Jim Cramer Blog

Drop in energy prices push the Dow ($INDU) to the flat line. This blue chip index ended the session with a gain of just 0.56 points to 12,666.87. The S&P 500 ($SPX) added 2.02 points to 1,450.02. The NASDAQ ($COMPQ) was the best performer of the day, up 19.01 points to close at 2,490.50. Volume remained moderate with the NYSE trading 1.48 billion shares and the Naz turning over 2.23 billion. Market breadth was positive by a 19-to-14 and 19-to-12 ratio on the Big Board and Naz respectively.Volatility in oil prices created volatility in the Dow Wednesday. Crude rose to a high of $59.84 today, but closed with a loss of $1.17 a barrel to $57.71. Oil inventory levels fell 0.4 million barrels, but distillates and gasoline reserves saw much larger declines of 3.7 million and 2.6 million barrels respectively. As a result, Exxon Mobil (XOM) shares fell 0.47 percent and the AMEX Oil Index ($XOI) fell half a percent as well. Tech stocks fared well Wednesday following a strong report by Cisco Systems (CSCO). The networking giant saw a 40 percent rise in profits and provided an outlook that was very optimistic. This led to a gain of 2.97 percent for CSCO, with the stock closing at $28.09. Nonetheless, the stock did close off its intraday high at $28.85. Shares of Amazon.com (AMZN) tacked on 1.9 percent today after it announced a partnership with TiVo (TIVO). He deal will allow AMZN to offer movies and TV shows that can be sent to a TiVo device. This news really helped out TIVO shares, which gained 8.9 percent on the session to close at $5.97. Shares of Texas Instruments (TXN) fell 0.6 percent after Infineon Tech (IFX) received a contract to supply chips to Nokia (NOK). Though IFX states the deal will not end their relationship using TXN chips, it was taken as bad news for TXN. However, IFX shares rallied 10.5 percent on the announcement. In economic news, fourth-quarter productivity was strong at growth of 3.0 percent. This is above estimates for a reading of 2.0 percent and well above an adjusted third-quarter decline of 0.1 percent. Unit labor costs, a key measure of inflation, came in at 1.7 percent, which was 3-tenths below estimates. This data points to an economy that is showing moderate strength, while avoiding inflationary pressures due to strong productivity growth.
Jody Osborne

Labels: AMZN, CSCO, IFX, NOK, SPX, Tivo, TXN, XOI, XOM

Stocks trade mixed in midday action following the January jobs data. The nonfarm payrolls figure came in below estimates, but there was more to this report than the headline figure. Earnings news continues to be a focus as well Friday with Amazon.com (AMZN) falling on its report as is Chevron (CVX). Overall, though stocks are treading water this afternoon, the data released today confirms a slowing in inflation and a soft landing for the economy.The January jobs data showed that 111,000 nonfarm payrolls were added during the month. Though a solid number, it was well below estimates for gains of about 160,000 payrolls. However, both November and December were revised higher, adding a total of 99,000 payrolls. Besides gains in payrolls, inflation pressures eased with average hourly earnings up just 0.2 percent, a tenth below expectations. Overall, most economists see the recent bout of economic data as a “Goldilocks” situation, one where the economy isn’t too hot or too cold, but just right. In other economic news, consumer sentiment fell slightly from the early month reading of 98.0, down to 96.9. However, this is still well above the December figure of 91.7. The fact that the expectations index was a bit stronger than current conditions points to some optimism. This data follows the Conference Board confidence data last Tuesday that also showed strength. In earnings news, AMZN reported that earnings fell 51 percent due in large part to its shrinking margins. This occurred even though the company saw sales rise 34 percent. The company also had a $91 million income tax expense that hurt the bottom line. AMZN expects to see a continued rise in sales this year, predicting growth of 28 percent. Despite this news, the stock is down more than three percent in midday action. Chevron had the unenvious task of following Exxon Mobil (XOM) with its earnings last night. XOM reported a decline in fourth-quarter earnings, but once again set a record for earnings in a year. CVX, which is the third-largest energy company, also saw a decline in quarter earnings. Profits fell to $3.77 billion as natural gas prices hurt the bottom line. CVX shares are down about half a percent in midday action. Overall, the AMEX Oil Index ($XOI) is off about three-quarters of a percent. Overall, the major market indices are up nicely this week so some minor profit taking or consolidation Friday isn’t a major concern for the bulls. In fact, the bulls have to be pleased with how earnings have been and the state of the economy, which should bode well for stock prices as we move further into 2007.
Jody Osborne

Labels: AMZN, CVX, XOI, XOM

Only two trading days remain in the year and, in the absence of any market nosedives between now and Friday, bulls will probably be pleased with the stock market’s performance in 2006. The S&P 500 Index ($SPX) has added a respectable 14.3%, the Dow Jones Industrial Average ($INDU) is up 16.74% to record highs, and the NASDAQ ($COMPQ) is up 10.24%.The gains aren’t limited to the large cap stocks of the Dow, S&P 500, or NASDAQ. The Russell 2000 Small Cap Index ($RUT) gained 18.5% and the S&P MidCap Index ($MID) rose more than 10%. In addition, nearly every sector of the market moved higher as well. Steel stocks were among the best gainers. Investor appetite for steel companies rose amid merger hopes and better pricing for the metal. So, despite concerns about slowing demand from autos and housing, stocks like AK Steel (AKS) and Chaparral Steel (CHAP) surged more than 100%. The SIG Steel Producers Index ($STQ) is up nearly 50% on the year. Tech stocks traded mostly higher. Computer stocks led the sector in 2006. The GSTI Computer Index ($GHA) surged 31.65% since December 31, 2005. Internet and software stocks also did well. However, semiconductors did not. The PHLX Semiconductor Index ($SOX) is off 2% and, at 469.97; the chip index is below its 2003 closing value of 508.21 The Dogs of the Dow ($MUT) made a comeback. The investment strategy, which involves buying the ten Dow stocks with the highest dividend yields at the beginning of the year, delivered a 27% return so far in 2006. The advance follows an 8.85% decline in 2005. Energy stocks continued their dominant performance. The Select Sector Energy Fund (XLE), which holds all of the energy-related stocks from within the S&P 500 Index, is up 18%. The gains add to a 23.4% advance in 03, a 31.8% rally in 04, and a 38.5% surge last year. Major oil companies led the rally. The AMEX Oil Index ($XOI) is up 21.4%. Meanwhile, the AMEX Natural Gas Index ($XNG) has added 12.53% and the PHLX Oil Service Index ($OSX) gained 11.1%.Brokers and banks helped lift the financials. The Select Sector Financial Fund (XLF) rallied 17.21%. Commodity-related stocks, consumer staples, retailers, and cyclicals also beat the S&P 500 Index. Utilities, airlines, and gold mining stocks also did well in 2006.
By Frederic Ruffy, Optionetics.com

Labels: AKS, CHAP, GHA, MUT, OSX, SOX, STQ, XLE, XLF, XNG, XOI