That of course is not the reason...the dems will not move the market.
Twice this morning, the Dow Jones industrials jumped past 12,000. Twice, it has fallen back.
And, with 90 minutes left in the day, it looks like it may try for a third time to stay above 12,000.
The Dow was up as much as 99 points -- to 12,049 -- shortly after the open, but by 3:20 p.m. ET, it was up 31 points, or 0.2%, at 11,981.
The rest of the market was struggling. The Standard & Poor's 500 Index was up less than a point at 1,365, and the Nasdaq Composite Index was down 8.4 points, 0.4%, at 2,337. There was weakness in finance, energy, chip, housing, networking and telecommunications stocks.
What happened? Profit-taking seems to be the biggest issue. Traders who trade on technical indicators, like the 20-hour and 50-hour moving averages, started dumping as soon as the S&P 500 hit the 20-hour average.
Sure, it sounds obscure, but that's how these people make money.
The market blasted past 12,000 for the first time ever right after the open on the strength of earnings from IBM (IBM, news, msgs), which issued a fairly strong earnings report after the bell last night. The stock was up more than 5% at the open but fell back to a 4% gain.
But JPMorgan Chase (JPM, news, msgs) caused some queasiness when it said that, although its investment banking business was quite strong, its banking operations in the third quarter were stressed by higher interest rates. So, the shares have fallen more than 1.6%. And then the market began to weaken more generally.
Today's Dow consists of 30 stocks ranging from chip giant Intel (INTC, news, msgs) and auto giant General Motors (GM, news, msgs) to drug giants Merck (MRK, news, msgs) and Pfizer (PFE, news, msgs). It is used by investors as a way to benchmark the overall stock market and to judge how their own investments are performing.
Compiled by Dow Jones & Co., the average has had 30 stocks since 1928. The index first crossed 1,000 in 1972 but fell back and didn't cross 1,000 again until the fall of 1982. It hit 10,000 in the spring of 1999 and peaked at 11,722 in early 2000 before the dot.com bubble and the Sept. 11 terrorist attacks gutted the overall market. The average closed above 11,722 again on Oct. 3.
Oil prices drag energy stocks lower
Oil prices dove this afternoon after the Energy Department reported a big increase in domestic oil inventories.
Crude was down to $57.70 a barrel, off $1.23 or 2.1%.
The decline took ExxonMobil (XOM, news, msgs) and Chevron (CVX, news, msgs) both down 0.4%. Oil services giant Halliburton (HAL, news, msgs) was off 2.2%. Schlumberger (SLB, news, msgs) was off 2%.
Semiconductors hit hard
Intel (INTC, news, msgs) might be up 0.3%, because it beat admittedly low expectations for the third quarter, but it was one of just two stocks in the Philadelphia Semiconductor Index ($SOX.X ) to show a gain today. The other was Freescale Semiconductor (FSL.B, news, msgs). The index was down 2.2%.
The loser among chip stocks was chip equipment maker Novellus Systems (NVLS, news, msgs), down nearly 7.3% after it forecast lower-than-expected fourth-quarter sales. The company on Tuesday said its third-quarter profit tripled, beating Wall Street estimates, according to a Thomson Financial poll. The company sees fourth-quarter earnings between 49 cents and 53 cents per share on between $415 million and $430 million in revenue. Wall Street projects earnings of 50 cents per share on $444.9 million in revenue.
Building permits suggest a weaker housing market
The Commerce Department offered a good news/bad news picture of home construction.
The department said housing starts hit an annual pace of 1.772 million units in September, compared with an upwardly revised 1.674 million pace in August.
Economists had forecast that September housing starts would instead edge down to 1.64 million units from the originally reported August pace of 1.665 million.
But building permits, which many see as a better indicator of future activity, were down 27% from a year ago and 6.3% from August. Single-family home permits were off 32% from a year and 6% from August.
Housing stocks weakened after the numbers were digested. The Philadelphia Housing Sector Index ($HGX.X) was down 0.4%. Lennar (LEN, news, msgs) was off 1.4%. M.D.C. Holdings (MDC, news, msgs) was off 0.7%.
Gasoline prices pull CPI lower
A big drop in energy prices helped pull overall U.S. consumer prices down steeply in September, the government said this morning, sparking hopes the economy might not be slowing as rapidly as thought.
The Labor Department said overall U.S. consumer prices fell 0.5% in September, although core prices, which exclude food and energy, edged up enough to keep inflation a concern just days ahead of the Federal Reserve's next policy-setting meeting.
The Fed’s Federal Open Market Committee meets Tuesday in Washington, D.C.
The Labor Department's core consumer price index, an inflation gauge that strips out volatile food and energy costs, rose 0.2% in September, in line with Wall Street economists' expectations. It also matched the core price gains in August and July.
"Core CPI was as expected, but it is still a bit too hot for the Fed's liking," Alex Beuzelin, a foreign exchange market analyst for Ruesch International in New York, told the Associated Press.
He doesn’t see the Fed doing anything other than leaving its federal funds rate at 5.25% next week. He also is skeptical the Fed will cut rates any time soon. Many market bulls see the Fed cutting rates several times in 2007.
Spinoffs for Verizon, Time Warner
Two big media players announced plans today to spin off business units into public entities.
Verizon Communications (VZ, news, msgs) said it will spin off its yellow pages directory business into a new public company, to be called Idearc.
The phone giant and Dow component, which announced plans to shed its directory business late last year, said shareholders will receive one share of Idearc for every 20 shares of Verizon held on Nov. 1. Verizon was up 0.2% today.
AndTime Warner's (TWX, news, msgs) cable unit, the second-largest U.S. cable-television provider, filed for an initial public offering that may raise as much as $6.9 billion and give investors a stake in the business for the first time.
Proceeds will go to creditors of Adelphia Communications, which took 16% of the company when Adelphia was bought by Time Warner Cable in July, Bloomberg News said.
Stamford, Conn.-based Time Warner Cable, estimated by Morgan Stanley to be worth as much as $43 billion, won't receive any proceeds from the IPO. But parent Time Warner will keep an 84% stake in the cable business, which is its fastest-growing unit. Time Warner was up 0.8%.
Morning news roundup
Will anybody watch a 2-minute TV spot? Dick Wolf thinks not. The creator of the various incarnations of “Law and Order” told The Wall Street Journal today he thinks the CW’s new “Content Wraps” -- 2-minute commercial segments intended to be as entertaining as the shows themselves -- represent a pipe dream. “The bottom line is Americans don't like commercials,” he said in an interview (subscription required). Wolf understands the relationship between television and advertising. As an account rep, he created the slogan "You can't beat Crest for fighting cavities" for Procter & Gamble (PG, news, msgs).
Icahn at it again. Shares ofLear Corp. (LEA, news, msgs) were down this afternoon after a 15% gain yesterday. The reason: The car seat maker said it sold $200 million worth of its shares -- to Carl Icahn. The Southfield, Mich.-based company plans to use the proceeds from the sale for "strategic investments" as it battles for financial survival in a struggling industry, BusinessWeek reported. The company on Oct. 17 estimated that it lost $50 million in cash during the third quarter, including capital expenditures of approximately $85 million. The stock sale agreement provides Icahn with the right to serve on Lear's board of directors, which would give the billionaire investor a larger say in how the company manages its business.
Coming to you -- maybe in 2020 -- Chinese cars. Despite growing anxiety that the Chinese would quickly seek to conquer yet another important industry, it now looks as if it will be at least another several years before Chinese automakers start exporting large numbers of cars they both design and make. They had intended to start selling their own brands in the United States as soon as 2007 but have pushed off their plans by a couple of years. And now, some Chinese auto executives admit, it could be as late as 2020 before they will be ready to take on the world auto market.
-- Charley Blaine |
