Daily Market Summary 1/11/07

[Portfolio Crafter]

End of Day Market Summary Thursday, January 11, 2007
by Portfolio Crafter
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Stocks closed at sharply higher levels, sending the Dow Jones Industrial Average to a record close, as investors shrugged off recent jitters about global markets and commodities, leaving room for the market to focus on earnings and the technology sector.

Today, the Dow Jones industrial average closed up 72.82 or 0.59% to 12,514.98, the broader S&P 500 closed up 8.97 or 0.63% to 1,423.82, the Nasdaq closed up 25.52 or 1.04% to 2,484.85, and ended at its highest point in nearly six years.

Market breadth was positive. On the New York Stock Exchange, winners topped losers by almost 23 to 9 on volume of 1.6 billion shares. On the Nasdaq, advancers topped decliners by 19 to 10 on volume of 2.4 billion shares.

The interest rate hike from the Bank of England took investors by surprise. However, the continuing decline of oil prices in response to warm Northeast weather and easing supply shortage fears have been a great consolation. In addition, some of the money that's coming out of oil and other commodities is going into tech and pharmaceuticals. The upbeat jobless claims report helped reassure investors about the strength of the economy. Additionally, many of the factors that have lifted stocks remain in place, including: a sense that the economy is slowing, but not heading for a recession; moderating oil prices; bets that the Federal Reserve will cut interest rates later in the year; and earnings growth that is strong.

The weekly jobless claims fell to the lowest level since July. The number of Americans filing new claims for jobless benefits plunged a larger-than-expected 26,000 to its lowest level in more than five months. Jobless claims are at a level economists see as consistent with the solid pace of employment growth. Analysts had expected claims, which provide a rough guide to the pace of layoffs, to fall to 324,000 from the 329,000 initially reported for the Dec. 30 week.

On the downside, investors on both sides of the Atlantic were thrown for a loop after the Bank of England opted to boost its benchmark lending rate by a quarter-percentage point due to pricing pressures. The move surprised economists who thought the bankers would hold steady for the time being. This takes borrowing costs to their highest level in 5-1/2 years. Most analyst had thought the central bank would wait at least another month to see whether wages were heading up in the new year and for a clearer reading on the consumer sector.

Shares of Genentech closed up $3.67 or 4.3% to $87.41, after reporting quarterly sales and earnings that rose from a year ago and topped estimates. It also issued a 2007 earnings growth projection that is more than analysts are currently forecasting. It had very strong sales of its flagship oncology drugs and new eye medication Lucentis. It reported a net income of $594 million, or 55 cents a share, compared with $339 million, or 31 cents a share, for the same quarter last year. Operating revenue rose to $2.7 billion, up from $1.9 billion in 2005. This is against an EPS of 56 cents on revenue of $2.55 billion. Sales of its top-selling drug Rituxan jumped 16% to $560 million.

Shares of Cisco Systems closed up $0.02 to $28.70, on stating that it is suing Apple for trademark infringement over the name of its new device iPhone.. Stock of Apple closed down $1.23 to $95.77. Cisco has held the trademark on 'iPhone' since 2000, and is seeking an injunction preventing Apple from using the 'iPhone' name.

U.S. light crude oil for February delivery fell $2.14 to $51.88 a barrel on the New York Mercantile Exchange.

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