Daily Market Summary 12/22/06

[Portfolio Crafter]

End of Day Market Summary Friday 12/22/2006
by Portfolio Crafter
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Stocks closed lower as investors reacted to a weaker than expected regional manufacturing survey and a downward revision of third quarter economic growth, which offset positive momentum from deal making by Raytheon Co. and Glaxo Smithkline Plc. The weakness can be attributed to a combination of economic weakness combined with the malaise befalling the market as we approach the holidays.

Today, the Dow Jones industrial average closed down 42.62 or 0.34% to 12,421.25, the broader S&P 500 index closed down 5.23 or 0.37% to 1,418.3, and the tech-heavy Nasdaq composite index closed down 11.76 or 0.48% to 2,415.85.

Market breadth was negative. On the New York Stock Exchange, losers beat winners by a margin of 19 to 13 on volume of 1.4 billion shares. On the Nasdaq, decliners topped advancers by a margin of 16 to 13 as 1.9 billion shares changed hands.

The markets turned lower as the Philadelphia Federal Reserve Bank's monthly survey posted a big decline in December. The index fell to a negative 4.3, versus forecasts for a positive 4.0 reading. This brought investors' attention back to the health of the economy. This is indicative that regional readings may also show a slow growth.

On the economic front, the Commerce Department said the GDP grew at a slower pace in the third quarter than previously estimated. The GDP grew at an annual 2% pace in the third quarter, down from the earlier estimate of 2.2%. This too provided a mixed backdrop for stocks. The Labor Department said initial jobless claims rose to 315,000 last week, exactly as predicted. The index of leading economic indicators inched up 0.1% to 138.2 in November, also meeting expectations on Wall Street.

Shares of Best Buy closed up $0.78 or 2% to $49.14, after Credit Suisse raised its rating on the electronics retailer to "outperform" from "neutral." On the other hand stock of Jabil Circuit closed down $2.32 or 9% to $24.24, after issuing a disappointing sales outlook for the current period.

Shares of Bed Bath & Beyond closed down $1.44 or 4% to $38.49, as it disappointed investors with its quarterly earnings report. The home goods retailer reported a higher quarterly profit, but the results fell short of forecasts.

Ohio-based regional bank Huntington Bancshares announced that it had agreed to buy another Ohio-based regional bank, Sky Financial Group for $3.6 billion. Shares of Sky Financial closed up $3.45 or 14% to $27.74.

Shares of General Mills Inc. gained 1.6%. to close at $58.95. The company posted a 4% rise in second-quarter income, to $385 million from $370 million a year ago. Sales for the quarter rose 5.3% to $3.47 billion, while worldwide unit volume expanded 3%.

In M&A news, Raytheon has agreed to sell its aircraft-making unit to Canada's Onex and Goldman Sachs for $3.3 billion. Raytheon also will buy back $750 million in stock. And Britain's GlaxoSmithKline said it will buy Praecis Pharmaceuticals for $54.8 million.

U.S. light crude oil for February delivery sank $1.06 to settle at $62.66 a barrel on the New York Mercantile Exchange.

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