briefly

Stock Ticker
from

3 hr 2 min ago

[BRIEFING.COM] The market chalked up another solid performance amid signs that consumer spending is holding up well in the face of high gas prices. Additionally, a report that first quarter labor productivity increased, and that wage inflation remained contained, also provided support. An added factor that fostered bargain hunting efforts following one of the worst monthly performances for the broader market since July 2004 was the sense that stocks remain oversold on a short-term basis. Further, reports late in the day that the U.S. reached an agreement with five other world powers regarding Iran's nuclear program gave stocks an extra boost into the close of trading.

Helping to kick off the month of June on a more positive note that carried broad-based buying efforts into the close was the consumer's resilience to high gas prices, as evidenced by strong monthly same-store sales across the board. According to the International Council of Shopping Centers, retail sales rose 4.2% in May, versus an expected 3.5% rise, led by department stores and specialty clothing chains. J.C. Penney (JCP 64.79 +3.95) surged after exceeding expectations with an 11.1% gain in May same-store sales and boosting its Q2 EPS outlook. Gymboree (GYMB 34.59 -0.80), a suggested holding in our Active Portfolio which hit a 52-week high at the open, also turned in a strong report.

The Labor Dept. showing that Q1 productivity was revised up to a 3.7% annual rate, but that inflation was contained, as evidenced by a smaller than expected rise in unit labor costs of 1.6%, eased concerns about the Fed going too far with its tightening efforts. The ISM manufacturing index, meanwhile, fell a larger than expected three points to 54.4% in May -- the lowest reading since August -- offering evidence that higher rates are helping to curtail economic growth. Also, pending home sales fell for a third straight month and construction spending fell for the first time since last June, which were both consistent with the slowdown in housing. Separately, initial claims unexpectedly rose to 336,000, which lifted the four-week average to its highest level since October of 2005 and could signal a bit of softening in the labor market. However, with the focus on tomorrow morning's May payrolls data, the initial claims report garnered little attention.

With regard to industry strength, upside leadership from all 10 economic sectors, especially underperforming areas like Technology and Health Care, also provided some relief. Chip stocks got a recent boost after Advanced Micro Devices (AMD 31.39 +0.50) said it aims to supply a third of the chip market by 2008, up from about 21%. Health Care chipped away at its year-to-date leading 5.6% decline as HMOs rebounded on the back of encouraging FY06 revenue guidance from UnitedHealth Group (UNH 45.72 +1.76). Financials also turned in a solid performance after Fannie Mae (FNM 51.44 +1.69) said last night its mortgage portfolio grew by an annualized 15.7% in April while falling bond yields also acted as a source of support. Even Energy and Materials provided some leadership, despite oil prices losing 1.3% and gold falling to a five-week low. The pullback offered investors further relief on the commodity price front which has served as a proxy for inflationary pressure.
NYSE Adv/Dec 2504/745...Nasdaq Adv/Dec 2229/799