CNNMoney.com Market Report - May. 1, 2007 (2024)

NEW YORK (CNNMoney.com) -- The Dow industrials surged to an all-time high Thursday, ending at a new record for the fourth time in the last five sessions as stocks found some momentum at the end of a choppy day on Wall Street.

The Dow Jones industrial average (up 73.23 to 13,136.14, Charts) added nearly 0.6 percent and ended at a new record. The blue-chip average did not take out the all-time intraday record of 13,162.06 it hit Monday.

The tech-heavy Nasdaq composite (up 6.44 to 2,531.53, Charts) and the broader S&P 500 (up 3.93 to 1,486.30, Charts) index both added nearly 0.3 percent.

Treasury prices fell, lowering the corresponding yields. The dollar rose against the euro, after hitting an all-time low last week. The greenback also advanced versus the yen

Stocks had struggled through most of the session as investors weighed lower oil prices, a strong read on manufacturing, further signs of weakness in the housing market, a number of company earnings and weak April auto sales.

But the tone turned more positive near the close, with investors looking to extend the big April rally.

"I think the market is very positive in the short term," said Dan Genter, president and CEO at RNC Genter Capital Management. "People have adapted to the fact that the economy is slowing, but earnings are going to continue to be solid and that the Fed is neither going to run to the rescue or attack us."

In other words, reasonably upbeat growth paired with a Federal Reserve that will probably continue to stay on hold in terms of moving short-term interest rates.

However, Genter said that with the major gauges all up between 4 and 6 percent this year, there is the potential for a bit of a pullback, particularly in the typically sluggish summer months, when trading volume is low and stocks can languish.

Among stock movers Tuesday, Dow Jones (up $19.87 to $56.20, Charts) surged 55 percent after it received an unsolicited $5 billion takeover bid from News Corp. (down $1.01 to $22.99, Charts, Fortune 500) News Corp. shares slumped 4 percent.

Wednesday morning brings earnings from CNNMoney parent Time Warner (Charts, Fortune 500), as well as the March factory orders report and the weekly oil inventories report.

Blue-chip gains were broad based, with 23 out of 30 Dow components rising led by Hewlett-Packard (up $0.75 to $42.89, Charts, Fortune 500), Intel (up $0.30 to $21.80, Charts, Fortune 500) and Citigroup (up $0.58 to $54.20, Charts, Fortune 500).

Automakers were reporting April sales throughout the session. General Motors (up $0.02 to $31.25, Charts, Fortune 500) said U.S. sales fell 2.2 percent in the month, due to the impact of a weak housing market and high gas prices. Shares were little changed.

Ford Motor (up $0.01 to $8.05, Charts, Fortune 500) said shares fell 12.9 percent from a year ago. Shares also ended the session little changed.

Circuit City (down $0.93 to $16.52, Charts, Fortune 500) fell 5.3 percent in active New York Stock Exchange trading after saying late Monday that it expects to report a first-quarter loss. The electronics retailer also withdrew its previously issued first-half outlook, blaming weaker April sales.

Dow component (down $1.57 to $62.84, Charts, Fortune 500) reported fiscal third-quarter earnings that rose from a year earlier and met analysts' forecasts on higher sales that beat forecasts. The consumer products company also said it expects fiscal fourth-quarter and full year earnings to hit the top end of its previous range, in line with forecasts.

However, shares fell 2.4 percent as investors took a 'sell the news' approach.

BEA Systems (down $0.36 to $11.43, Charts) lost 3 percent in active Nasdaq trade after the business software maker warned that first-quarter revenue won't meet forecasts, due to a tough selling environment.

Liz Claiborne (down $8.37 to $36.35, Charts, Fortune 500) slumped 18.7 percent after the women's clothing retailer reported sharply lower quarterly profit that missed expectations and warned that 2007 earnings would miss estimates.

BP (up $0.00 to $67.32, Charts) said its CEO was stepping down after UK courts removed a legal injunction that stopped a newspaper group from printing details of his private life.

Market breadth was mixed. On the New York Stock Exchange, winners edged losers 8 to 7 on volume of 1.76 billion shares. On the Nasdaq, decliners topped advancers by a narrow margin on volume of 2.41 billion shares.

With 68 percent of the S&P 500 having reported results, earnings are currently on track to have risen 6.8 percent from a year earlier, more than double what analysts were forecasting April 1, according to the latest Thomson Financial estimates.

While the results have been better than what was expected, the first quarter does represent the slowest earnings growth in 3-1/2 years, with the S&P 500 breaking a streak of 14 quarters of double-digit percentage growth.

The earnings helped lift stocks in April, a traditionally strong month on Wall Street.

The Dow rose about 5.7 percent in the month, its best percentage gain in a month since October 2003. The Nasdaq composite rose 4.3 percent, its best monthly gain since October 2004. The S&P 500 index rose 4.3 percent in April, its best one-month gain since November 2004.

After the strong April, the major gauges were probably vulnerable to a pullback in early May, particularly as they hit up against what analysts refer to as resistance levels, said Todd Salamone, director of trading at Schaeffer's Investment Research.

"Overall, we're bullish, but we would expect some consolidation-type behavior in the short term, followed by a general upward move later in the month," Salamone said.

He said that such a move was typical after a period of strength.

The morning brought a number of economic reports. The ISM index, a key reading on manufacturing, rose to 54.7 in April from 50.9 in the previous month. Economists thought it would rise to 51.0.

Pending home sales fell 4.9 percent in the month, showing a large drop among sellers finding buyers for their homes.

U.S. light crude oil for June delivery fell $1.27 to settle at $64.44 a barrel on the New York Mercantile Exchange.

COMEX gold for June delivery fell $6.20 to settle at $677.30 an ounce.

Treasury prices slipped, raising the yield on the 10-year note to 4.64 percent from 4.62 percent late Monday. Treasury prices and yields move in opposite directions.

In currency trading, the dollar gained against the euro, after hitting an all-time low versus the European currency last week. The dollar also rose versus the yen.