Dec 2006 Financial News

US investors upbeat on economy

Dec 11, 2006

Wall Street got confirmation this week that the economy may be as healthy as the rally has been indicating. The previous week's concern about manufacturing slowdown was usurped by jobs figures that showed that the economy was still fairly healthy.

The jobs figure raises Wall Street's hopes about a slew of economic data expected next week, including retail sales figures.
For the week the Dow added 0.93%, the Nasdaq gained 1% and the S&P increased 0.94%. The gains help set the major indexes up for double-digit gains this year, with the Dow up 14.84%, the Nasdaq 10.52% and the S&P up 12.94% so far.

Positive momentum from a number of mergers helped stocks to a higher close on Monday. The Dow finished up 89.72 points to 12,283.85, despite weakness in Pfizer (PFE) which fell 10.6% to $24.90 on news that it halted development of a once-promising cholesterol drug.

News that Bank of New York had agreed to buy Mellon Financial to create the world's largest securities company helped buoy the market. Shares of Bank of New York and Mellon Financial rose $4.27 and $2.73 to $39.75 and $42.78, respectively.
The Nasdaq had its biggest gain in nearly a month, jumping 35.18 points to 2,448. The S&P rose to a six-year high adding 12.41 points to 1,409.12.

Stocks closed higher on Tuesday after a report showed unexpected strength in key services sector suggesting that earnings growth would be able to weather the housing slowdown. This fuelled investor optimism about a soft landing for the US economy and helped the Dow add 47.75 points to 12,331.60. The Nasdaq tacked on 3.99 points to 2,452.38 and the S&P gained 5.64 points to 1,414.76.

Nasdaq-listed Qualcomm Inc climbed 3.6% to $38.74 on news that China may issue its first third-generation cell phone network licencce as early as this month. The licence would boost royalties to the wireless technology and chip supplier.

Wall Street's two-day rally ended Wednesday as investors awaited the Labour Department's jobs report due on Friday. Stocks ended lower as investors speculated on the implications of a lower jobs report and its indication of the health of the economy. The Dow dropped 22.35 points to 12,309.25, the Nasdaq declined 6.52 points to 2,445.86 and the S&P fell 1.86 points to 1,412.90.

Shares of Yahoo Inc (YHOO) fell 2.1% to $26.86, after announcing the departures of key management personnel. The management shake-up is the biggest at the internet portal in more than five years.

Stocks declined for a second straight session Thursday with the Dow falling 30.84 points to 12,278.41, the Nasdaq losing 18.17 points to 2,427.69 and the S&P slipping 5.61 points to 1,407.29.

Investors have grown increasingly nervous ahead of the government's November jobs creation report. Wall Street hopes the job market will hold up well enough to safeguard consumer spending, though investors also are concerned that high employment levels will make it more expensive for businesses to hire and retain workers.

It was a higher close on Friday as investors welcomed a government employment report that painted the US job market as robust heading into the holiday season, easing concerns that the economy is losing steam too quickly.

The Labor Department report showed a slightly better than expected increase in jobs creation last month and ultimately helped diminish nervousness about a drop in the dollar and a weaker-than-expected reading from the University of Michigan's consumer confidence figure.
The Dow tacked on 29.08 points to 12,307.49, the Nasdaq added 9.67 points to 2,437.36 and the S&P gained 2.55 points to 1,409.84.

For the coming week investors should watch out for the results of the Federal Reserve meeting on Tuesday, December 12. The market is expecting that the Fed will continue to hold the rate at its current levels. Also due out this week is a number key economic reports which will move the markets depending on how they are interpreted.

Contributed by Denise Gallimore - Investment Analyst, Alliance Investment Management. For further information on investing in the US stock market contact us at info@allianceinvestment.com or call 960-4321.

The Jamaica Observer
Sunday, December 10, 2006.
http://www.jamaicaobserver.com/magazines/Business/html/20061209T150000-0500_116444_OBS_US_INVESTORS_UPBEAT_ON_ECONOMY.asp