Stock Market News for April 6, 2011 - Market News
April 06 2011 - 5:07AM
Zacks
On Tuesday, markets dropped a few points to end almost flat as the
trend of lackluster trading continued, displaying the lack of
conviction among investors. Minutes of the Federal Open Market
Committee’s meeting affirmed its plan to continue the economic
stimulus program but the divide in the central bank raised concerns over the possibility of a change in
monetary policy. Meanwhile, merger & acquisition news,
coupled with Nasdaq OMX’s plans to rebalance the Nasdaq 100 index
helped the tech sector gain significant points.
The Dow Jones Industrial Average declined for the
first time in three days and shed 0.05% to close at 12,393.90. The
Standard & Poor 500 (S&P 500) could not break the key
technical resistance level for a second day and closed at 1,332.63
after dropping 0.02%. The Nasdaq Composite Index gained 0.07% and
finished the day at 2,791.19. The fear gauge, CBOE Volatility Index
fell below 17. Volumes remained tight with consolidated volumes on
the New York Stock Exchange at 3.9 billion shares. Advancing stocks
outnumbered decliners by ratio of 17:13 on the NYSE.
Investors were focused on what the
Fed minutes had to offer to the economy as all as a decision on the
continuation of the $600 bond-buying plan. Minutes from the Open
Market Committee’s meeting, held on March 15, confirmed that the
central bank will continue its monetary policy, which is believed
to be a key economic stimulus measure. However, differences arose
during the meeting creating speculation about possible changes to
an easy money policy. Nonetheless, changes remain unlikely with the
policy slated to stretch till June 30 this year. The committee was
divided over the requirement to tighten credit in order to combat
inflation. The economy continues to grow and some economists have
opined that this justifies tighter monetary policy, while the rest
believe that the Fed should proceed with its plans. According to
the minutes: "Participants judged that the potential for
more-widespread disruptions in oil production, and thus for a
larger jump in energy prices, posed both downside risks to growth
and upside risks to inflation. Several of them indicated, in light
of recent developments, that the risks to their forecasts of
inflation had shifted somewhat to the upside".
A report released by the Institute for Supply
Management (ISM) said the non-manufacturing economy had declined on
a monthly basis. The ISM said activity in the services sector
declined to 57.3% in March compared to 59.7% in February, the
index’s highest level in six years. The “magic-50” index suggests
an expansion when the level is higher than 50 while anything below
50 represents an economic contraction. This is the sixteenth
consecutive month that the level has remained above 50 and suggests
the service side of the economy continues to grow.
In global news, the People's Bank of China raised
interest rates by 25 basis points, the fourth time in six months
that the central bank has taken such a step to control inflationary
pressure. Crude prices dropped marginally on Tuesday and this hike
might continue to weigh on oil demand over the next few months. The
resumption of oil shipments from
Libya and a decline in gasoline demand also helped crude
prices move lower as the crude price for May delivery settled at
$108.34 per barrel. Crude demand in China becomes a significant
factor influencing crude prices. According to the U.S. Energy
Information Administration, oil consumption in China is expected to
touch 9.6 million barrels a day this year and will account for 37%
of the projected world oil demand.
News of Texas Instruments Inc. (NYSE:TXN)
acquiring National Semiconductor Corporation (NYSE:NSM) had already
spread after the closing bell on Monday and the mergers and
acquisitions activity yesterday helped the chip sector post higher
gains. Following news of the $6.5 billion deal, Texas Instruments
gained 1.7% and National Semiconductor soared 71.0% on Tuesday.
Other chip stocks to gain were Intersil Corporation (NASDAQ:ISIL),
Semtech Corp. (NASDAQ:SMTC) and ON Semiconductor Corp.
(NASDAQ:ONNN) and they gained 8.4%, 7.5% and 2.7%,
respectively.
The tech sector as a whole was also pushed higher
after Nasdaq OMX announced its plans to rebalance the weight of the
companies listed on the index. According to Nasdaq OMX Group, the
rebalancing is to adjust the weights of index components
corresponding to their market capitalizations. Following the
rebalancing, 19 stocks will enjoy a larger share of the index while
the rest will have to suffer a decline in percentages. The biggest
gainer of the rebalancing will be Microsoft Corporation
(NASDAQ:MSFT), while Apple Inc. (NASDAQ:AAPL) stands to lose the
most as Nasdaq will shrink its weightage from 20.5% to 12.3%.
Stocks of Microsoft Corporation gained 0.9% while Apple shed 0.7%
over the last day. With a near 5% increase, Microsoft Corporation
will have the largest percentage increase, raising the software’s
major share to 8.3%. Other stocks to gain from the rebalancing
included Intel Corporation (NASDAQ:INTC), Oracle Corp.
(NASDAQ:ORCL), Google Inc. (NASDAQ:GOOG), Cisco Systems, Inc.
(NASDAQ:CSCO), Dell Inc. (NASDAQ:DELL) and Yahoo! Inc.
(NASDAQ:YHOO) and they will rise to 4.2%, 6.7%, 5.8%, 3.7%, 1.1%
and 0.9%, respectively.
The basic materials sector enjoyed a cheerful day
as traders expected higher price increases. Consequently, Alcoa,
Inc., The Dow Chemical Company and Newmont Mining Corp. rose 2.8%,
1.3% and 4.4%, respectively.
APPLE INC (AAPL): Free Stock Analysis Report
CISCO SYSTEMS (CSCO): Free Stock Analysis Report
DELL INC (DELL): Free Stock Analysis Report
GOOGLE INC-CL A (GOOG): Free Stock Analysis Report
INTEL CORP (INTC): Free Stock Analysis Report
INTERSIL CORP (ISIL): Free Stock Analysis Report
MICROSOFT CORP (MSFT): Free Stock Analysis Report
NATL SEMICON (NSM): Free Stock Analysis Report
ON SEMICON CORP (ONNN): Free Stock Analysis Report
ORACLE CORP (ORCL): Free Stock Analysis Report
SEMTECH CORP (SMTC): Free Stock Analysis Report
TEXAS INSTRS (TXN): Free Stock Analysis Report
YAHOO! INC (YHOO): Free Stock Analysis Report
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