touched a record intraday high of 14,124.54. The S&P 500 added 14.75 points, or 0.96%, to 1557.59, an all-time closing high. The Nasdaq surged 46.75 points, or 1.71%, to 2780.32.

Indices notched their fourth winning week in a row. The Dow added 1.2%, the S&P 500 climbed 2%, and the Nasdaq jumped 2.9% for the week

Traders, though, were nervous ahead of the earnings reporting season, which unofficially kicks off Tuesday when Dow component Alcoa (AA:) posts its results.

The earnings calendar was light to start the week, however, with Yum! Brands (YUM:) the only S&P 500 company due out with results. Analysts expect Yum! to report a third-quarter profit of 45 cents a share when it announces after the closing bell.

"The market is at high levels, so this is a perfect day for investors to step aside and let the market digest," said Peter Cardillo, chief market economist with Avalon Partners. "Earnings won't really pour in until next week, so we'll maintain this cautious attitude through this week."

While there were few earnings reports, there were several mergers in the spotlight. German database firm SAP (SAP:) said over the weekend that it will acquire French software maker Business Objects (BOBJ:) for $6.8 billion in cash. SAP was down $2.93, or 5%, to $56.30. Business Objects, on the other hand, rallied 15.5% to $58.06.

In other M&A activity, United Industrial (UIC:) jumped 6.5% after Textron (TXT:) agreed to purchase the maker of unmanned aircraft for nearly $1.1 billion.

Elsewhere, Vodafone (VOD:) said it will buy the Italian and Spanish assets of Tele2 AB for about $1.1 billion. Vodafone recently was down 29 cents, or 0.8%, to $34.68.

Among ratings changes, JPMorgan downgraded Merrill Lynch (MER:) to neutral from overweight after the financial services company said last week it expects $5 billion in writedowns due to the credit crisis over the summer. Shares of Merrill were off $1.33, or 1.7%, to $75.43.

Deutsche Securities cut its ratings on several companies in the real estate sector. Kimco Realty (KIM:) , Avalon Bay (AVB:) , Boston Properties (BXP:) and Public Storage (PSA:) all were downgraded to hold from buy.

Commodities were lower. Crude oil was down $1.32 to $79.90 a barrel. Gold was losing $7 to $740.20 an ounce, and silver eased 6 cents to $13.42 an ounce.

Due to the Columbus Day holiday, bond markets were closed in the U.S. and the economic docket was bare.

European bourses were mimicking the sluggish action of the U.S. averages. London's FTSE 100, Germany's Xetra Dax and the Paris CAC 40 were all losing 0.3%. Overnight in Asia, Hong Kong's Hang Seng slipped 0.2% while China's CSI 300 Index jumped 1.3%. Japan's Nikkei 225 Index was closed.