Reply #48: quitting time

[ozymandius]

Dow 10,833.73 +28.18 (+0.26%)
Nasdaq 2,231.66 +9.24 (+0.42%)
S&P 500 1,262.79 +3.17 (+0.25%)
10-Yr Bond 44.86 +0.20 (+0.45%)
NYSE Volume 2,065,173,000
Nasdaq Volume 1,666,055,000

Today marked the fifth consecutive day of a higher start that fizzled. The difference today, though, was that the market's majors clung to modest gains and finished the session on positive turf. A plethora of M&A activity, some strong reports on the earnings front, and good third quarter GDP data collectively catalyzed an bullish air that dominated, but faded, during the session's final hour. Wide-spread buying across the Materials sector (+1.6%) allowed it to occupy the driver's seat for the duration of trading. The soaring steel industry, following positive analyst comments on Nucor (NUE 67.84 +2.29), served as one of the broader market's best sources of support. Seven other sectors contributed upside. Mirroring the overall market, the influential Financial sector finished with well-pared 0.4%. While support came from several corners, multi-line insurers fared especially well as American International Group (AIG 66.44 +1.02) enjoyed extended buying following yesterday's report that it will purchase $3.5 billion worth of property in Japan. In spite of the Treasury market's submerged status, the sector held higher all day; Utilities, the other rate-sensitive sector, did not perform as well, though. Broad-based selling took that sector to a market-dragging -1.1%. As was the case with Financial, the Technology sector (+0.2%) erased much of its intra-day gain and thereby revoked some leadership. Today's host of merger activity mainly occurred within the Tech sector, and included Seagate Technology's (STX 20.20 +0.60) $1.9 billion bid for Maxtor (MXO 6.80 +2.28) - a move that will unite two of the largest disk-drive makers. Google (GOOG 426.25 -3.49), meanwhile, announced that it will pay $1 billion for a 5% stake in Time Warner's (TWX 17.62 -0.12) AOL, while IBM (IBM 83.12 +0.64) has proposed a purchase of Micromuse (MUSE 9.93 +2.72). With respect to the earnings front, ATI Technologies (ATYT 16.47 -0.03) beat analysts' profit expectations, and Blackberry-competitor Palm (PALM 31.93 +1.03) issued upside profit guidance for its fiscal Q2. However, relative weakness in semiconductors and declines in several tech bellwethers largely offset the gains that corporate news fostered. FedEx (FDX) topped the list of upside earners. The company's much better than expected report, and upped fiscal 2006 forecast, lifted Industrials (+0.5%) while also sparking wide-spread buying that's sent the Dow Jones Transportation Average 2.3% higher. Consumer Staples (+0.3%) also held steady today, but the Consumer Discretionary sector (+0.1%) wavered. Following reports that Kirk Kerkorian's Tracida sold more that 20% of its stake in General Motors (GM 19.10 -0.75) this month, the automaker again dragged the sector and the Dow. Nike (NKE 85.75 -2.73), despite beating earnings expectations, was another weak link due to the disappointing future orders it reported. Earnings-driven strength in Family Dollar (FDO 24.40 +1.32) and optimism ahead of Bed Bath & Beyond's (BBBY 41.26 +0.44) earnings report helped retailers counter the decliners; that industry demonstrated resilience in the face of crude futures' 0.9% rise. Conversely, that uptick was to the Energy sector's (+0.1%) benefit, and followed data that showed greater than expected drawdowns in gasoline and distillates (i.e., heating oil) last week. On the other hand, an unexpected build in crude supply paired with relative weakness in oil storage and transport in stifling the sector. With respect to the final Q3 GDP report, the data was marginally revised to reflect a 4.1% annual rate of increase - the strongest gain in a year and a half and the tenth consecutive quarter of economic growth above 3.0%. The inflation-gauging chain deflator, meanwhile, was revised slightly upward to 3.3%. While the reflection of solid growth alongside the chain deflator's rise somewhat disturbs inflation-flustered bond traders, the data was essentially "old news" that has be followed by more recent indications that growth remains solid amid contained inflation. As such, neither the bond nor stock markets overly reacted to the data. NYSE Adv/Dec 2068/1214, Nasdaq Adv/Dec 1842/1177