CLOSING WRAP-UP, June 8
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June 8, 2007
Volatile day for stocks, but the bulls win the battle this time. The Dow ($INDU) gained 157.66 points to close at 13,424.39. The S&P 500 ($SPX) tacked on 16.95 points to 1,507.67. The NASDAQ ($COMPQ) added 32.16 points to close at 2,573.54. Volume fell off from Thursday’s session with the NYSE trading 1.56 billion shares and the Naz turning over 1.95 billion shares. Market breadth was positive by a 23-to-10 and 20-to-10 margin on the Big Board and Naz respectively.
After three sessions of large losses, traders decided to buy the dip. A drop in bond yields provided the impetus and despite a volatile session, the bulls were able push stocks sharply higher. A drop in oil prices and a larger than expected drop in the trade deficit in April also helped the bull’s cause.
Overnight, the 10-year Treasury bond yield reached a high of 5.25 percent. Thursday’s sharp decline came after bond yields moved above the psychological five percent level. However, this resulted in traders buying bonds, pushing the yield down to 5.12 percent today.
News the U.S. trade deficit fell by 6.2 percent also benefited stocks and bonds. The deficit for April came in at $-58.5 billion when estimates were for a reading of $-63.5 billion. This decline was the largest monthly drop since October 2006. However, some economists were disappointed that the trade deficit with China actually increased.
Crude prices fell by $2.17 a barrel Thursday to close the session at $64.76. this put oil down 36-cents for the week. Prices had been rising on concerns about a tropical storm that hit the Persian Gulf. However, there wasn’t any significant damage, only some delays. Demand has fallen off for gasoline, only up 1.5 percent year on year, but every time prices fall, demand increases, so retail prices aren’t expected to change in the near term.
In individual stock news, shares of National Semi (NSM) rose 14.70 percent to a new 52-week high of $29.58. The chip stock benefited from a stronger than expected earnings report, an upbeat outlook and a stock buyback of $2 billion. Overall, the Philly Semiconductor Index ($SOX) rose 3.10 percent, but remains below 500 at 488.36.
Shares of McDonald’s (MCD) saw solid gains Friday, rising 2.4 percent to $51.41. The fast-food king announced that global same-store sales rose 8.7 percent in May. The company benefited from a “Shrek the Third” movie promotion as well as from additional menu items in European stores.
Jody Osborne
Senior Staff Writer & Options Strategist
Optionetics.com ~ Your Options Education Site
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