The Federal Reserve Board held interest rates in check at 5.25 percent, unchanged after five consecutive meetings of the federal bankers. Markets were volatile in the week before our session ended Jan. 31, 2007, responding to mixed earnings reports.
The Fed delivered a positive message on the economy in December. "They coupled a firmer economic growth scenario with the expectation of moderate growth, and they expect the inflation outlook to be improving," John Miller, head of fund management at Nuveen Investments, said about the Fed's decision.
The NAHB/Wells Fargo housing market index improved to 35 in January, from a revised 33 in December and the highest rate since July.
This sentiment was reflected in the Builders' and Product Manufacturers' Housing Giants indices. Although the Product Manufacturers' Stock Index was down 12.67 points, or 1.25 percent, most companies in the index were strongly positive for the month, with the slight downturn by GE pulling the whole index south. The Builders' Index gained 52.83 points, or 4.79 percent, and ended at 1156.09. Advancing issues were moderately stronger than declining issues at a 19-to-16 count. On the Manufacturers' side, advancing issues pulled past declining issues by a 3-to-1 margin, and the index ended at 1000.13.
Shares of AvalonBay (NYSE: AVB) jumped 18.31 points, or 14.08 percent after the apartment real-estate investment trust (REIT) reported a 17.2 percent rise in its funds from operations (FFO) a traditional performance marker for REITs. AvalonBay reported fourth-quarter FFO at $82.6 million, or $1.09 per share, up from $70.1 million, or $0.93 per share earned in last year's fourth quarter. AVB said the rise came from strong demand, which allowed landlords to boost rents. AVB closed at 148.36.
Beazer Homes switched to a loss in its fiscal first quarter ended Dec. 31. Beazer lost $59 million, or $1.54 per share, versus net income of $89.9 million earned a year ago. Beazer cited lower revenues and charges to cover inventory writedowns and forfeited deposits on land options. Beazer lost 3.50 points, or 7.45 percent, and closed at 43.51.
On the production side, Whirlpool increased 8.41 points, or 10.13 percent, to end at 91.43. Whirlpool said it plans to cut about 370 positions at a Tennessee plant and move production to Tulsa, Okla., and Mexico. Whirlpool was the top dollar gainer.
Shares of Fortune slid this month after the company said that first quarter earnings may be off 20 percent due to the weak housing market and higher costs for raw materials. Bernstein Research analyst Robert van Brugge noted that the weakness is a cyclical downturn in housing. "I think it's good that management is putting all the inevitable, bad news out on the table," said van Brugge. "The good thing is that at least they have the stability of the spirits business, which has performed very well." Fortune lost 1.67 points, or 1.96 percent, and was the top dollar loser. Fortune closed at 83.72.
|Margot Crabtree is president of Trade Trends, a financial services company.|