CLOSING WRAP-UP, Feb. 1
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February 1, 2007
Gains continue Thursday on tame inflation data and despite a drop in manufacturing activity. The Dow ($INDU) ended the session with a gain of 51.99 points to 12,673.68. The S&P 500 ($SPX) added 7.70 points to 1,445.94. The NASDAQ ($COMPQ) tacked on 4.45 points to close at 2,468.38. Volume was strong on the session with the NYSE trading 1.69 billion shares and the Naz turning over 2.22 billion. Market breadth was positive by a 24-to-9 and 20-to-11 ratio on the Big Board and Naz respectively.
The Dow closed at a new all-time high Thursday with just 7 of its 30 components finishing in the red. Exxon Mobil (XOM) shares tacked on 1.32 percent after announcing that profits came in at a record $39.5 billion in 2006. However, during the fourth-quarter, XOM saw its profits fall about four percent from the third-quarter. Nonetheless, earnings per share were 25-cents higher than estimates, coming in at $1.76.
In other earnings news, Google (GOOG) announced that it nearly tripled its profits in the fourth-quarter. Earnings exceeded $1 billion for the quarter and exceeded estimates, but traders seemed to be looking for more with the stock falling 3.94 percent to $481.75. The overall feeling was that Google’s results were solid, but not spectacular and when you have a high valuation, traders want to see spectacular.
Economic news was a little mixed Thursday ahead of Friday’s employment report. The ISM Index, which measures manufacturing activity, fell into contraction territory for the second time in three months. The index fell to 49.3 in January from 51.4 in December and well below estimates for a reading near 52.0. This keeps hopes alive for future rate cuts, especially when we look at the benign inflation data released today.
The core personal consumption expenditure [PCE] index showed a benign 0.1 percent growth rate in December. This was below expectations and confirmed the view the Fed has taken that inflation is easing from prior monetary policy. At the same time, personal incomes came in as expected at growth of 0.5 percent.
After the bell Thursday, Amazon.com (AMZN) announced that its profits were cut in half in the fourth-quarter, yet the stock is still seeing gains in after-hours trading. AMZN made 23-cents a share on income of $98 million. Sales were up a solid 34 percent to $3.99 billion. Both figures easily surpassed expectations and the company also raised its guidance for 2007.
Jody Osborne
Senior Staff Writer & Options Strategist
Optionetics.com ~ Your Options Education Site
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