Tuesday October 2^nd 2007

Perhaps it's the additional sour news on the troubled housing industry that left stocks mixed today. Pending home sales fell in August by 6.5 percent, according to the National Association of Realtors. But aren't we used to bad housing news by now? Housing has further to fall, at least until the 4^th quarter of 2008. This stuff is no longer a surprise, really. These days, economic data that suggests further movement to the downside can be a plus. It gives the Fed some room to cut rates again at the next meeting on the 30^th and 31^st. Most likely today's action was a little profit-taking after yesterday's huge rally.

The DOW fell 40.24 points to close at 14,047.31. The tech-heavy NASDAQ gained 6.12 at 2,747.11. The broader S&P 500 lost .41 to finish at 1,546.63.

With the Dow Jones Industrials over the psychologically important 14,000 mark again, there's a lot to cheer about. With yesterday's close at 14.087.55, the Dow hit an all-time high. The trend is upward going forward. With the 50 basis point cut on rates last month, the central bank shifted its concern from inflation to that of economic stability. That's going to drive equities higher in the long term.

Retailer Walgreen's (WAG) gave back some more today, closing .08 cents lower at 40.08 per share. The stock took a big hit yesterday when the company said higher expenses and lower generic drug reimbursements brought profit down by 4 percent in the quarter. For a company that's always delivered solid earnings results, this was very disappointing. If you own shares, holding the stock is my recommendation. This company will show solid growth in the long term, as it has for years and years.

The auto makers had generally lower sales results for September. Ford's (F) monthly sales in the states fell 21 percent. Toyota Motor (TM) sales declined 4.4 percent. General Motors (GM) said truck sales improved by 3.6 percent, but car sales went down 4.4 percent. The company labeled it a fair month. Results were better than the street expected, but until GM can show some real profitability, that stock is a sell. GM rose a dollar to close at $37.05.

It's a pretty light week for economic data. Thursday we get initial jobless benefits and a look at business spending with factory orders data. But on Friday, the all-important September jobs report will be out with the non-farm payrolls and hourly earnings. Wall Street anticipates a moderate increase in the jobless figure from last month's 4.6 percent. Wall Street also anticipates that about 94,000 jobs were added in September. The unofficial start to earnings season begins October 9^th, when aluminum maker Alcoa (AA) reports.

Feel free to write me with any questions or comments at the "contact us" link on this page. My website is www.daveonstocks.com. This is Dave On Stocks.

DAVE HARRIS