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From Briefing.com: 4:20 pm : Closing the week with an average 3.2% gain, the equity market's major averages continued 2006's streak today. A mixed interpretation of the December employment report triggered some intra-day melee, but buyers ran back post-lunch and carried the market to a fourth straight day of advances.

Each of the ten economic sectors finished on positive ground. A 2.3% surge in the price of crude futures was the Energy sector's gain, with which it closed the week 6% higher. While the energy price action drove that sector, it did little to dampen buying across the broader market. Speaking of commodities, gold futures rose to the highest closing price in 25 years, and helped incite surges across the Materials sector (+1.2%). It was Technology that retained the spotlight today, though; on account of still-surging semiconductors, soaring communication equipment issues, and an altogether general extension of bullishness across the board, Tech rose a weighty 1.4% and continued the 2006 Tech theme. The SOXX index jumped 2% -- up 8% on the week -- and the Nasdaq hit a four and a half year high. Some upbeat corporate news helped to extend the sector's recent rally. Goldman Sachs upped its price target and profit estimates on Google (GOOG 465.15 +13.91) and Yahoo (YHOO 43.20 +1.67) shares, and The Wall Street Journal ran an article discussing those companies' partnership with Briefing.com recommended holding Motorola (MOT 24.47 +0.95) - an example of their efforts to reach consumers beyond the traditional PC. Signifying strong end-market demand, Samsung asserted that it will raise DRAM contract prices by 10%. Garnering particular attention was IBM's (IBM 84.95 +2.45) announcement that it plans to freeze its $48 billion pension plan in 2008. Hardware rallied, and that stock led the Dow, which also hit a four and a half year high today. A lone sore spot was Microsoft (MSFT 26.91 -0.08), which declined following an analyst downgrade.

With respect to the jobs data, investors took somewhat of a mixed interpretation. For a market focused upon the interest rate environment, a lower than expected rise in December non-farm payrolls supported the argument that the Fed may end its current monetary tightening cycle sooner than later. Futures trade jumped, and the indices ran upon the market's launch. However, the consideration of November's upside revision, which essentially puts today's data in-line with what had been expected, served as a tempering factor. A greater than expected uptick in hourly earnings was an additional offsetting element; although the rise was unalarming, that caveat nonetheless fanned inflation concerns. As a result, the Treasury market spent another session submerged and bond traders further flattened the yield curve. The rate-sensitive Financial sector took a bearish cue, but banks reversed course and pushed the influential sector to a supportive 0.5% gain.

Aside from the four and a half year highs hit by the S&P 500, the Dow, and the Nasdaq this week, the NYSE Composite, S&P Financial, Oil Services, S&P Midcap, and Russell 2000 also touched historic highs.DJ30 +77.16 NASDAQ +28.75 SP500 +11.97 NASDAQ Dec/Adv/Vol 1037/2020/2.29 bln NYSE Dec/Adv/Vol 843/2450/1.77 bln

4:32 pm Weekly Wrap

The Fed presented the stock market with a late Christmas present. It was good enough to lead to a fundamental shift in the outlook, and the S&P was up every day this week.

The Fed's December FOMC minutes were released on Tuesday afternoon. The The minutes stated that "views differed on how much further tightening might be required" and that "policy decisions going forward would depend to an increased extent on the implications of incoming economic data."

In other words, several more rate hikes are by no means guaranteed. Market talk went from a fed funds rate of 5% or more later this year to expectations that the Fed might halt the rate hikes at 4 1/2% or 4 3/4% over the next several months.

The S&P 500 index surged 20 points on Tuesday.

The implication that the Fed might be nearing the end of the rate hike cycle is a very important fundamental issue. Higher rates would threaten economic growth in the latter half of 2006, and would lower the relative value of stocks in valuation models.

The market response was rational. It also carried through the week.

The S&P index gained another 5 points on Wednesday, was up fractionally on Thursday, and posted a 12 point gain on Friday. All of this was possible because of the revised perceptions on Fed policy.

The Friday gain was due in part to a lower-than-expected 108,000 increase in December non-farm payrolls. This suggests weaker economic growth than expected, but at this time that is a positive for stocks because it adds to the argument that the Fed will soon stop raising rates. The key inflection issue for stocks is the interest rate outlook, not the economic outlook, and everything will be viewed through that perspective.

Other economic data this week were mixed. December auto sales were disappointing, but sales at retail chains were slightly better than expected for the important month of December.

There were only a few earnings reports. Walgreen, Monsanto, and Accenture had good reports. Oil was up on the week and crude closed above $64 a barrel. That was considered tolerable, however, especially as natural gas prices continued their recent plunge.

The focus will shift to fourth quarter earnings reports over the next couple of weeks, but the underlying tone has clearly improved since late December. This is due entirely to the revised expectations about the outlook for Fed policy.

 
 Index      Started Week Ended Week Change %Change YTD  
 DJIA         10717.50    10959.31  241.81   2.3 % 2.3 %  
 Nasdaq        2205.32     2305.62  100.30   4.5 % 4.5 %  
 S&P 500       1248.29     1285.45   37.16   3.0 % 3.0 %  
 Russell 2000   673.22      699.39   26.17   3.9 % 3.9 %  
 

09:20 am Motorola (MOT)

23.52: Yahoo (YHOO) and Google (GOOG) are singing "Hello Moto" inking deals with the Schaumburg-based handset manufacture looking to give consumers more access to their respective Internet services. Both companies signed new partnerships and services agreements with Motorola in an attempt to extend services beyond desktop PCs to handsets and TVs. Motorola, the world's second largest handset maker, is betting on Google's success, anticipating consumers will pay more for phones directly linked to the top-ranked search engine. Separately, Motorola signed an exclusive 10-year agreement with Eastman Kodak (EK), making it easier for consumers to print, view, and share photos taken on their digital cameras.

Motorola, which continues to gain share against rival Nokia (NOK), will provide a one-click access to Google's search services on its handsets capable of transmitting data. Yahoo is looking to provide consumers mobile access to their Yahoo email, address book, calendar, and instant message services. Both companies have signed deals in the past, but the new agreements raises the bar in terms of access for consumers.

The trend of "everything digital, everything portable" is the basis for our bullish view on the Technology sector, driving growth from semiconductors to consumer electronics products. Motorola, a suggested holding in our Active Portfolio, continues to produce iconic, must-have handsets that enable consumers to integrate all aspects of their digital lives. The partnership with Yahoo and Google makes complete sense for Motorola hoping to sell more higher-end devices that command higher selling prices by offering wide-ranging access, services, and functionality.

If the linkage helps to drive Internet access, it will boost consumer demand for data-services offered by wireless operators, which carries a hefty profit margin. Motorola said it would begin offering the Google services by the end of March, but stated each wireless carrier would announce plan details. Yahoo is expected to announce its new Yahoo Go suite of services today at the CES show in Las Vegas, which will allow consumers all their personalized Yahoo services across different devices. Yahoo said Nokia plans to install the Yahoo Go on its new handsets. Yahoo Go TV service is expected to be released last this year. Motorola remains one of our preferred names within the Technology sector, executing well on the top and bottom line.

--Kimberly DuBord, Briefing.com


09:14 am Accenture Ltd (ACN)

29.68: After the bell last night, Accenture reported Q1 (Nov) earnings of $0.36 per share, two cents better than the Reuters Estimates consensus of $0.34. One of the world's biggest consulting and IT services firms attributed another strong quarterly performance to improved operating margins and record net revenues, with growth across all five operating groups and all three geographic regions. Total revenues rose 11.8% year/year to $4.17 bln, matching Wall Street's consensus. Revenue from its consulting services, which accounted for 62% of its overall business, rose 8% year/year to $2.58 bln, while Outsourcing revenue, which makes up the remaining 38% of Accenture's total top line, surged 18% to $1.59 bln.

In addition to achieving double-digit increases in both its top and bottom lines, Accenture upwardly revised its fiscal 2006 EPS forecasts to the range of $1.52 to $1.57 (consensus $1.53) due to discounted share repurchases and redemptions in Q1. In fact, since new bookings of $5.5 bln checked in at their highest level in seven quarters, management feels confident that they are on the right trajectory to achieve net revenue growth of 9-12% this year. With regard to Q2, management guided GAAP diluted EPS of $0.33-0.35 (consensus $0.35) but sees Q2 revenues of $4.0 bln to $4.15 bln -- a range which is below the $4.24 bln consensus.

Nonetheless, the company's ability to return cash to shareholders through share buybacks and its first ever payout of a quarterly dividend in Q1 bodes well for a company that has gained strong momentum since shares bottomed out last April. The stock has since soared over 40% to a new 52-week high and is up more than 6.0% in pre-market trading.

-- Brian Duhn, Briefing.com

09:09 am IBM (IBM)

82.50: As part of its ongoing global retirement plan strategy shift, IBM said on Thursday that it plans to freeze its $48 billion defined benefit pension plan and expand its 401(k) savings plan for employees. The Armonk, New York-based technology company said it will stop the accrual of new benefits in its defined benefit pension plan and fully preserve all retirement benefits that employees will have earned as of December 31, 2007. The shift to the more predictable cost structure of a 401(k), or defined contribution, plan will affect both existing employees and new hires, but not the 125,000 current U.S. retirees, former employees with vested benefits, or employees who retire prior to January 1, 2008.

Under its redesigned 401(k) plan - the largest in the country with more than $26 billion in assets - IBM said participants will receive a dollar-for-dollar match on the first 6% of pay deferred and a 4% automatic company contribution, for a total of 10% of pay annually.

"We are taking these actions to better control retirement expenses," said Randy MacDonald, IBM senior vice president, human resources. "We also believe these are prudent and balanced steps at a time of uncertainty and conflicting legislative and regulatory directions about defined benefit retirement plans in the Unites States."

As a result of these pension plan changes, IBM will record a one-time pre-tax charge of $270 million in the fourth quarter of 2005. However, the company expects the U.S. plan changes, which will become effective in January 2008, along with 2006 retirement plan changes under consideration in several other countries, will result in worldwide retirement-related expense savings of $450 to $500 million for 2006 and between $2.5 and $3 billion for 2006 through 2010, based on year-end 2005 pension assumptions.

--Richard Jahnke, Briefing.com

09:54 am Xyratex: RBC Capital Mkts upgrades Sector Perform to Outperform. Target $17 to $17. Upgrade is based on the improved near-term assumptions in the storage infrastructure segment due to the accelerated perpendicular recording media rollout; and the likelihood that our FY06 estimates for the storage infrastructure segment will prove conservative due to 60% of Xyratex's full year guidance being related to current purchase orders. Firm says their expectation that a more conservative adoption of S.A.S versus Fibre Channel drives will occur, which should lead to a slower degradation in NetApp rev in relation to the Dot Hill sourcing agreement. Firm also says lower tax rate estimates as a result of storage infrastructure, which operates in a 0% tax rate region, will become a higher percent of Xyratex's financials.

09:53 am Talk America: Needham & Co initiates Buy. Target $12. The firm says that TALK shares trade at only 3.4x 2006 EBITDA, which represents a significant discount to the group average. Assuming that Tall's margins begin to improve and the co moves towards positive EBITDA in 2006, they anticipate that TALK's valuation could benefit from a sustainable multiple expansion scenario.

09:52 am Peabody Energy: Stifel Nicolaus reiterates Buy. Target $90 to $90. Firm also raises 2006 E.P.S. est to $4.65 from $4.50 (consensus $4.43). The firm favors BTU's larger and more diverse coal reserve base as well as its superior track record of meeting earnings expectations,

09:51 am Nokia: Piper Jaffray reiterates Outperform. Target $21 to $21. Firm is saying monthly channel checks continue to indicate stronger trends for NOK in North America. Also, firm raises their tgt on MOT to $25 from $23, saying that checks inidicate that MOT posted strong North American sell-through trends during Dec. Regarding QCOM, firm says checks indicated an improving mix of 1xEV-DO chipsets and higher handset ASPs in the North American handset market, and their checks and discussions with industry contacts indicate strong trends for WCDMA handset sales. Firm also raises their ests for RFMD.

09:50 am Steak n Shake: CL King upgrades Accumulate to Strong Buy. Target $21. Firm is saying they believe the risk/reward is very compelling at current levels with the potential for better than 25% upside over the coming year.

09:49 am Abercrombie: UBS reiterates Neutral. Target $62 to $62. Firm ups price target due to concerns that earnings guidance may disappoint at the Detroit Auto Show next week. Firm also cuts their ests for AXL and LEA.

09:48 am Borg Warner: KeyBanc Capital Mkts / McDonald downgrades Aggressive Buy to Hold. Downgrade is due to concerns that earnings guidance may disappoint at the Detroit Auto Show next week. Firm also cuts their ests for AXL and LEA.

09:44 am CancerVax: Adams Harkness upgrades Reduce to Mkt Perform. Firm is saying they believe that the recent discontinuation of Canvaxin and restructuring announcement, and the resulting effect on the stock price, have played out in full.

09:42 am TETRA Tech: Hibernia Southcoast Capital upgrades Hold to Buy. Target $43. Upgrade follows TTI guidance. Firm says previous expectations for profit contributions from both the Fluids and Well Abandonment and Decommissioning divisions were substantially below the co's guidance for FY06. TTI is benefiting from pricing and international demand for its Fluids division products. Firm says the WA&D division profit contribution should be positively impacted by increased oil and gas production by TTI's Maritech subsidiary, which completed several mature oil and gas property acquisitions during FY06. Additionally, the firm notes WA&D results during FY06 should benefit from hurricane-related work and G.O.M work deferred during property sales in 2003 and 2004.