Wednesday, January 17, 2007

Dow Streak Halted Despite Good News

The Dow, higher at midday, lost steam in the afternoon and finished nearly flat, down just over 5 points for the session in moderate to heavy trade.

After three straight record-setting days, the Dow - and the Nasdaq and S&P 500 - simply ran out of gas, especially after the release of the Fed's Beige Book which showed sustained growth in all regions and some indications of wage pressure. That was viewed negatively on Wall Street and the selling ensued in earnest.

Once again, the reverse logic of a surging economy re-igniting inflation fears (and possible resultant interest rate hikes) sent traders into outright selling mode.

On the tech front, Intel's (INTC) continued poor performance (see yesterday's post) led the technology indices lower. The Nasdaq was the worst performer of all the majors, dropping 18.36. Coupled with Intel's disappointing quarter, Cisco Systems (CSCO) was downgraded for the third time in the past two days. Cisco lost 1.06; Intel dropped 1.26.

Earnings and the CPI report will be the major movers tomorrow, as earnings season gets into full swing. Inflation fears are probably overdone right now, as the Fed will likely wait well into any expansion to raise rates. With many economists predicting a slow first half of the year, investors are prone to take a break as January winds into February.

The oil effect was noted today as crude prices firmed. Weather reports are calling for cold days ahead for the Northeast and the price of the slippery stuff grudgingly climbed to close at $52.24.

Just after the close, Apple released earnings that trounced the estimates. The company reported profits of $1.14 per share for their fiscal 1st quarter, well beyond the 78 cents per share analysts predicted. The numbers were a 75% improvement over the 65 cents per share in the year-earlier period.

The company reported quarterly revenue of $7.1 billion, up from $5.75 billion in the same quarter last year. Investors missed the boat completely, as Apple (AAPL) traded down more than $2 prior to the announcement. Play that on your i-Pod. Ouch!

No comments: