CLOSING COMMENTS 10-30-06

The Last Week in Review:

Nearly every aspect of the Q3 earnings reports has been positive. More companies than normal have beat analysts estimates, and the aggregate increase is well above expectations. Interesting too, there have been very few earnings warnings for Q4 so far. These numbers are flat-out bullish. Of the S&P 500 companies that have reported, over 70% have reported profits above expectations.

All the major indexes made multi-year highs last week, with the Dow hitting another all-time high. Strong corporate earnings and a reassuring statement on inflation from the Federal Reserve lifted confidence as the S&P 500 had its fifth consecutive weekly gain closing up 8 points. The S&P 500 is up 10.3% for the year. The Dow ended the week up 87 points and has now gained to 12.8% for the year, while the NASDAQ was up 8 points increasing its year-to-date gain to 6.6%. The Russell 2000 closed up 3 points, increasing its year-to-date gain to 13.8%.

The Week Ahead

This week investors will see earning reports from Ashland (ASH), Humana (HUM), Metlife (MET), Principal Financial Group (PFG) and telecom giant Verizon (VZ) on Monday. On Tuesday reports from Hilton Hotels (HLT), Marathon Oil (MRO), U.S. Steel (X), and Valero Energy (VLO) will be released. Wednesday, Time Warner (TWX), Newmont Mining (NEM), Allied Waste (AW), Conseco (CNO), Prudential (PRU), Sunoco (SUN) and Clorox (CLX) will all report their profits. On Thursday reports from Chiquita Brands (CQB), Gateway (GTW), Whole Foods Market (WFMI), and United Stationers (USTR) highlight the day. Friday Duke Energy (DUK), Medco Health Solutions (MHS), and Sierra Pacific (SRP) close out the week.

The economic news for next week will include a variety of other economic reports. Monday September Personal Spending and Personal Income will be reported. The Q3 Employment Cost Index will be released on Tuesday followed by the October Purchasing Managers Index (PMI), and the October Consumer Confidence report. On Wednesday October Truck and Auto Sales, September Construction Spending, October ISM Index and the weekly Crude Inventories will be announced. September Factory Orders, the weekly unemployment claims, and the Q3 Productivity report will be announced Thursday. The October Non Farm Payrolls, Unemployment Rate, Hourly Earnings, and Average Workweek will be announced before the market opens Friday to close out the week.

In summary, investors should continue to be focused on the corporate earnings reports and any signs of inflation.

Stay tuned!