AP News, December 21st, 2006
Stocks meandered in light trading ahead of the holiday weekend as investors tried to reconcile a handful of robust corporate profit reports with news that the economy grew at a weaker-than-expected pace in the third quarter.
Quarterly results from drug store chain Rite Aid Corp. and ConAgra Foods Inc. lent support to the notion that companies will still squeeze out growth in a slowing economy.
Sentiment has been upbeat on Wall Street in the final months of the year, so investors tried to look past news that the economy grew at a slower pace in the third quarter than had been estimated. Gross domestic product fell to 2 percent in the third quarter amid a cooling real estate market; the Commerce Department estimated a month ago that the reading would be closer to 2.2 percent. Investment in home building fell by the largest amount in 15 years.
In midmorning trading on a day seeing light volume before the holidays, the Dow Jones industrial average rose 1.60, or 0.01 percent, to 12,465.47.
Broader stock indicators were also higher. The Standard & Poor's 500 index was up 0.26, or 0.02 percent, at 1,423.79, and the Nasdaq composite index was up 1.42, or 0.06 percent, at 2,429.03.
Bonds rose, with the yield on the benchmark 10-year Treasury note falling to 4.59 percent from 4.60 percent late Wednesday. The dollar was mixed against other major currencies, while gold prices fell.
Light, sweet crude was down 48 cents at $63.24 per barrel on the New York Mercantile Exchange.
Wall Street showed little reaction to word that a gauge of future economic activity advanced 0.1 percent in November. The report from the Conference Board, an industry-backed research group, found its Index of Leading Economic Indicators edged up to 138.2 last month following a revised increase of 0.1 percent to 138.1 in October. It suggests the U.S. economy will continue to expand modestly in coming months.
In corporate news, Rite Aid rose 15 cents, or 2.8 percent, to $5.52 after reporting a narrower fiscal third-quarter loss amid stronger pharmacy sales and increased prescription volume. The company reiterated its 2007 profit forecast.
ConAgra rose $1.13, or 4.2 percent, to $27.98 after its fiscal second-quarter profit rose 44 percent. The maker of Healthy Choice and other packaged food brands raised its forecast for the year.
Defense contractor Raytheon Co. rose 9 cents to $53.95 after striking a deal to sell its aircraft business, which makes Hawker and Premier business jets, for $3.3 billion to a new company backed by an affiliate of Goldman Sachs Group Inc. and a Canadian private equity group.
Jabil Circuit Inc. fell $2.24, or 8.4 percent, to $24.32 after the company's fiscal first-quarter results disappointed Wall Street despite a 34 percent increase in revenue.
PMC-Sierra Inc., which makes chips used communications and networking equipment, fell 34 cents, or 4.9 percent, to $6.55 per share, after cutting its fourth-quarter profit forecast.
The Russell 2000 index of smaller companies was up 2.14, or 0.27 percent, at 787.70.
Advancing issues outnumbered decliners by about 3 to 2 on the New York Stock Exchange, where volume came to 165.2 million shares, compared with 261.2 million traded at the same point Wednesday.
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