Daily Market Summary 1/19/07

[Portfolio Crafter]

End of Day Market Summary Friday, January 19, 2007
by Portfolio Crafter
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Stocks finished mixed on the day and for the week, with the broad market little changed but technology shares posting steep weekly losses, after IBM's earnings forecast failed to live up to investor expectations, further souring sentiment towards the tech sector. A number of better than expected results from several blue chip stocks failed to push the Dow higher, as Wall Street was hesitant to take a position at the start of the earnings season.

Today, the Dow Jones Industrial average closed down 2.40 or 0.02% to 12,565.53, the broader S&P 500 closed up 4.13 or 0.29% to 1,430.50, while the tech-heavy Nasdaq closed up 8.10 or 0.33% to 2,451.31. For the week, the Dow Jones Industrial Average and the S&P 500 finished nearly flat, and the Nasdaq Composite fell 2.1%.

Market breadth was positive. On the New York Stock Exchange, winners beat losers 23 to 19 on volume of 1.6 billion shares. On the Nasdaq, advancers topped decliners 18 to 11 on volume of 2.1 billion shares.

Investors' worries about some disappointing numbers issued earlier this week were apparent as in-line or better-than-expected results from three Dow components failed to move stocks higher. Most investors are just hanging back because they want to see what the bulk of earnings look like.

Upbeat news such as the preliminary consumer sentiment index from the University of Michigan rising to 98.0, failed to excite the market. This read topped estimates and reflects the impact of the recent decline in oil prices and gains for the stock market. The bigger than expected uptick in housing starts and the Philadelphia Federal Reserve reporting a rebound in Mid-Atlantic factory activity, are good economic news. The recent economic readings have fueled speculation that the Federal Reserve will not cut interest rates anytime soon. Jeffrey Lacker, the Richmond Federal Reserve Bank president, said that inflation remains the main risk for the U.S. economy, but that there are signs that it is moderating.

Shares of IBM closed down $3.37 or 5.5% to $96.08, despite posting quarterly sales and earnings that topped estimates, due to strength in services and its recent software acquisitions. However, investors took a 'sell the news' approach and sent shares lower. It reported an EPS of $2.20, compared to the expected $2.19. Its net income was $3.54 billion, compared to $3.19 billion in the fourth quarter last year. Its revenue was $26.3 billion, compared to the expected $25.66 billion.

Stock of Citigroup closed down $0.06 to $54.33, after reporting quarterly earnings that fell from a year earlier, but also topped estimates. The company raised its quarterly dividend 10% to 54 cents a share. Its revenue rose 15% to a record $23.83 billion compared to $20.78 billion.

Shares of General Electric closed down $1.04 or 1.5% to $36.96, despite reporting higher quarterly earnings that met estimates. However, the company also said it would restate financial results for the years 2001 through 2005, as well as the first three quarters of 2006.

General Electric Co. said o it will buy two of Abbott Laboratories diagnostics business units for $8.13 billion, broadening GE's reach into diagnostics. Shares of Abbott Laboratories closed up $0.50 to $53.29. Abbott's Molecular Diagnostics and Diabetes Care businesses are not part of the transaction and will remain part of Abbott.

Stock of Alcoa Inc. closed up 3.6% after saying it plans to buy back up to 10% of its outstanding stock and hike its dividend by 13%. It plans to buy back about 87 million shares over the next three years, in its first new buyback plan since July 2001.

Shares of Motorola closed up $0.53 or 2.5% to $19.24, after the company said it plans to cut 3500 jobs in a bid to improve operating costs. The company forecast 2007 EPS to be flat to slightly above its 2006 earnings of $1.13 on sales of $46 billion to $49 billion. Profit from continuing operations fell to $528 million, from $1.177 billion in the year-ago quarter.

U.S. light crude oil for December delivery climbed $1.51 to settle at $51.99 a barrel on the New York Mercantile Exchange.

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