Market Shrugs Off Rate Increase
The FOMC raised rates by 1/4 point.
But stocks shrugged off the news.
It was the 10th consecutive rate increase, bringing the key rate
to 3.25%. The Fed gave no hint of any let-up in rate increases, saying the risks
of inflation and weaker growth can be balanced. The policy statement contained
no major changes, and the committee said rates can be raised at a "measured
pace."
Since the April lows, the Dow is up 5.8%; the Nasdaq has gained
14%.
In economic news, productivity decelerated to a 2.2% annual rate in the first
quarter. Unit labor costs rose 1.3% in Q2, down from 3.6% in Q1.
After the bell, Disney
(
DIS |
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PowerRating) reported 0.41, beating
the 0.38 estimate. Revenues were $7.715 billion, slightly lower than
expected.
Cisco
(
CSCO |
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PowerRating) was in-line at 0.25; revenue was $6.58 billion, also
in-line.
Ruth’s Chris Steakhouse
(RUTH) priced its IPO at $18, above the range, and increased size to 13 million
shares. The stock closed at 20.70.
Elan (ELN)
was in focus after an encouraging safety evaluation and on speculation Tysabri
will return to the market. ELN closed up 13% and partner Biogen-Idec
(
BIIB |
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PowerRating) closed up over 7%.
Advanced Micro Devices
(AMD)
was upgraded to overweight at Lehman Bros.
Gap Inc
(
GPS |
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PowerRating) was higher on rumors that the company may be
considering a leveraged buyout. The
Retail Sector is up 1.0% on the news.
Oil is up 48% since the beginning of the year.
Strong sectors were: Healthcare
(
$HMO.X |
Quote |
Chart |
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PowerRating) +1.45% Semis
(
$SOX.X |
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PowerRating) +1.21% Brokers
(
$XBD.X |
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PowerRating) +1.30%
Weak sectors were: Oil Services
(
$OSX.X |
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PowerRating) -1.05% Airlines
(
$XAL.X |
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PowerRating) -0.70%
| Dow | +78.74 | 10,615.67 |
| Nasdaq | +9.80 | 2174.19 |
| S&P 500 | +8.26 | 1231.39 |
Stocks in the news:
Blockbuster (BBI)
missed by 0.12 and withdrew its previous guidance.
LoJack (LOJN)
beat by 0.08 and guided FY 2005 higher.
PG&E (PCG)
was upgraded to buy from hold at Jeffries, who have a $40 price target.
Edison (EIX)
beat by 0.10.
King Pharmaceuticals
(KG)
beat by 0.22% revenues rose 68% year over year.
Faro Tech (FARO)
missed by 0.04 and guided to the low end of the range.
Brice Wightman