Stock Market News for June 25, 2009

A surprise rise in demand for durable goods and Oracle’s better-than-expected earnings pushed equity markets higher yesterday, but stocks pared gains as policy makers at Federal Reserve decided to keep the benchmark interest rate between zero and 0.25%.  The S&P 500 index edged up 0.7% to 900.94 and the Dow Jones Industrial Average lost 23 points or 0.3% to end the day at 8299.86.  Tech-heavy Nasdaq jumped 1.6%.  Boeing (NYSE:BA - Analyst Report) continued to trade lower after announcing that it had again delayed initial test flight of its 787 Dreamliner program.  Volume on the NYSE was light at 1.10 billion with advancing issues outpacing declining stocks by a seven-to-three margin.  Crude price eased 0.2% to $68.53 as weekly US stockpile reports were ahead of estimates.  The absence of Fed plans to extend or increase its $300 billion debt buyback program sent Treasury prices lower, with the 10-year, which influences interest rates on mortgages and other consumer debt off 20/32 and the 30-year off 1 14/32.

Although Fed noted that the economic contraction is slowing, its decision to maintain the status quo was widely expected and unanimous.  The Fed also sounded a cautious tone, noting the economy "likely to remain weak for a time," as the consumer remains constrained and employment weak. Nevertheless, at the end of the two-day meeting in Washington, no plans for additional quantitative easing were announced.  At the same time, the central bank reiterated that it is likely to keep the interest rates at low levels for an extended period. 

Among S&P sector grouping, technology stocks led the gainers with a 1.4% rise, after Apple Inc. (NASDAQ:AAPL - Analyst Report) and Microsoft (NASDAQ:MSFT - Analyst Report) advanced.  Oracle (NASDAQ:ORCL - Analyst Report) jumped 7% to $21.26 after reporting better-than-expected results.  Legg Mason (NYSE:LM - Analyst Report) jumped 11% and was the leading gainer on the S&P 500 after media reports said billionaire Nelson Peltz bough a stake in the company and would be looking for a breakup or sale.  On the downside, Supervalu Inc. (NYSE:SVU - Analyst Report) led the decliners on the S&P 500 after it said first quarter earnings will be “substantially below” Street estimates.

Meanwhile, data continued to suggest that recession may be ending.  Durable goods orders unexpectedly rose for the second month in a row, up 1.8% in May, and up 1.1% excluding transportation. Estimates were for a 0.9% decline in total orders, and a 0.5% drop excluding transportation. Of greatest note, nondefense capital orders jumped 4.8%, rallying from the prior two months' falls of 2.9% in April and 1.4% in March.

Thursday sees Fed Chairman Ben Bernanke testifying before a House of Representatives Committee regarding Bank of America’s (NYSE:BAC - Analyst Report) acquisition of Merrill.  Companies reporting their results include ConAgra (NYSE:CAG - Analyst Report), McCormick (NYSE:MKC - Analyst Report), Micron Tech (NYSE:MU - Snapshot Report) and Lennar (NYSE:LEN - Analyst Report).

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Read the full analyst report on LEN