Reply #76: fork-stickin' time [View All]

[ozymandius]

Dow 11,011.90 +52.59 (+0.48%)
Nasdaq 2,318.69 +13.07 (+0.57%)
S&P 500 1,290.15 +4.70 (+0.37%)
10-Yr Bond 43.79 0.00 (0.00%)
NYSE Volume 2,277,418,000
Nasdaq Volume 2,010,547,000

4:20 pm : For the fifth consecutive session, the equity market's major averages closed higher and extended the momentum with which they rang in 2006. While they had maintained positive footing since the morning, the Dow's clearance of a key technical level at which it had not closed since 2001, 11,000, helped increase afternoon buying efforts.

The market lacked much trading catalyst today, as both the corporate and economic fronts were deficient of much market-moving news. Nonetheless, a bullish bias dominated and sent seven of the ten economic sectors higher. On account of a surging auto manufacturing industry, soaring homebuilders, several pockets of relative strength across the retail board, and a sharp pullback in the price of crude futures, the Consumer Discretionary sector (+0.9%) assumed the driver's seat. With respect to auto makers - the commencement of the Detroit Auto Show put the industry in the spotlight as investors attempt to gauge the prospects for returns to profitability. Optimistic comments from GM's (GM 22.40 +1.60) CEO Rick Wagoner and Goldman Sachs' upgrade of GM shares to In-Line from Underweight sent the Dow component and its peers (F and DCX) to the top of the market. Pulling back from recently-hit three-month highs, crude futures dropped 1.3% to $63.40 per barrel and served as another measure of support. As a separate result, the Energy sector's leadership was stunted; the sector demonstrated resilience, however, and closed at the unchanged mark.

A 0.4% advance in the weighty Financial sector lent the most substantial muscle to today's market. A pair of bellwether upgrades - Prudential raised its rating on both J.P. Morgan (JPM 40.67 +0.65) and Merrill Lynch (MER 69.68 +0.98) - helped lengthen the advance that last week's FOMC minutes initiated. Although the Fed's tightening cycle may be nearing its end, the recognition that interest rates will still go higher may have capped the sector's rise; continued attention to the flat yield curve also remains a bearish overhang. Technology wavered somewhat, but still-soaring semiconductors and relative strength in hardware, despite IBM's (IBM 83.73 -1.22) downgrade, helped the sector maintain the spotlight and extend the 5.6% gain it's registered this year. Positive comments on the semi equipment industry out of Piper Jaffray, along with a handful of upgrades and target increases across the sector (including CSCO, KLAC, QCOM), underpinned the bullish bias that has pervaded Technology.

Broad-based buying took Healthcare +0.5% north; following Boston Scientific's (BSX 25.88 -0.36) assertion that it will divest over $4 billion in assets to Abbott Labs (ABT 42.41 +1.52) as part of its acquisition of Guidant (GDT 69.00 +1.65), ABT emerged as a particular bright spot. With respect to the BSX and GDT deal, the former formalized its $25 billion offer, which represents a 12% premium to the revised Johnson & Johnson (JNJ 62.99 +0.39) bid, over the weekend. Further to the M&A front, Tyco (TYC 31.04 +1.06) is reportedly considering a plan to further break up the conglomerate, and Texas Instruments finalized the sale of its sensors and control business to private equity firm Bain Capital for $3 billion. Meanwhile, Duke Energy (DUK 27.05 +0.06) will purchase Duke Energy North America's entire fleet of power generation assets outside the Midwest for about $1.54 billion. The action is reflective of the M&A wave that is expected to persist during 2006.

Today's single piece of economic data was the November consumer credit report - which unexpectedly showed a $0.6 billion decline (consensus +$5 billion). The data did not have much affect on trading within the either the stock or bond markets, though. Two rounds of Fed speak similarly went largely unnoticed, as comments from Atlanta Fed president Guynn and Kansas City Fed president Hoenig delivered little surprise.DJ30 +52.59 NASDAQ +13.07 SP500 +4.70 NASDAQ Dec/Adv/Vol 1193/1872/2.00 bln NYSE Dec/Adv/Vol 1090/2208/1.67 bln