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US Stocks Slide, With FedEx A Drag; CarMax Hits Record December 20, 2006

Posted by notapundit in Economic News.
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NEW YORK (Dow Jones)–Stocks edged lower, damped by a dour outlook from FedEx, and as investors balked at Dell’s management shift. But CarMax’s earnings drove its shares to an all-time closing high, while Hewlett-Packard stock reached its highest level in six years.

The Dow Jones Industrial Average dropped 7.45, or 0.06%, to 12463.87. The Nasdaq Composite Index lost 1.94, or 0.08%, to 2427.61. The Standard & Poor’s 500 Index shed 2.02, or 0.14%, to 1423.53. The index at one point hit 1429.05, less than 100 points from its all-time closing high of 1527.46, reached on March 24, 2000.

“There was not a lot of buying enthusiasm in general, with people happy to sit on their gains,” said Richard Dickson, senior market strategist at Lowry’s Reports. “This was exacerbated by energy stocks. They were one of the strong points of the year and saw some profit taking today, which helped set a downbeat tone.”

FedEx lost 2.15, or 1.9%, to 111.85. Brisk holiday business and lower-than-expected fuel prices contributed to an 8.5% increase in second-quarter earnings. But the package-delivery giant indicated it expects third-quarter earnings per share to fall on a year-over-year basis. Rival United Parcel Service lost 98 cents, or 1.3%, to 74.77, but the news influenced declines among all manner of transporters. Railroad operator Norfolk Southern, for instance, fell 1.87, or 3.7%, to 49.28. All are members of the Dow Jones Transportation Average, which lost 1.1%.

Dell (Nasdaq) dropped 36 cents, or 1.4%, to 25.77. In a management move as it struggles to right itself after more than a year of corporate stumbles, the personal-computer maker tapped the former chief executive of American Airlines parent AMR, Donald Carty, as its new chief financial officer. He is to replace James Schneider, who recently stepped down amid a Securities and Exchange Commission probe into the company’s accounting.

CarMax rose 4.14, or 8.5%, to 52.77, among the Big Board’s best percentage gainers. Third-quarter net income nearly doubled as used-car sales were up sharply from last year and improvements to its Internet site and online advertising paid off. The nation’s largest used-car dealer by sales volume also increased its same-store sales and earnings-per-share forecast for fiscal 2007.

Hewlett-Packard rose 91 cents, or 2.3%, to 41.34, the best gainer on the Dow industrial average. Banc of America Securities reiterated its buy rating for the computer and printer giant, saying its channel checks are not turning up incremental signs of weakness. H-P is also scouting Germany for small acquisitions in the services and software fields, according to German newspaper Handelsblatt, which cited the chief executive of the company’s German operations.

Volume on the New York Stock Exchange was 1.38 billion. Up volume beat down by 723 million shares to 641 million, and stocks that rose in value exceeded those that fell, 1,860 to 1,465.

Nike topped the 100 mark during the session and closed at an all-time high, with a gain of 3.59, or 3.7%, to 99.78. The movement came ahead of posting results after the closing bell. The athletic footwear maker’s fiscal second-quarter profit rose to $325.6 million, or $1.28 a share, from $301.1 million, or $1.14 a share, in the year-ago period.

Yahoo (Nasdaq) fell 82 cents, or 3.1%, to 25.59. RBC Capital Markets reduced 2007 estimates, seeing impacts from the loss of high-margin search affiliate deals to Google and increased turnover in the Internet search engine’s advertising sales force.

JetBlue Airways (Nasdaq) bucked a rise in oil and gained 51 cents, or 3.7%, to 14.29. The low-cost carrier estimated that available seat miles in 2006 rose between 19% to 21% from the previous year, and will rise 11% to 14% in 2007. Available seat miles are a measurement of capacity that tells how much space is available for purchase by passengers.

Ford Motor kept chugging, with a gain of 15 cents, or 2.1%, to 7.33. KeyBanc Capital Markets raised shares to hold from sell, based on a view that most of the bad news and “rapid deterioration in earnings in 2006 will begin to moderate.” The stock rose by the same percent on Tuesday, when Morgan Stanley raised its rating on the stock to overweight from equal weight.

Maxim Integrated Products (Nasdaq) gained 1.32, or 4.4%, to 31.52. The supplier of analog and mixed-signal products said founder and Chief Executive John Gifford plans to retire because of health reasons. The resignation should be viewed as a “healthy dose of change,” and the company could see buyout rumors start to spread, said American Technology Research.

The final Dow Jones Industrial Average close was 12463.87, down 7.45. On the New York Stock Exchange, there were 1,860 issues advancing, 1,465 declining and 159 unchanged.

NYSE volume totaled 1,405,816,120 shares, compared with 1,597,951,310 Tuesday.

The NYSE Composite Index was 9128.88, down 10.56. The average price per share rose by 1 cent.

Alliance-Atlantis Communications jumped 6.15, or 17%, to 42.10 on the pink sheets. Investors moved in as the Canadian co-producer of television’s “CSI: Crime Scene Investigation” put itself up for sale.

NYSE Group slipped 1.17, or 1.1%, to 102.19. Shareholders of the New York Stock Exchange’s parent overwhelmingly voted to support the company’s takeover of pan-European exchange Euronext NV.

Family Dollar Stores gained 51 cents, or 1.8%, to 29.40. Fiscal first-quarter earnings rose to $54.4 million, or 36 cents a share, from $51.4 million, or 32 cents a share, a year earlier, while sales grew 5.9% to $1.60 billion. The deep discounter also said it doesn’t expect to file its quarterly report on time while it continues to review the accounting of historical stock option grant practices.

Cintas (Nasdaq) lost 1.66, or 4%, to 40.22. The supplier of uniforms and restroom supplies posted second-quarter earnings of 51 cents a share, just missing Wall Street’s expectation for 52 cents. Revenue showed a wider miss, coming in at $923.3 million, while analysts had expected $933 million.

Darden Restaurants dropped 58 cents, or 1.4%, to 40.01. The operator of Red Lobster, Olive Garden, Bahama Breeze, Smokey Bones and Seasons 52 restaurants posted a second-quarter profit that beat analysts’ estimates by a penny, while revenue came in at $1.39 billion, just below the $1.4 billion analysts were looking for.

CIT Group advanced 1.27, or 2.3%, to 55.32. CIBC World Markets sees several catalysts over the near term propelling the consumer- and commercial-finance company’s shares higher by at least 20%. The drivers include an increase in 2007 earnings-per-share guidance, as well as CIT raising its dividend by at least 15% and announcing a strategic alternative for one or more of its business segments, CIBC said.

Pepsi Bottling Group lost 33 cents, or 1%, to 31.32. The No. 1 bottler of Pepsi beverages issued a cautious profit forecast for 2007, hurt by anticipated higher costs for raw materials, but backed its target for 2006.

Tiffany gained 60 cents, or 1.5%, to 39.52. The holiday season is usually a big buying time for jewelry, spurring sentiment about a rise in revenue.

Kohl’s slipped 1.39, or 1.9%, to 70.50. Robert W. Baird downgraded the midprice department store operator’s shares to neutral from outperform, citing difficult comparisons in the wake of a “stellar” fiscal 2006 and warmer weather potentially hampering upside for fourth-quarter results.

Emerson Electric gained 1.15, or 2.7%, to 44.25. The diverse manufacturer said that customer orders for the three months ended Nov. 30 rose between 5% and 10% from the same period a year ago.

Hydril (Nasdaq) gained 2.74, or 3.7%, to 76. The maker of oil and gas drilling products said it sees fourth-quarter per-share earnings of about $1.05 or higher, above its prior view.

By Karen Talley, Dow Jones Newswires

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