Stock Market News for April 7, 2011 - Market News

Investors stayed away from making large bets as markets posted modest gains amidst low volumes. The technology sector was driven higher after Cisco’s chief executive said the company was implementing stricter methods to narrow its focus. Consequently, the broader market received an impetus.

The Dow Jones Industrial Average (DJIA) dropped 0.3% to close at 12,426.75, while both the Standard & Poor 500 and Nasdaq climbed higher. The S&P 500 was finally able to move above the 1,333 mark, gaining 0.2% to finish at 1,335.54. For the S&P 500, the next target to overcome is the technical high of 1,344 which it achieved for the last time on June 2008. The tech laden Nasdaq gained 0.3% and ended at 2,799.82. On the New York Stock Exchange, consolidated volumes were at only 4.1 billion and for every four stocks that rose, three stocks declined.

In his memo to the company’s employees, dated April 4, 2011, John Chambers, chief executive of Cisco Systems, Inc. (NASDAQ:CSCO) suggested taking certain ‘bold steps’ to regain the lost credibility of the company over past recent years. In his memo, he said: “Over the years as your leader here at Cisco, I’ve also learned many things. I’ve learned to read market transitions by listening deeply to our customers and partners. And I’ve learned to adjust when and where it’s needed, quickly and transparently.”

Wall Street analysts believe that the memo reveals that it is likely that Cisco may opt out of low-margin consumer products such as the Flip video camera, Linksys home networking and audio and media-storage products, as these products have crippled sales growth and puzzled employees. He added: “…today we face a simple truth: we have disappointed our investors and we have confused our employees. Bottom line, we have lost some of the credibility that is foundational to Cisco’s success – and we must earn it back. Our market is in transition, and our company is in transition. And the time is right to define this transition for ourselves and our industry. I understand this. It’s time for focus.” According to him the company needs to prepare for its next move and he said: “As you will see Cisco make a number of targeted moves in the coming weeks and as we move into FY12. These actions will be based on uncompromising integrity and will represent a very simple set of guiding principles”.

Cisco shares gained 4.9% and settled at $18.07, posting the highest jump among the Dow components. Consequently, the broader market moved higher and the Philadelphia Semiconductor Index gained 1.5%. Among other tech stocks, Hewlett-Packard Company (NYSE:HPQ), Microsoft Corporation (NASDAQ:MSFT), Dell Inc. (NASDAQ:DELL), Intel Corporation (NASDAQ:INTC) and Broadcom Corp. (NASDAQ:BRCM) gained 2.2%, 1.4%, 2.4%, 1.2% and 3.9%, respectively. Shares of optical-networking also posted gains and JDS Uniphase Corporation (NASDAQ:JDSU), Finisar Corp. (NASDAQ:FNSR) and Oclaro, Inc. (NASDAQ:OCLR) rose 2.3%, 9.0% and 7.6%, respectively.

Light, sweet crude for May delivery touched an intraday high of $109.15, recording a 2.5-year high before it reversed course after comments from the Energy Department’s Energy Information Administration (EIA). Comments from the EIA about a surge in crude oil inventories pulled down crude prices which settled at $108.83 per barrel after gaining 49 cents. According to the EIA, crude oil inventories were up 1.95 million barrels last week and exceeded expectations of 1.3 million barrels. However, gasoline inventories dropped 400,000 barrels last week and were lower than estimates of a decline of 2.1 million barrels. Oil indexes dropped as did shares from the energy sector. The NYSE Arca Oil Index, NYSE Arca Natural Gas Index and the Philadelphia Oil Service Index dropped 0.7%, 0.8% and 1.9%, respectively. Shares like Halliburton Company (NYSE:HAL), Weatherford International Ltd. (NYSE:WFT), Baker Hughes Incorporated (NYSE:BHI), Marathon Oil Corporation (NYSE:MRO) and Valero Energy Corp. (NYSE:VLO) declined 2.7%, 3.0%, 2.4%, 1.0% and 2.2%, respectively.

In other news, Jose Manuel Barroso, president of the European Commission said Portugal has asked for a bailout package from the European rescue fund. Portugal’s economy has been crippled by a crisis of high public debt, weak banks and slowing growth. Incremental borrowing costs and political deadlock have forced the nation to seek the bail-out package as it has been unable to raise funds for government operations. Jose Socrates, the outgoing prime minister, sent a notice but did not mention any amount and the fate of the financial package will now depend upon extensive talks with the International Monetary Fund and European Union finance ministers. Portugal is now the third European country in a year to seek a bailout package.

Stock Market News for April 7, 2011 – Market News

SIGN UP TO NEWSLETTER

Free E-Book

Recent Posts