Daily Market Summary 12/6/06

[Portfolio Crafter]

End of Day Market Summary Wednesday 12/6/2006
by Portfolio Crafter
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Stocks closed lower as the market took a break from its recent advance, with Yahoo Inc. in focus after a management shakeup and concerns ahead of the November jobs report.

The Dow Jones industrial average closed down 22.35 or 0.18% to 12,309.25, the broader S&P 500 closed down 1.86 or 0.13% to 1,412.90, and the tech-fueled Nasdaq closed down 6.52 or 0.27% to 2,445.86.

Market breadth was negative. On the New York Stock Exchange, losers beat winners 19 to 15 on volume of 1.53 billion shares. On the Nasdaq, decliners beat advancers by 16 to 13 on volume of almost 1.92 billion shares.

The recent data showing growth in the service sector and weaker-than-expected inflation has helped ease concerns about a hard landing for the economy. However, overall economic reports have been weaker than expected and, together with the dollar and the bond market, they are pointing to a major slowdown in the economy that the equity market is not paying attention to. It is possible that that we can sail through the end of the year and that stocks will peak only at the beginning of next year. Investors are excited about the amount of private-equity deals and mergers that are adding liquidity, while reducing the share count, in the stock market.

It is apparent that investors are resting after a few up days and ahead of the payrolls report Friday. While employers in the private sector have added about 158,000 jobs in November, more than what economists were expecting. The Labor Department's employment report on Friday is expected to show that 110,000 non-farm payroll jobs were created in November, up from 92,000 in October. Wage inflation is expected to decline to a 0.3% rate of increase from 0.4% in October, a development that would please the market as it would make it more possible for the Federal Reserve to cut interest rates to stave off an economic slowdown.

Yahoo Inc. is revamping its operations and reshuffling its executive ranks amid stiff competition from others. However, the moves fell short of what some on Wall Street had hoped for and its shares fell $0.57 or 2.1% to $26.86. Its shakeup includes putting its current CFO in a position to potentially succeed its CEO.

Stock of Novell closed down $0.34 or 5.4% to $5.99, after stating that it swung to a fourth-quarter profit from a loss a year earlier, but also issued fiscal 2007 revenue guidance in a range that is below analysts' estimates.

Shares of HSBC fell nearly 1% after reporting that revenue growth has slowed due to reduced lending and mentioned that loan delinquencies have increased in the U.S. The bank has also taken a decision to rein in its lending as conditions have worsened in several markets.

U.S. light crude oil prices for January delivery fell 24 cents to settle at $62.19 a barrel on the New York Mercantile Exchange. The weekly energy inventory report showed a surprise fall in crude and gasoline supplies.

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