Dow Marches Higher Again - TheStreet

Dow Marches Higher Again

The Nasdaq, however, closes lower after Dell's warning.
Author:
Publish date:

Updated from 4:14 p.m. EDT

Tech stocks fell Tuesday, a day after

Dell

(DELL) - Get Report

lowered its profit guidance, but the

Dow Jones Industrial Average

continued steaming toward an all-time high.

The

Nasdaq

fell 6.74 points, or 0.29%, to 2338.25, while the

S&P 500

was higher by 0.48 point, or 0.04%, at 1325.14. The Dow rose another 55.23 points, or 0.48%, to 11,639.77. The Dow's record close came on Jan. 14, 2000, when the index finished at 11,722.98.

"It was a wait-and-see day, ahead of the

Federal Reserve's

announcement tomorrow," said Barry Hyman, equity market strategist with Ehrenkrantz King Nussbaum. "The existing trends of the blue chips outperforming remain a positive factor. If we get any type of a hint for a hold, the Dow could hit a new record high within a few days. I would expect a volatile day tomorrow."

About 1.52 billion shares traded on the

New York Stock Exchange

, with advancers matching decliners. Trading volume on the Nasdaq was 1.91 billion shares, with decliners outpacing advancers by a 9-to-7 margin.

The 10-year Treasury was down 4/32 in price to yield 5.13%, and the dollar rose against the yen and euro.

At 2:15 p.m. EDT Wednesday, the Fed is expected to announce its 16th consecutive quarter-point hike in official interest rates, lifting fed funds to 5%. A heated debate surrounds the

Fed's

next move in June, and tomorrow afternoon's policy statement will hold even more drama than usual for its clues about the future.

Speculators are leaning toward the possibility that Wednesday's hike will be the last of the current two-year-old tightening cycle -- at least for a while. Fed Chairman Ben Bernanke recently said he and his colleagues would consider a "pause" in their current campaign to erase the lag time embedded in most economic data.

To view Gregg Greenberg's video take on today's market, click here

.

Dell warned that first-quarter EPS will be about a nickel short of analyst estimates, and the Nasdaq was pressured all day. The shortfall reflects a discounting campaign by the world's No. 1 personal computer maker aimed at restoring market share.

The news got a bleak reception on Wall Street, where investors worry that an industry price war could make Dell's strategy hard to execute. Dell shares dropped 4.7% to close at $25.20, while

Hewlett-Packard

(HPQ) - Get Report

and

Intel

(INTC) - Get Report

also took hits of 1% or more.

"Technology stocks continue to lag, and that's not usually a healthy sign longer term," said Ken Tower, chief market strategist with CyberTrader. "But the big negative is that so much of the current rally seems based on the expectation that the Fed will stop raising rates. That means a lot of overanalysis of every word, shrug and facial expression of tomorrow's Fed meeting."

By sector, the Philadelphia Semiconductor Sector index lost 1%, the Nasdaq Computer index was off 0.7%, and the Amex Computer index closed down 0.8%.

Oil spiked higher Tuesday after easing during the previous session on hopes that a resolution could be in sight with Iran. According to reports, Iran's president has sent a letter to President Bush proposing "ways for solving problems," which might include the standoff over Iran's nuclear ambitions.

However, summaries of the letter, published by U.S. media, suggested it was more an excoriation of the White House and U.S. policy than an olive branch. June crude was up 92 cents to close at $70.69 a barrel.

Precious metals rocketed to fresh multiyear highs. Gold for June delivery finished up $21.60 to $701.50 an ounce, a near 26-year high. Silver added 70 cents at $14.47 an ounce. Both the Philadelphia Gold and Silver index and the Amex Gold Bugs index finished up about 4.5%.

On the economic front, the Commerce Department said U.S. wholesale inventories rose 0.2% in March as sales were up 0.7%. Economists expected inventories to rise 0.5% after a 0.8% increase in February.

Shares of

General Motors

(GM) - Get Report

were upgraded to hold by Deutsche Bank, which cited the automaker's recent cash-raising activities. The move comes a day after GM revised its first-quarter results to a profit from a loss to reflect new accounting for a health-care settlement. GM rose $2.25, or 9.6%, to close at $25.80.

Fellow Dow component

McDonald's

(MCD) - Get Report

said worldwide same-store sales were up 6.2% in April. U.S. same-store sales rose 4.1%, while European sales jumped 9.3%. The stock added 44 cents, or 1.2%, to $35.83.

McDonald's spin-off

Chipotle

(CMG) - Get Report

said its first-quarter earnings more than tripled to $8 million, or 26 cents a share, on a 20% rise in sales to $187 million. Both numbers were well ahead of estimates. Chipotle surged $7.78, or 13.1%, to $67.05.

Sonus

(SONS)

swung to a first-quarter, adjusted profit of 3 cents a share, on a 78% jump in sales to $60 million, also beating estimates on both lines. Sonus lost 19 cents, or 3.8%, to close at $4.87.

Sara Lee

(SLE)

posted fiscal third-quarter income of $42 million, or 6 cents a share, down from $189 million, or 24 cents, a year ago. Excluding items, earnings reached 22 cents a share. Sales fell 1.3% to $3.79 billion from a year ago. The Thomson First Call consensus was for EPS of 25 cents on sales of $4.43 billion. Sara Lee was off 34 cents, or 1.8%, to $18.35.

Tenet

(THC) - Get Report

swung to a first-quarter profit of $70 million, or 15 cents a share, reversing a year-ago loss of $4 million, or a penny a share. Income from continuing operations was $15 million, or 3 cents a share, beating the Thomson First Call average estimate by a penny. Tenet fell 37 cents, or 4.7%, to $7.59.

Cablevision Systems

(CVC)

reported a first-quarter net loss of $58.9 million, or 21 cents a share, narrowing from a loss of $118.9 million, or 41 cents a share, last year. From continuing operations, Cablevision had a loss of 20 cents a share, greater than the expected loss of 8 cents a share, according to Thomson First Call. The stock finished up 30 cents, or 1.4%, to $21.20.

After the bell,

Cisco

(CSCO) - Get Report

said it had fiscal third-quarter earnings of $1.4 billion, or 22 cents a share, slightly up from a year ago. Revenue rose to $7.32 billion from $6.19 billion. On an adjusted basis, earnings reached 29 cents a share. Analysts were looking for a 26-cent profit on sales of $7.17 billion. Cisco finished the session down 8 cents to $21.68 but was trading up 4.6% in the after-hours session.

Also after Tuesday's close,

Disney

(DIS) - Get Report

reported second-quarter net income of $733 million, or 37 cents a share, up from $657 million, or 31 cents a share, a year ago. Sales rose to $8.03 billion from $7.83 billion a year earlier. The Thomson First Call consensus was for EPS of 31 cents a share on revenue of $8.18 billion. Disney finished up 81 cents, or 2.8%, to $29.58 before the report was released.

Away from earnings,

Coach

(COH)

said its board of directors has approved a stock buyback program for up to $500 million worth of its common stock by the end of June 2007. Shares finished unchanged at $31.92.

Overseas markets were mixed, with London's FTSE 100 adding 0.5% to 6096 and Germany's Xetra DAX unchanged at 6130. In Asia, Japan's Nikkei fell 0.6% to 17,191, while Hong Kong's Hang Seng fell 1% to 17,134.