Closing Wrap-Up, May 12
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May 12, 2008
Stocks rally Monday on decline in oil prices and merger rumors. The Dow ($ INDU) gained 130.43 points to close the session at 12,876.31. The S&P 500 ($ SPX) added 15.30 points, closing at 1,403.58. The NASDAQ ($ COMPQ) tacked on 42.97 points to 2,488.49. Volume remained extremely light Monday with 1.05 billion shares traded on the NYSE and 1.76 billion shares exchanged on the Naz. Market breadth was positive by a 22-to-9 and 20-to-9 margin on the Big Board and Naz respectively.
The session got off to a bullish start on a decline in crude prices, ending record closes for several days. Ultimately, oil prices fell $1.73 a barrel to close at $124.23. A gain in the value of the dollar helped push prices lower, but energy remains elevated and is having a negative impact on the consumer sentiment and consumer spending. The fall in crude did help retailers Monday with the S&P Retail Index ($ RLX) up 2.74 percent to close at 405.89.
In earnings news, HSBC ( HBC) stated that for the first quarter earnings were higher than expected. HBC announced that growth in markets more than offset a $3.2 billion loss in U.S. loan write-downs. HBC also stated that its outlook is unclear given the uncertainty in the U.S. housing sector and problems with pricing pressures. Nonetheless, HBC shares rose 3.1 percent on the session to close at $86.68.
MBIA ( MBI) also saw gains Monday despite the fact the bond insurer lost $2.41 billion in the first quarter. Initially, this led to sharp declines for MBI shares, but the stock ultimately closed with a gain of 4.5 percent to $9.85. The company reassured investors that it has plenty of liquidity and this helped push the stock higher. Overall, MBI shares are at $9.85, well below their 52-week high above $70.
Tech stocks benefited Monday after the Wall Street Journal reported that Hewlett-Packard ( HPQ) is in talks to purchase Electronic Data Systems ( EDS) for at least $12 billion. EDS shares rallied nearly 28 percent on the news to a price of $24.13 with HPQ shares falling 4.68 percent to $46.83. Shares of Research in Motion ( RIMM) also rallied Monday, up 6.9 percent to $141.97. RIMM is the maker of the popular BlackBerry phone and announced a new model.
Economic news was non-existent Monday, but will be a factor this week. Tuesday''s calendar will include the retail sales report, import and export prices, as well as a speech by Fed Chairman Bernanke.
Jody Osborne
Senior Writer & Options Strategist
Optionetics.com ~ Your Options Education Site
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