Daily Market Summary 11/15/06

[Portfolio Crafter]

End of Day Market Summary Wednesday 11/15/2006
by Portfolio Crafter
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Stocks rose with the Dow Jones Industrial Average stretching to a fresh record close after surprising strength in a regional survey eased economic worries, with further help from news of a possible merger in the airline sector. Traders weighed the minutes of the latest Federal Reserve meeting on interest rates that showed central bankers were less worried about the housing market's impact on the economy and still had concerns about inflation. Investors welcomed further signs that the economy is slowing at a moderate pace, and not heading for recession.

Today, the Dow ones industrial average closed up 33.70 or 0.28% to 12,251.71, a record for the second straight session, and also hit a trading record during the session. The broader S&P 500 index closed up 3.35 or 0.24% to 1,396.57, and the tech-fueled Nasdaq composite index closed up 12.09 or 0.5% to 2,442.75, its highest close since Feb. 15, 2001.

Market breadth was positive. On the New York Stock Exchange, winners topped losers five to three on volume of almost 1.7 billion shares. On the Nasdaq, advancers topped decliners by 18 to 11 on volume of 2.16 billion shares.

Today's most-anticipated event was the afternoon release of the minutes from the October Fed meeting. The minutes reinforced that the economy is headed for "soft landing" and that the Fed remains focused on cutting inflation. However, the minutes also suggested the central bank is unlikely to cut interest rates anytime soon.

The reading on manufacturing in the New York region rose unexpectedly. This reinforced the belief that while the economy is slowing, it is not heading for a "hard landing." The Empire State index rose by about four points to a five-month high of 26.7. Economists had expected a decline to about 15.4 in November from 22.9 in October.

US Airways made a surprise cash and stock bid for larger rival Delta. Shares of US Air closed up $8.57 or 17% to $59.50, while shares of Delta climbed 3%. This bid could spark a round of mergers leaving the US with just a handful of major airlines. The proposal is for about $4 billion in cash and 78.5 million shares of US Airways stock, also worth $4 billion. US Air has also proposed keeping the Delta name if the merger is completed. The "new" Delta would be the number one airline across the Atlantic and the second largest airline to the Caribbean.

Stock of Google closed up $2.63 to $491.93, after Credit Suisse resumed coverage of the web search leader with an "outperform" rating and price target of $600 a share.

Stock of HP closed down $0.88 or over 2% to $39.79, day before it is due to report quarterly earnings. This year the share has risen 41% helped by turnaround efforts implemented by new CEO Mark Hurd. The company has steadily beat Wall Street's estimates and aims to keep up the winning streak when it reports fiscal fourth-quarter results after the market close tomorrow.

Shares of Pfizer Inc. rose 1% to close at $26.53, after it announced its animal health division is buying agricultural biotechnology company Embrex Inc. for $155 million. Shares of Embrex rose $4.72 or 40% to close at $16.64. The buy out price of $17, represents a 43% premium to Embrex shares' closing level on Tuesday. Embrex posted revenue of $52.5 million in 2005, 37% of which came from outside of the U.S.

U.S. light crude oil for December delivery rose 48 cents to settle at $58.76 a barrel on the New York Mercantile Exchange. The price of oil rose after the weekly oil inventory report showed a surprisingly large drop in gasoline supplies and distillate stocks, used to make heating oil.

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