Fed Minutes Lifted U.S. Markets

Market Update Analysis:

Author: 123jump.com Staff
123jump.com
Last Update: 5:42 PM EDT October 09 2007

U.S. stocks closed higher after the Fed minutes showed that the Fed believes inflation is under control and is prepared to act to support economic growth. The 50 basis points rate reduction is widely percieved as a gift to Wall Street. The preemptive action by the Fed was partly based on weak August employment report which was revised to 89,000 new job additons from a decline of 4,000 after the rate cut. European and Asian markets closed higher. Oil rebounded.

5:30PM New York, 11:30 PM Frankfurt, 3:00AM Mumbai – U.S. stocks advanced after the Fed statement indicated that inflation is under control and is ready to support economic growth.

Global Market Indexes

Dow Jones Industrial Average closed up 210.80 or 0.86% to a record close 14,164.53, S&P 500 added 12.57 or 0.81% to 1,565.15, and Nasdaq Composite Index traded up 16.54 or 0.59% to a close of 2,803.91. In Toronto TSX Composite gained 30.81 or 0.22% to close at a six year high of 14,264.15.

Of the 30 stocks in Dow Jones Industrial Average 27 closed higher, 3 closed lower, and none was unchanged. Alcoa led the gainers with a rise of 3.7% followed by increases of 3.02% in American Express, 2.2% in Exxon Mobil, and 1.5% in Verizon. The three decliners, Citigroup, Wal-Mart, and Home Depot fell a fraction.

Of the stocks in S&P 500 363 closed higher, 128 fell, and 9 closed unchanged. Twenty eight stocks rose 3% or more and eight fell 3% or more. Molson Coors jumped 10.5% and led the gainers in the index followed by increases in Janus Capital of 6.7%, Franklin Resources of 6.3%, Goldman Sachs of 5.4%, and Yum! Brands of 5.02%. Akamai closed higher for the second day with a rise of 5% to $35.62.

Microchip Technology (MCHP: chart) fell 12.7% to close at $31.98 and led the decliners followed by losses in Countrywide Financial of 4.2%, Supervalu of 3.6%, Limited Brands of 3.5%, and Liz Claiborne of 3.4%.

In London FTSE 100 Index closed up 74.50 or 1.14% to 6,615.40, in Paris CAC 40 index rose 32.53 or 0.56% to close at 5,861.93, and in Frankfurt DAX index increased 0.08% or 6.07 to close at 7,980.44. In Zurich trading SMI added 0.45% or 40.78 to close at 9,137.82.

In Tokyo Nikkei 225 index added 0.56% or 94.86 to close at 17,159.90, in Hong Kong Hang Seng index closed up 1.65% or 457.75 to 28,228.04, in Australia ASX 200 closed up 0.35% or 23.50 to a close of 6,677.80, Sensex surged 4.5% or 788.85 to 18,280.24. In South Korea Kospi Index added 1.31 or 0.07% to 2,014.13.

In Latin Markets Brazil led the gainers with a rise of 1.42% followed by increases of 1.3% in Chile, 0.6% in Peru, and 0.22% in Argentina. Colombia fell 0.9% and Venezuela declined 0.2%.

In Brazil, iBovespa Index closed 1.4% higher or 887.84 to close at 63,548.69 and in Mexico Bolsa Index fell 0.07% or 23.82 to close at 31,801.69. Of the 63 stocks in iBovespa index in Brazil, 45 gained, 15 lost, and 3 closed unchanged.
CCR led the decliners with a loss of 6.7% followed by losses in Duratex of 6.1%, Natura of 2.8%, and CESP of 2.6%. Perdigao led the gainers with a rise of 7% followed by increases of 4.8% in Sadia, 4.3% in Gol, and 4.2% in Copel.

Bond Yields rose on 10-year U.S. bonds to 4.65% and 30-year bond edged down a fraction to close at 4.863% in Friday’s trading and were closed for trading on Monday.

Commodities, Metals, and Currencies

Crude oil rose $1.24 to close at $80.26 per barrel for a front month contract, up 32.0% for the year, natural gas increased 1.7 cents to $6.86 per mBtu, and gasoline futures increased 2 cents to close at 202.02 cents per gallon.

Gold increased $4.40 in New York trading to close at $743.10 per ounce, silver closed up 22 cent to $13.58 per ounce, and copper for front month delivery in London fell $257.00 to $8,003.00 per pound.

Dollar edged lower against euro to $1.4109 from $1.404 and lower to 117.15 yen from 117.4 yen.

Deal News

SAB Miler and Molson Coors agreed t unite their U.S. operations under a new name MillerCoors with total sales of $6.6 billion. The two companies will control 33% of the beer market in the U.S. after the market leader Anheuser Busch with a market share of nearly 50%. SAB Miller will control 58% of the new company and Molson Coors will own 42%.

AT&T agreed to purchase for $2.5 billion wireless spectrum from Aloha Partners. The wireless spectrum purchase gives AT&T access to 12 MHz in the 700 MHz frequency at which signals are stronger than at 1 GHz spectrum.

NBC Universal, unit of General Electric, agreed to pay $925 million for Oxygen Media and expand its portfolio of cable channels including channels USA Network, CNBC, MSNBC, and Sci Fi. The young women focused media channel was launched in 2000 and is now available in 74 million homes. The current Chairwoman and chief executive Geraldine Laybourne said in television interview that she will stay on board till the end of the year.

Newmont Mining agreed to pay C$1.5 billion for Miramar Mining Corp. The Canadian gold explorer was offered C$6.25 or 20% premium to its closing price of C$5.19. Nunavut Territory based Hope Bay Project over 1,000 square kilometers is considered one of the most promising gold exploration region in the world.

SLM, student lender widely known as Sallie Mae, sue the private equity led group to force the buyout at $60 per share price or pay $900 million fee.

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