Sunday October 15, 2006
Dow ends week on record high
WALL STREET UPDATE
NEW YORK: The major US blue-chip stock index closed at a record high Friday as investors gained confidence in the resilience of the US economy and the corporate earnings season kicked-off to a healthy start.
The gains came despite a government report showing a surprise drop in retail sales last month, dashing Wall Street forecasts that had called for sales to rise.
The Dow Jones Industrial Average closed up 12.81 points (0.11%) at an all-time record high of 11,960.51, as the blue-chip index smashed its record close set Thursday of 11,947.70.
The tech-rich Nasdaq closed up 11.11 points (0.47%) at 2,357.29 while the broad-market Standard and Poors 500 index ended the week 2.79 points (0.20%) higher at 1,365.62.
The stocks gains came late in the session, however, as the Dow Jones industrials remained mired in negative territory for much of Friday.
Investors appeared to brush off the retail sales report which showed sales fell 0.4% in September, a figure somewhat skewed by a sharp drop in gasoline prices.
The Commerce Department figure was far weaker than expected on Wall Street, where analysts had been calling for a rise of 0.2% in retail sales.
However, analysts pointed out that the data was heavily impacted by gasoline station sales posting a 9.3% drop, their largest drop since the data series began in its present form, in 1992.
Sales excluding motor vehicles and gasoline were up 0.8% in their best showing since January.
Some analysts doubt Septembers fall in sales will be replicated in coming months, especially as oil prices have fallen sharply in recent weeks.
Global Insight chief economist Nariman Behravesh said that as a result of falling oil prices, he is more upbeat about consumer spending. This slide is like a tax cut worth a little less than 100 billion dollars.
This will cushion the blow from the housing crunch. We now predict that consumer spending can continue at a pace of 2.5 to 3.0% over the next year, Behravesh said.
On the corporate front, giant US conglomerate General Electric Co. reported a six per cent rise in third-quarter net earnings, with media-entertainment division NBC Universal dragging on profits.
That translated into 48 cents per share on a net basis. Earnings per share from continuing operations came to 49 cents, in line with Wall Streets consensus target.
The Connecticut-headquartered companys shares closed down 24 cents, or 0.7%, at US$35.98.
The Federal Communications Commission on Friday delayed a vote on AT and Ts planned takeover of BellSouth amid opposition to a deal which would create the biggest US telecommunications company.
News reports said the FCC commissioners were split 2-2 on approval of the deal, with one member abstaining. The panel comprises three Republicans and two Democrats.
AT and Ts shares were unchanged from Thursday at US$33.60, while BellSouths shares finished down 15 cents at US$44.13.
Microsoft said it would roll out its next-generation operating system as planned in Europe and the rest of the world, amid persistent competition concerns from EU regulators.
Microsoft's shares ended up 15 cents at US$28.37.
Oil price gains also helped support stocks as production setbacks in the North Sea pushed up crude prices.
New York's main contract, light sweet crude for delivery in November, closed up 71 cents at US$58.57 per barrel, as OPEC ministers mulled an October meeting to debate their production quotas.
Bond prices weakened. The yield on the 10-year US Treasury bond rose to 4.806% from 4.778% Thursday while that on the 30-year bond spiked up to 4.938% from 4.911%. Bond yields and prices move in opposite directions. AFP