While Citigroup (NYSE:C) struck a deal for ballpark naming rights, the stock market provided its own field of dreams for investors.
Buoyed by declining oil prices and optimistic comments from a Fed official, stocks closed higher on Monday. On Tuesday, declining wholesale inflation figures competed with disappointing retail sales data for investor attention. Ultimately, positive comments in the afternoon from the St. Louis Fed President sparked a broad rally, sending the major indices to lofty levels.
The party continued on Wednesday, as a pickup in northeast manufacturing activity and a buyout in the airline industry left investors feeling good about the state of the economy. The release of the Fed minutes from their October meeting didn't do much to sway the market, and the S&P 500 topped 1,400 for the first time in six years.
On Thursday, stocks powered higher again, with the Dow closing at a new record high on benign inflation readings, declining oil prices, and takeover activity. Stocks struggled early on Friday following a weak housing starts report, but later shrugged off any doubts to close marginally higher, with tech slipping slightly.
By week's end, it was clear: If you build a rally, they will come.
A quiet holiday week includes the release of leading indicators today, the State Street Consumer Confidence Index tomorrow, and consumer sentiment on Wednesday. Markets will be closed on Thursday, and close early at 1 p.m. ET on Friday.
Corporations scheduled to release earnings include Campbell Soup, Lowe's, Medtronic, and Nordstrom today; Borders, Coldwater Creek, Dollar Tree, Eaton Vance, J. Crew, and Michaels Stores tomorrow; and Hormel Foods on Wednesday.
Stay market-tuned and Foolish!
Capital Markets Summary
U.S. Equities
|
11/17/06 Close |
Weekly Change (%) |
YTD Change (%) | |
|---|---|---|---|
|
Dow |
12,342.56 |
1.9 |
15.2 |
|
Nasdaq |
2,445.86 |
2.3 |
10.9 |
|
S&P |
1,401.20 |
1.5 |
12.2 |
Commodities
|
Price ($) |
Weekly Change (%) | |
|---|---|---|
|
Crude oil |
58.94 |
(0.97) |
|
Gold |
622.30 |
(0.99) |
Foolish Quiz
1. The Dow enjoyed its longest winning streak in:
(a) a month
(b) a year
(c) two years
2. True or false: Shares of Hewlett-Packard (NYSE:HPQ) surged after the company reported a quadrupling of third-quarter profits.
3. Shares of which retailer gained more after reporting earnings: Target (NYSE:TGT) or Wal-Mart (NYSE:WMT)?
4. True or false: Shares of Home Depot (NYSE:HD) rose following its disappointing earnings release.
5. Which shielded the bottom line of Sears (NASDAQ:SHLD) more: sales of dishwashers or derivatives?
6. True or false: Clear Channel agreed to be bought by Reader's Digest.
7. USAirways made a bid to purchase:
(a) Continental Airlines
(b) Delta Air Lines
(c) JetBlueAirways
8. Which IPO enjoyed a better first day debut: Hertz or NYMEX?
9. The CEO of which company enjoyed last Monday more: KB Home or Wynn Resorts?
10. Which of Citibank's announced purchases last week will cost more: a ballpark or a bank?
Answers
1. (b). The Dow ran up its longest consecutive winning streak since November 2005, and closed at a new all-time high on Friday.
2. False. Although on Friday Hewlett-Packard reported a quadrupling of fourth-quarter profits from a year ago, shares slipped 0.9% on news that the SEC has ordered a formal investigation into its boardroom spying antics.
3. Wal-Mart. Shares of Wal-Mart rose 2.9%, inching out the 2.4% gain in those of Target on Tuesday after both companies reported earnings. Wal-Mart reported an 11% increase in earnings but lowered its forecast, while Target's profit rose 16%.
4. True. Despite reporting a 3% drop in third-quarter net profit, shares of Home Depot built a 4.3% gain on Tuesday. Although same-store and comparable-store sales were down in a declining home improvement market, the rise may portend investor sentiment that the company will hunker down through the housing slowdown and emerge in good shape. Or it may have just been wishful thinking and a bit of giddiness in a rising equity environment.
5. Derivatives. On Thursday, Sears reported a tripling of third-quarter profits, but the increases were built on large investment gains, while sales at Sears and K-Mart declined. Shares fell 5.5%.
6. False. Both companies made headlines Thursday as private equity chased old-media companies. Clear Channel agreed to a $26.7 billion takeover, including assumption of $8 billion of debt, by Thomas H. Lee Co. and Bain Capital Partners. Shares rose 3.6%. Reader's Digest also agreed to a $2.4 billion buyout transaction led by RipplewoodHoldings, and its shares rose 7.7%.
7. (b). US Airways wants to fly higher with Delta, making an $8 billion hostile offer on Wednesday to purchase the bankrupt air carrier. The news lifted the shares of US Airways 16.8%, while those of Delta rose 4.8%. Other airline stocks traveled higher as well, with the Amex Airline Index taking off 5.5%, Continental flying 12.3%, and JetBlue climbing 7.4%.
8. NYMEX. Shares of the futures exchange more than doubled on its first day of trading on Friday, ranking as the second-best debut in the last five years. Shares of Hertz pulled out ahead also, up 4.8% on its first day of trading on Thursday.
9. Wynn Resorts. Some guys have all the luck. On Monday, CEO Steve Wynn learned he will receive $147 million from the company's unexpected one-time special dividend of $6 per share, declared that day. That's more than 10 times the amount CEO Bruce Karatz of KB Home agreed to repay when he resigned the same day amid the company's stock-options scandal.
10. The bank. Citigroup won a $3.1 billion bid for a controlling stake in Guangdong Development Bank, a Chinese bank with a nonperforming loan ratio higher than most of its peers. The bank also struck a $400 million deal with the New York Mets for naming rights to the team's new ballpark. Perhaps Citibank likes to work with disappointing performers.
Scoring
- 8-10 correct: Foolishly impressive.
- 6-7 correct: Almost Foolish.
- 1-5 correct: OK, but just barely.
- 0 correct: Really?! Keep reading the Fool, and watch your scores improve!
Wal-Mart, Dollar Tree, and Home Depot are Motley Fool Inside Value picks. JetBlue is a Motley Fool Stock Advisor selection . Whatever your investing style, the Fool has a newsletter for you.
Fool contributor S.J. Caplan is a former vice president and assistant general counsel of Goldman Sachs and former vice president and derivative finance specialist at Lehman Brothers. She serves as an arbitrator for the New York Stock Exchange and the NASD. The Fool has a disclosure policy.
