Daily Market Summary 11/14/06

[Portfolio Crafter]

End of Day Market Summary Tuesday 11/14/2006
by Portfolio Crafter
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Stocks staged a late rally as gains for Wal-Mart Stores Inc., Home Depot Inc and Intel Corp. boosted the Dow Jones Industrial Average to a fresh all-time high. Investors welcomed a tame PPI report although many are looking ahead to consumer-price data they hope will confirm the signs of an easing inflationary trend.

Today, the Dow closed up 86.13 or 0.71% to 12,218.01, closing at a record for the 15th time since early October, when it first knocked out its old all-time high from 2000, near the end of the 1990s tech boom. The broader S&P 500 index closed up 8.80 or 0.64% to 1,393.22, and the tech-fueled Nasdaq composite closed up 24.28 or 1.01% to 2,430.66, at its highest level since February 2001.

Market breadth was positive. On the New York Stock Exchange, winners beat losers 2 to 1 on volume of around 1.71 billion shares. On the Nasdaq, advancers beat decliners by 4 to 3 on volume of 1.97 billion shares.

The PPI fell 1.6% in October, matching a record low set in October 2001. Excluding food and energy costs, the core PPI rate fell 0.9%, the biggest drop in over 13 years. Economists had been expecting the index to fall 0.5% and the core rate to rise 0.1%. This reinforced the view among some investors that the Federal Reserve has some leeway to cut interest rates in the first half of next year. Retail sales, fell 0.2% in October due to cheaper gasoline prices. Excluding autos, retail sales dropped 0.4%. Economists had expected a slightly larger 0.4% decline in October sales. U.S. business inventories rose 0.4% in September as sales dropped 2.0%. The report missed the expectations of economists, who were expecting inventories to rise by 0.6%

Investors can conclude from these reports that there is modest consumer spending and moderate core inflation. Things are moving in the way the Fed wants. Growth is slowing, but not slowing too rapidly and inflation pressures seem to be cooling. The reports are consistent with the Federal Reserve keeping interest rates steady.

Shares of Wal-Mart closed up $1.34 or 3% to $47.66, reported higher quarterly earnings that topped estimates. Strength in its international business and new store openings helped offset disappointing U.S. sales. Its net income rose to $2.65 billion or 11%, from $2.37 billion a year earlier. CEO Lee Scott was upbeat about the holiday season and vowed that the company would lure customers via deep discounting.

Stock of Target closed up $1.40 to $59.16, on reporting earnings that beat forecasts on sales that rose from a year ago and met forecasts. The company earned $506 million or 16%, up from $435 million in the same period a year earlier. Sales in the quarter grew 11.2% to $13.5 billion, up from $12.2 billion a year ago.

Shares of Home Depot closed up $1.56 or 4.3% to $37.96, despite reporting quarterly earnings that slipped from a year earlier and missed analysts' projections, reflecting the impact of the slowdown in the housing market. It also cut its forecast for earnings and sales growth in the fiscal year. Its EPS was 73 cents against the expected 75 cents. Its total sales rose 11.3% to $23.1 billion against the expected $23.3 billion.

U.S. light crude oil for December delivery fell 30 cents to settle at $58.28 a barrel on the New York Mercantile Exchange. Traders weighed supply and demand considerations against a backdrop of mild weather in the Northeast.

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