Wall Street Romps Forward
Markets breezed ahead for the month ended July 29, 2005, looking beyond high energy costs to an economy that remains stable despite rising oil prices. The gross domestic product, or GDP, a broad benchmark of economic health, grew at 3.4 percent for the second quarter. This marks the 9th straight quarter that the economy has grown more than 3 percent. “The economy is rolling along like a freight train. High energy prices are less of a drag than what many people had feared,” said Ken Mayland, president of ClearView Economics. In addition, Fed chief Alan Greenspan has indicated another rise in interest rates when the Federal Reserve meets again at its August 9 session as a hedge against inflation.
Both the Builders’ and the Product Manufacturers’ indices put in robust sessions, in tandem with the major markets. Even companies ending in negative terrain had no passion behind their positions. The Builders’ Index closed ahead 124.17 points, or 9.32 percent, ending at 1456.30. Advancing issues overpowered declining issues by a 17-to-1 margin. The Product Manufacturers’ Index closed at 985.87, a gain of 13.13 points, or 1.35 percent. Toll Brothers had a 2-for-1 stock split on July 11, 2005. Of the 14 companies tracked in the Manufacturers’ Index, advancing issues outpaced declining issues by a 13-to-1 count.
On the Builders’ side, shares of William Lyon gained ground after the company revealed that its controlling shareholder decided not to take the company private. General William Lyon had offered $82 per share in April. The investment firm JMP Securities started William Lyon with a rating of “strong buy,” saying in a research note that “William Lyon is a small cap, but fast growing, public home-building company that operates in the Southwest states of California, Arizona and Nevada, among the nation’s strongest housing markets.” William Lyon jumped 28.39 points, or 29.27 percent, and ended at 125.40.
Dominion was also a robust player after the company said that orders for homes in the second quarter ended June 30 gained 28 percent over last year’s second quarter, to 655 homes. The sales value of homes sold rose 24 percent, to $123.1 million. After the report, Raymond James upped its rating for Dominion to “market perform” from “underperform.” Dominion gained 5.49 points, or 34.01 percent, and closed at 21.63. Dominion was the top percentage gainer on the builders’ side.
On the Product Manufacturers’ Index, wedding bells kept distracting our players, as Whirpool’s bid for Maytag heated up. Chinese suitor Haier withdrew its offer after Whirlpool stepped into the merger and acquisitions fray with a $17-per-share offer, then upped it to $18 per share. Maytag has agreed to open its books to Whirlpool. This step takes Maytag further away from privately-held Ripplewood Holdings’ original offer of $14 per share. Maytag gained 1.21 points, or 7.73 percent, and closed at 16.87. Whirlpool increased 9.87 points, or 14.08 percent, and ended at 79.98. Whirlpool was the top dollar gainer this month.
GE stumbled slightly as it tripped into negative terrain, losing 0.14 points, or 0.40 percent, to end at 34.50. GE division NBC Universal is in talks to purchase movie studio DreamWorks for as much as $1 billion. GE was our top dollar and percentage loser.
American Woodmark was part of “Fortune 40,” Fortune Magazine’s report of top stock picks. American Woodmark was included in Fortune’s annual portfolio of “inexpensive stocks with momentum,” including stocks with a market cap between $250 million and $2 billion. American Woodmark gained 5.20 points, or 17.33 percent, and closed at 35.21. American Woodmark was the top percentage gainer on the manufacturers’ side.