Daily Market Summary 12/13/06

[Portfolio Crafter]

End of Day Market Summary Wednesday 12/13/2006
by Portfolio Crafter
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Stocks closed with faint gains after rising crude oil prices tempered positive reaction to stronger-than-expected retail sales in November. This eased concerns about the extent of a slowdown in the economy. Investors showed caution amid rising oil prices and Treasury yields.

Today, the Dow Jones industrial average closed up 1.92 or 0.02% to 12,317.5, the broader S&P 500 index closed up 1.65 or 0.12% to 1,413.21, and the tech-fueled Nasdaq closed up 0.81 or 0.03% to 2,432.41.

Market breadth was mixed. On the New York Stock Exchange, winners edged losers by a narrow margin of 17 to 15 on volume of 1.467 billion shares. On the Nasdaq, decliners narrowly topped advancers 15 to 14 on volume of 1.811 billion shares.

Stocks are bound to be choppy in the short run, with volume likely to thin out in the next week or so, as people head off for vacations. In addition, Friday's options expiration is also making stocks a bit skittish as this can lead to fluctuations in the prices of the underlying stocks in the days leading up to the expiration.

Retail sales in November surged, in an encouraging start to the all-important holiday shopping period. Ahead of the holiday shopping month, shoppers flocked to malls in search of juicy deals on toys, electronics and other popular gift items. Retail sales jumped 1% compared to the revised 0.1% decline in October.

In merger talk, shares of United Airlines closed up $2.07 to $45.30, and Continental closed up $1.81 to $44.69, as the two are reportedly in talks about a merger. Any deal between the two carriers would likely be one of the largest in the industry and create one of the world's top 10 airlines.

Shares of AirTran closed up $0.45 to $12.80, after it stated that it had made an offer to buy Midwest Air for about $210 million in a deal that would merge the two regional air carriers. Shares of Midwest Air closed up $1.85 to $10.93. AirTran is offering $11.25 a share in cash and stock, or about $210 million.

Shares of Home Depot closed up $0.35 to $39.05, on stating that it is buying Chinese home improvement chain The Home Way for an undisclosed amount, in its first foray into retailing in China. The acquisition will give it 12 stores in six cities and access to a $50 billion home-improvement market that is growing at 20% per year. While the company did not disclose the terms of the deal or a purchase price, the acquisition is valued at $100 million.


Stock of Apple Computer closed up $2.74 to $88.88, on a pair of bullish analyst notes. Morgan Stanley boosted its price target, and UBS reiterated a "buy" rating on the stock, saying that it thinks Apple will have a branded cell phone by the start of the second quarter of 2007.

Shares of Hilton Hotels Corp. gained 2.4% after affirming its 2007 financial targets, including growth rates for management/franchise fees, margins and revenue per average room. The hotels operator also said it anticipates adding some 120,000 rooms globally between 2007 and 2009.

U.S. light crude oil for January delivery gained 35 cents to $61.37 a barrel on the New York Mercantile Exchange after the weekly energy inventory report showed a drop in crude oil and gasoline supplies.

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