Stocks Finish Mixed
Stocks finished mixed Tuesday, as the major indexes were unable to garner any followthrough buying despite strong economic data.
The Dow Jones industrial average rose 16.1 points, or 0.17%, to 9,763.94. The broader Standard & Poor's 500 index was up 1.81 points, or 0.17%, to 1,053.89. The tech-heavy Nasdaq fell 4.1 points, or 0.21%, to 1,943.04, following Monday's 2.81% surge.
Third-quarter GDP was revised to 8.2% annual growth from 7.2% that was previously reported. This beat the 7.8% growth that was expected, but many economists were looking for a strong revision. Much of the boost came from inventories and fixed investment.
In other economic news, consumer confidence rose to 91.7 for November, vs. 81.7 last month, the highest level since September, 2002 and above estimates. Existing home sales for October fell 4.9% to a 6.35 million annual rate, weaker than expected.
There are a few more economic reports to watch Wednesday. MMS expects the November Chicago-PMI manufacturing survey to improve to 56.5 from October's 55.0, as factories are ramping-up activity to meet ongoing solid demand and replenish depleted inventory levels.
October durable orders and shipments are expected to rise 0.5%, says MMS. The projected gains follow the strong figures of September and would be consistent with the ongoing firmness seen in other recent manufacturing reports, as well as the economy overall. Strength is expected to be fairly widespread, with the one notable exception being vehicles.
The final November reading for the University of Michigan's Consumer Sentiment is forecast to come in 94.0, vs. the preliminary level of 93.5 and October's 89.6. And personal income is expected to rise 0.5%, while consumption is unchanged, says MMS.
Among sectors on the move Tuesday, oil services, managed care, industrial gas, and gold stocks were higher. Drug and biotech stocks fell after the Senate passed a new Medicare drug bill.
In merger news, Staten Island Bancorp (SIB ) agreed to be acquired by Independence Community Bank (ICBC ) for $23.88 per share, or about $1.5 billion.
Citigroup (C ) says it will acquire Washington Mutual Finance Corp., the consumer finance subsidiary of Washington Mutual (WM ), for $1.25 billion. Citigroup says the deal will add to its 2004 earnings per share.
In the tech sector, Autodesk (ADSK ) says it will cut 550 to 650 jobs and close certain facilities. It will take a $37 million restructure charge over next four quarters. As a result, the software maker expects EPS (GAAP) of 24 cents to 30 cents in the fourth quarter EPS, 4 cents to 10 cents in first quarter of fiscal year 2005, and 68 cents to 88 cents for all of fiscal 2005.
Copier maker Xerox (XRX ) gained after Merrill Lynch upgraded its rating on the shares to 'buy' from 'neutral', while Lehman Bros. raised its opinion to 'equal-weight' from 'underweight.' The recommendation upgrades follow yesterday's investor conference, where the company outlined its strategy for addressing the expanding color and digital printing markets.
Mylan Labs (MYL ) says its Mylan Technologies unit got final approval from the FDA for its fentanyl transdermal system, which is equivalent to Alza Corp.'s Duragesic. Final approval was granted notwithstanding the patent litigation with Alza for Duragesic.
Nike (NKE ) shares rose after Merrill upgraded its investment rating on the footwear and apparel maker to 'buy' from 'neutral.' On Monday, Nike raised its quarterly dividend by 43%.
Treasuries ended higher in price despite the strong GDP and consumer confidence data. Along with month-end factors providing a bid today, traders also reported some short covering and safe-haven demand over the holiday weekend, says economic research outfit MMS International.
"The data is not so much the issue this week as liquidity, booksquaring, and perhaps some doubts about the sustainability of such a vigorous snap back in growth," says MMS. "Certainly, that has been the theme for this holiday, though it remains to be seen how much longer the fixed income market and Fed can continue to fight the tape on the expansion."
European stock markets were mixed. London's Financial Times-Stock Exchange 100 index gained 6.3 points, or 0.14%, to 4,388.7. Some investors were encouraged that Britain's October car production rose 2.5% due to export demand. Business investment rose 0.7% in October but fell 1.6% for the third quarter.
In Paris, the CAC 40 was up 6.1 points, or 0.18%, to 3,418.15 as French consumer spending unexpectedly rose 1.6% in October although the September figure was revised down to 2.9% from 3.4% originally reported. Germany's DAX index fell 3.93 points, or 0.11%, to 3,733.16 as IFO business confidence index rose to 95.7 in November from 94.3 in October, the seventh consecutive monthly gain. In other news, Germany and France won more time from the European Union to cut their budget deficits.
Asian markets finished higher. In Japan, the Nikkei 225 index rose 107.37 points, or 1.09%, to 9,960.2. In Hong Kong, the Hang Seng index gained 159.51 points, or 1.35%, to 12,008.07.