Market summary 10/10/2006

[Portfolio Crafter]

End of Day Market Summary Tuesday, 10/10/2006
by Portfolio Crafter
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Stocks ended higher on a fresh drop in oil prices and cautious optimism over the upcoming third quarter earnings season. However, a rise in bond yields and lingering concerns over North Korea gave investors pause for thought. The Dow Jones Industrial average set a new closing record.

Today, the Dow Jones Industrial; average closed up 9.36 or 0.08% to 11,867.17, scratching out a record closing high less than a point above the previous record of 11,866.69 set last Thursday. The broader S&P 500 index closed up 2.76 or 0.2% to 1,353.42, while the tech-fueled Nasdaq composite closed up 3.66 or 0.16% to 2,315.43.

Market breadth was positive. On the New York Stock Exchange, winners barely beat losers 17 to 14 on volume of 1.51 billion shares. On the Nasdaq, advancers edged out decliners 15 to 13 on volume of 1.77 billion shares.

Tomorrow, investors will look forward to the Federal Reserve minutes from their Sept. 20 meeting. We need to pay heed to the fact that we are now at the cusp of earnings season, and you have a market that's looking to take a wait-and-see type of approach. Investors are reassessing a new set of risks, such as a pick-up in bond yields, oil stabilizing at around levels that are historically high and North Korea, which appears to be beyond the influence of the major world powers. The market is going to look very carefully for those companies which can sustain earnings growth and this may lead to a lot of volatility among individual stocks.

U.S. businesses' sales and inventories rose at the same pace in August. Inventories and sales each rose by 1.1%, keeping the inventory to sales ratio at 1.15. The report exceeded the expectations of economists who were forecasting wholesale inventories to rise by 0.6%, after climbing 0.8% in July. In the past year, sales were up 12.5%, while inventories were up 9.7%.

Shares of ImClone Systems Inc. closed up $1.19 or 4% to $31.09, after the biotech said David Kies resigned as chairman in the face of severe criticism over his performance from activist shareholder Carl Icahn. Board member William Crouse has likewise stepped down. Since assuming a directorship in late September, Icahn, who has about a 14% stake in ImClone, has been vociferously demanding Kies' resignation, saying the company has been poorly managed.

Google Inc. closed down $2.35 or 0.6% at $426.05 after the Internet search giant announced an agreement to acquire privately held YouTube Inc., the No. 1 video-sharing site on the Web, for $1.65 billion in stock. YouTube, has quickly become the most well-known of several online video sites. More than 100 million videos are downloaded a day on the site and it has 46% of the online video market. This gives Google the ability to tap into the online video and social networking markets.

U.S. light sweet crude oil sank $1.44 to $58.52 a barrel on the New York Mercantile Exchange.

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