Dow Sets New Standard
Robert Holmes
12/15/06 - 04:47 PM EST
Updated from 4:16 p.m. EST
The market was stronger again Friday, and the
Dow Jones Industrial Average reached another benchmark as traders cheered a benign reading on inflation at the consumer level.
After the Labor Department said the overall CPI and the core rate for November were unchanged from the prior month, the Dow ran up 28.76 points, or 0.23%, to 12,445.52, its best-ever finish. Earlier, the index touched a record intraday high of 12,486.30.
The
S&P 500 gained 1.60 points, or 0.11%, to 1427.09, and the
Nasdaq Composite tacked on 3.35 points, or 0.14%, to 2457.20.
The upswing punctuated a week in which the Dow added 138 points, or 1.1%, its second straight weekly gain. The S&P 500 was higher by 17 points, or 1.2%, and the Nasdaq collected 20 points, or 0.8%, over the five sessions.
By subgroup, banking stocks were the best performers of the session. The Philadelphia/KBW Bank Sector Index rose 0.6%. On the other hand, metal stocks were crushed as both silver and gold futures fell hard. The Amex Gold Bugs Index slipped 1.5% and the Philadelphia Gold & Silver Index lost 1.4%.
Volume was heavy, with more than 3.21 billion shares changing hands on the
New York Stock Exchange. Decliners outpaced advancers by a 6-to-5 margin. The Nasdaq traded roughly 2.37 billion shares, and losers edged winners 8 to 7.
"Overall, we had decent economic numbers that had traders talking about a soft landing," said Jay Suskind, head of institutional equity trading with Ryan Beck & Co. "Going into the last two weeks of the year, we'll get lighter volumes and people leaving for vacation. The bias should be to the upside and we should end the year near these highs, something we can deal with in January."
Invigorating the bulls was a government report on inflation. Overall, consumer prices were expected to have risen 0.2% last month instead of coming in flat with October. The core consumer price index was also supposed to show that excluding food and energy, prices rose 0.2%.
Ian Shepherdson, chief economist with High Frequency Economics, said that prices were expected to fall after declines in auto prices, but the market didn't account for such an abrupt downshift.
"Prices can fall further over the next few months," Shepherdson said. "Elsewhere, the core numbers are soft more or less everywhere except housing, where rents rose on trend and lodging costs rebounded. Inflation is fading fast. The Fed can safely ease to boost growth."
A separate report said that November production at utilities, factories and mines rose 0.2%, ahead of forecasts for no change. Capacity utilization was 81.8%, slightly below the consensus estimate.
Following the economic data, Treasuries were steady. The 10-year note was unchanged in price to yield 4.59%. The 30-year bond was flat, yielding 4.71%. The dollar was higher against the euro and the yen.
Also playing a role in the session was the simultaneous expiration of four different derivatives. Trading for the last day were stock index futures, stock index options, stock options and single stock futures. The expiration of all four contracts, referred to as quadruple witching, happens quarterly.
Stocks in the news included
Dell (DELL Quote), which said after the prior session's close that it would delay its 10-Q quarterly filing with regulators because of a probe into its accounting. Dell lost 34 cents, or 1.3%, to $26.53.
Similarly,
Apple (AAPL Quote) will need more time to file its annual report as it continues a review of its options accounting. The company said in a regulatory document that it's working on a restatement of its past compensation expenses. Shares of Apple were off 83 cents, or 0.9%, to close at $87.72.
Also after the close,
Home Depot (HD Quote) revealed plans for a $3 billion accelerated share buyback, and
Bear Stearns (BSC Quote), whose strong earnings this week continued a trend for investment banks, boosted its repurchase authorization by $500 million to $2 billion.
Dow component Home Depot finished lower by 0.2% to $39.89. Bear Stearns added 2.3% to $163.68.
Elsewhere, shares of
Black & Decker (BDK Quote) sank 10% after the tool maker dropped its fourth-quarter earnings and revenue outlook, citing a decline in orders from key retailers. Shares slid $8.66 to $78.26.
Oil prices were again higher, surging by 92 cents to $63.43. Crude futures strengthened Thursday after OPEC said it would probably further cut production, this time by half a million barrels a day, early next year.
A few weeks ago, the world's biggest oil-exporting group said it was reducing output by 1.2 million barrels, but analysts don't believe the curtailment has actually been that pronounced.
Overseas, European markets were moderately higher. London's FTSE 100 was up 0.5% to 6260, and Frankfurt's Xetra DAX added 0.6% to 6589. Asia's shares rose overnight. The Nikkei gained 0.5% to 16,914, and the Hang Seng added 1.1% to 19,110.
