The Dow moved back above the 13,000 mark on Tuesday, as Wall Street experienced a volatile trading session, eventually ending in positive territory. After seeing significant strength in morning trading, stocks came under pressure in the late morning and early afternoon. Nonetheless, the markets managed to climb back out of negative territory in late-day trading, largely on strength within oil related stocks and on hopes for an upcoming interest rate reduction. The Dow reversed sharp losses from the previous session to close up 51.70 points, or 0.40 percent, at 13,010.14. The Nasdaq finished with a modest rise, gaining 3.43 points, or 0.13 percent, to end the day at 2,596.81, while the S&P 500 posted the largest percentage gain of 0.45 percent, or 6.43 points, to end at 1,439.70. This afternoon, the Federal Reserve released the minutes of its October meeting, when it lowered interest rates by 25 basis points. The minutes showed that the decision to reduce rates was a close call. The Fed also released the first of its quarterly reports, saying that it projects slower than expected growth in the next year, which could possibly lead to a bump up in unemployment. The Fed did say that it believes inflation will remain moderate. Oil related led the markets in their afternoon recovery, as the price of oil closed at a record closing high. Subduing the markets gains was Freddie Mac (FRE), which reported a sharp third-quarter loss, badly missing Wall Street's estimates. The loss was due to continued weakness in the credit and housing markets. Dow Components The Dow experienced another volatile trading session on Wednesday, finishing the day in positive territory after reversing sharp losses. The average ended the day with a trading range greater than 260 points. Within the Dow, Exxon Mobil (XOM) saw the greatest strength, with its shares climbing 4.4 percent. The company saw strength as oil reached a record closing high and after it was upgraded to Buy from Neutral this morning by an UBS analyst. Software giant Microsoft (MSFT) also saw buying interest, with its shares rising 1.8 percent. The gains came after a Citi Investment Research Analyst said that Microsoft could bring in an additional $1 billion this year if its anti-piracy efforts succeed. Intel (INTC) also moved to the upside after a Cowen and Co. analyst said that the company is a good investment in a tough market for tech stocks. The chip giant's stock advanced 1.4 percent on the day. Additionally, Hewlett Packard (HPQ) ended the session with a modest gain. The company moved to the upside after it reported better than expected fourth-quarter earnings and revenue results. Other Dow components that finished the session with notable gains include Home Depot (HD), 3M Corp. (MMM), United Technologies (UTX), and IBM (IBM). On the downside, financial service and insurance giant AIG (AIG) posted the largest loss, falling for a fourth consecutive session with a 1.6 percent loss. The company's stock experienced selling pressure on reports that a shareholder is suing AIG over its exposure to the sub-prime mortgage mess. Citigroup (C) also traded sharply lower, extending losses from the previous session to move to its lowest level in four and a half years. Today's downward move came after a Deutsche Bank analyst said that Citigroup could face new rules that would restrict its operations. Other declining Dow components include General Motors (GM), American Express (AXP), Merck (MRK), and Boeing (BA). Sector News Resource related stocks led the markets back to the upside on Tuesday, with gold stocks posting the largest gains. The Amex Gold Index climbed 5.3 percent, as it reacted to an increase in the price of the precious metal. Oil related stocks also helped the markets end in positive territory, as they benefited from the record closing price of oil. The Philadelphia Oil Service Sector Index gained 3.4 percent on the day, while the Amex Oil Index rose 2.6 percent. Within the oil sector, Hess (HES) and Exxon Mobil turned in the best performances, reacting to news that a UBS analyst upgraded the companies to Buy from Neutral this morning. The steel sector was another resource related sector that outperformed the markets, as the Amex Steel Index ended the session with a 2.3 percent gain. Among steel stocks, Arcelor Mittal (MT) posted the largest gain after the company announced its plans to purchase a 12.6 percent stake in General Moly (GMO). Technology stocks also ended the session with gains, as the Amex Computer Technology Index closed up 0.9 percent. Among computer technology stocks, Google (GOOG) contributed the most to the sector's strength, rising 3.6 percent after a Credit Suisse analyst upped Google's target price to $900. On the downside, airline stocks came under severe selling pressure, with the Amex Airline Index falling 4.1 percent. The sector suffered from the record high price of oil, brining the index to its lowest level in over four and a half years. The banking sector was another area of the market that posted severe losses, with the S&P Bank Index tumbling 3.7 percent. Mortgage investor Freddie Mac led the sector lower. Freddie Mac reported Tuesday that its third-quarter loss widened from a year ago amid a worsening mortgage crisis. The loss for the company widened to $2.03 billion, or $3.29 per share, from a loss of $715 million, or $1.17 a share, in the same quarter a year ago. Housing stocks were also on the decline, as investors sold homebuilders after the Commerce Department said this morning that building permits had fallen to their lowest levels since 1993 in October. Other Markets In overseas trading, European stocks saw a broad based rally, rising in late-afternoon trading to cap off a volatile trading session. U.K.'s FTSE 100 rose 1.7 percent on the day. In Asia, markets were able to rebound from sharp losses in the previous session on the hope for further U.S. interest rate reductions. Japan's Nikkei 225 finished up 1.1 percent. Oil rallied to another record close on Tuesday a day ahead of the Department of Energy's weekly inventory report. Light sweet crude for January delivery finished at $98.03 a barrel, up $3.39 on the session. Oil reached as high as $98.30 in intraday trading. Gold rallied sharply on Tuesday in U.S. trading, making up for some of the losses it saw in a recent slide. December gold finished at $791.40 an ounce, up $13.40 on the session. Prices touched an intraday high of $799.50. Treasuries soared to a fourth consecutive multi-year closing high Tuesday, as investors threw money into fixed income following the release of the Fed minutes. For Tuesday, the yield on the benchmark 10-year note closed down 2.5 basis points at 4.054 percent. Looking Ahead Investors will be focused on economic data on Wednesday, hoping to get a better picture of the Federal Reserve's upcoming interest rate decision. Initial jobless claims will be released prior to the opening bell, with many investors expecting a modest increase. Later in the session, reports on leading indicators, consumer sentiment and crude inventories will be released. On the earnings front, several notable companies are set to release their quarterly results including Mesa Air (MESA), and retailers such as Abercrombie & Fitch (ANF), Gap (GPS), and J. Crew (JCG).
November 20, 2007 4:42 PM