Markets & Finance

Stocks Finish Mixed As Oil Prices Rise


Stocks finished mixed on Wednesday as oil prices headed higher and investors braced for more readings on the economy. A reading on inflation showed consumer prices were relatively tame.

The Dow Jones industrial average fell 11.68 points to 10,674.76. The broader Standard & Poor's 500 index rose 2.2 points to 1,231.21. The tech-heavy Nasdaq composite index edged up 1.19 points to 2,187.93.

December crude oil futures rose 90 cents to $57.88 a barrel after Wednesday's weekly EIA inventory data showed a draw down in oil and gasoline supplies, rather than a rise in crude stocks. Forecasts for colder temperatures in the U.S. sent natural gas prices up nearly 7%, says Action Economics.

A few more economic reports are coming out Thursday. October housing starts is expected to be down a bit to 2.07 million units. Recent strength in housing permits, which jumped in September to the highest rate since 1973 of 2.189 mln units, implies the number could be higher, says Action Economics. Rebuilding after the hurricanes should also provide a boost to construction, says Action Economics. In general, the market has given housing data increased attention recently, given the importance to the outlook and some signs of slowing, says Action Economics.

The headline November Philly Fed index is expected at 16.3 from October's reading of 17.3. The November reading should imply that activity in this region remains solid, says Action Economics.

Thursday's release of October industrial production is expected to rebound 1.0%, which would leave capacity utilization at 79.7% from 79.0%. Weekly jobless claims will also be reported.

In economic news Wednesday, the consumer price index (CPI) rose 0.2% overall and on the core in October following gains of 1.2% and 0.1%, respectively, in September. On a year-over-year basis, CPI is up 4.3% and the core is up 2.1%, vs. 4.7% and 2.0%, respectively in September, but October rates are well of recent highs. Energy prices reversed some of their strength over the last three months, falling 0.2%. Gas prices dropped 4.5%. Food prices rose 0.3%, while housing was up 0.9% with fuels and utilities up 4.4%. The core data is relatively tame.

U.S. business inventories rose 0.5% in September following a 0.4% increase in August. Sales were up 0.6% after a revised 0.7% in Augsut (0.4% previously). The inventory/sales ratio fell to a record low of 1.25. The combination of data should be bullish for the economy, but these data will take a back seat to CPI, says Action Economics.

The U.S. Senate Banking Committee approved the nomination of Ben Bernanke to succeed Fed Chairman Alan Greenspan, and has sent the nomination to the full Senate for its vote. "It was virtually clear sailing for Bernanke through the Banking Committee, and we suspect it will be so with the Senate as well, enabling him to take over a 14-year governor term, and 4-year chairmanship, on Feb. 1," says Action Economics.

A drop in General Motors (GM) helped drag down the Dow average, on reports that the United Auto Workers said it needs Delphi to revise its current offer or parties won't be able to come to terms on a new agreement. A strike is seen as damaging for GM, which is Delphi's main customer.

In earnings news, Abercrombie & Fitch (ANF) posted third-quarter earnings per share of 88 cents, vs. 64 cents a year ago (non-GAAP), on 25% higher total companies same-store sales and 35% higher total company sales. The retailer increased its fiscal year 2006 EPS guidance to $3.44-$3.49, excluding charge.

Tyco International (TYC) shares rose after the company reported fourth-quarter earnings per share of 44 cents, vs. 22 cents a year ago, on a 4.1% revenue rise. It sees 40-42 cents first-quarter EPS from continuing operations. It sees fiscal year 2006 EPS from continuing operations increasing by approximately 10% over fiscal year 2005's.

Gilead Sciences (GILD) and Roche ended their Tamiflu dispute. The companies will establish joint committees to oversee manufacturing, commercial, pandemic planning for the product. Deutsche Bank says the deal favors Gilead -- it reiterated a buy opinion.

The New York Stock Exchange reportedly reached a settlement with a group of dissident seat holders who objected to terms of the NYSE's planned acquisition of Archipelago Holdings (AX) and sued to block the deal. This clears the way for NYSE members to vote on the deal.

Treasury Market

Treasury yields fell following reports foreign purchases of U.S. securities rose to a record $101.9 billion, along with the vote of confidence for Ben Bernanke as Fed chief. The tame core CPI print in October relieved a little inflation anxiety on the month, while the inventory data had little sway, says Action Economics. The 10-year yield moved down to 4.47%.

World Markets

European stock markets were lower on Tuesday. London's Financial Times-Stock Exchange 100 index fell to 5,340 after the Bank of England trimmed forecasts for economic growth and inflation over the next two years, a sign that interest rates may stay on hold. Also, U.K. jobless claims rose more than expected 12,100 in October.

Germany's DAX index moved down to 5,081.46 after Eurozone October inflation rose 0.3% for a 2.5% year-over-year reading, above the European Central Bank's 2% upper limit for price stability.

In Paris, the CAC 40 index lost ground to 4,512.13 on profit taking, worries about inflation, and concerns about urban violence.

In Japan, the Nikkei 225 index gained 79.1 points, or 0.56%, to 14,170.87 -- the highest close in four years. The index was supported by gains in bank and auto stocks, says Standard & Poor's MarketScope.

In Hong Kong, the Hang Seng index rose 23.13 points, or 0.16%, to 14,650.54.


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