4:30PM NY – 10:30PM Frankfurt – 3:00AM Mumbai
Strong earnings from Microsoft, Caterpillar and MEMC Electronics, Porsche and others helped averages to rebound. New Home sales in December jumped 4.8% making investors worried about the direction of interest rates. Crude oil rose to above $55, the highest in more than two weeks.

Market traded higher on strong earnings from industrial and tech companies but caught cautious wind on new home sales data release. Nasdaq Stock Market won''t raise its 2.7 billion-pound offer for LSE and extended its offer to shareholders by two weeks. Caterpillar Q4 profit rose 4.3 percent on increased demand for machinery in China and India. Asia ends lower on weakness in tech issues and banking shares, Europe finishes lower with mining shares, while Canada gained on oil prices.

Crude oil rose to the highest in more than two weeks as colder weather over much of the U.S. increased heating-fuel demand and OPEC prepared to cut supplies. Resource stocks Xstrata and Antofagasta led decliners, dragged by weaker metals prices. Industrials also declined, including French defense company EADS. Technology stocks were supported by a stronger-than-expected quarterly profit from Microsoft.

Yield on 10-year bond closed at 4.879% and the 30-year bond closed at 4.980%.

Gold declined $3.30 to close at $651.10 a troy ounce, silver lost 8 cents to end at $13.410 a troy ounce and copper decreased 2.25 cents to close at 263.200 cents per pound.

Oil increased $1.20 to close at $55.430 a barrel and heating oil gained 4.34 cents to finish at 159.250 cents a gallon. Natural gas advanced 25.3 cents to close at $7.158 per MMBtu. Gasoline traded up 3.54 cents to end at 147.950 cents a gallon.

Asian markets closed lower, tracking overnight declines on Wall Street, as markets in Japan dropped on weakness in tech issues and banking shares weighed on Hong Kong. The decliners were led by Philippines with a decrease of 3.43%, Hong Kong with a loss of 1.88% and Taiwan with a decline of 1.29%. The only gainers were India with an increase of 1.22% and Australia advanced 0.07%.

European markets finished lower with mining shares leading decliners and offsetting gains from cosmetics giant L''Oreal. The decliners were led by Switzerland with a decline of 1.02%, Belgium with a decrease of 0.87% and Spain with a loss of 0.84%. There were no advancers.

Latin America markets ended mostly lower led by Brazil with a decline of 0.61% and Argentina with a loss of 0.22%. The only advancer was Mexico with an increase of 0.21%. Canada gained 0.56% on oil prices.

1:00PM European markets closed lower, led by resource stocks.
European stocks closed in the negative on Friday, as weakness in mining shares offset gains from cosmetics giant L''Oreal. U.S. stocks were also trading lower Friday morning. Resource stocks Xstrata and Antofagasta led decliners, dragged by weaker metals prices. Industrials also declined, including French defense company EADS, down 1.6%. Automakers also traded actively. Germany''s Porsche said first-half profit will jump to over $1 billion, due to solid gains from its stake in Volkswagen. Shares fell 1.8% after recent strong gains. Peer BMW said revenue in 2006 hit a record high of 49 billion euros on strong sales of its BMW brand and luxury Rolls-Royce cars. Shares rose 1.2%.

Some broker upgrades provided relief for investors. Shares in L''Oreal rose 3.7% in Paris after the cosmetics giant reported 6.5% Q4 comparable sales growth. Credit Suisse raised its rating on L''Oreal to outperform after the figures. Carrefour shares rose 2.5% after Citigroup upgraded the French supermarket chain to hold from sell, citing valuation. Nokia shares benefited from an upgrade to buy at Deutsche Bank, rising 2.4%. The German DAX 30 closed down 0.4% at 6,690.34, the French CAC-40 slipped 0.5% to 5,582.30 and the U.K. FTSE 100 lost 0.7% to 6,228.00.

Crude oil prices rose above $55. Light, sweet crude March delivery gained 81 cents to $55.04 a barrel. Heating oil added 2 cents to $1.5775 a gallon, while gasoline fell 2 cents to $1.4647. Natural gas added 25 cents to $7.158 per 1,000 cubic feet. London Brent rose 68 cents to $54.80. The U.S. dollar gained ground against its major currency rivals. The euro was quoted at $1.2907, down from $1.2908. The dollar bought 121.54 yen, up from 120.87. The British pound was quoted at $1.9597, down from $1.9711. European gold prices dropped. In London, gold traded at $645.95 per troy ounce, down from $651.77. In Zurich, the precious metal traded at $644.05 per ounce, down from $650.60. Silver closed at $13.37, down from $13.43.


11:30AM Stocks turned to the downside as strong economic data raised inflation concerns.
Wall Street reversed from earlier gains, reflecting cautiousness on rising long-term interest rates in the bond market after stronger-than-expected economic data were released. Reports of robust durable goods orders and new home sales in December pressured bond prices, sending their yields to five-month highs. Shares of financial services companies declined, with American International Group (AIG: chart) and J.P. Morgan Chase & Co. (JPM: chart) each falling about 1%. Shares of Merrill Lynch (MER: chart) slid 2%, while Morgan Stanley (MS: chart) fell 1.1%.

Companies reporting quarterly financial results also drew attention. Amgen Inc. (AMGM: chart), the world''s largest biotechnology company, fell 4.5% amid disappointing clinical trial results for cancer drugs. A better-than-expected earnings forecast from Microsoft Corp. (MSFT: chart) sent its stock up 1.1%. Honeywell International Inc. (HON: chart) weighed on the blue-chips, falling 2% on disappointing 2007 profit outlook. Caterpillar Inc. (CAT: chart) helped limit the downside for the Dow with an advance of 1.9% on the back of higher quarterly earnings and reiterated full-year forecast.

The disk drive sector stood out as one of the market''s worst performances, led by Western Digital (WDC: chart), down 8%. The company reported better-than-expected Q2 earnings but provided disappointing Q3 earnings guidance. Computer hardware stocks also moved to the downside, with Gateway (GTW: chart) and Network Appliance (NTAP: chart) posting losses of 2% and 1%, respectively. Weakness also emerged in the airline sector, as the price of oil gained some ground after a sharp decline on Thursday. Continental Airlines (CAL: chart) dropped 2.6% after Goldman Sachs downgraded its rating on the airline to sell from neutral, citing valuation. Brokerage, defense, and biotechnology stocks also came under pressure.

New home sales rose 4.8% in December.
The Department of Commerce released its report on new home sales in the month of December on Friday, showing that home sales rose much more than economists had been expecting. The increase reflected strong sales growth in the Northeast and Midwest. The report showed that new home sales rose 4.8 percent to a seasonally adjusted annual rate 1.120 million units in December from a revised rate of 1.069 million units in November. Despite the increase, sales were down 11 percent compared to December of 2005. Economists had been expecting new homes sales to edge up to a 1.050 million unit rate from the 1.047 million unit rate originally reported for the previous month. As mentioned above, the increase in new home sales was largely due to strong sales growth in the Northeast and Midwest, which rose 27.3 percent and 26.6 percent respectively. Sales in the South edged up 0.3 percent, while sales in the West fell 4.4 percent. The report also showed that the seasonally adjusted estimate of new houses for sale at the end of December was 537,000, which represents a supply of 5.9 months at the current sales rate. Additionally, the median sales price of new houses sold in December was $235,000, while the average sales price was $290,100. The Commerce Department added that an estimated 1.061 million new homes were sold in 2006, down 17.3 percent from the 1.283 million sold in 2005.


9:45AM Market opened higher, boosted by upbeat manufacturing data.
U.S. stock markets opened in the positive Friday, as government data showed an improving manufacturing sector, with orders of durable goods up 3.5% in December, in line with expectations. Better-than-expected forecast from Caterpillar Inc. (CAT: chart) also provided a boost, with company''s shares rising 2.8%. Caterpillar''s earnings, considered an indication about the pace of U.S. construction, rose 4.3% in the fourth quarter.

Technology stocks were supported by a stronger-than-expected quarterly profit from Microsoft (MSFT: chart). Strong sales of its Xbox video game console helped offset the delayed release of its latest operating system, Vista. The software maker also projected double-digit growth in all of its core businesses through the rest of the fiscal year. Microsoft gained 1.8% in early trading. Among other companies reporting quarterly earnings, Biotech bellwether Amgen (AMGN: chart) dropped 4.9% after it reported Q4 adjusted profit below Wall Street forecasts. In the first hour of trading, the Dow Jones industrial average rose 13.86, or 0.11%, to 12,516.42. The Standard & Poor''s 500 index was up 1.93, or 0.14%, at 1,425.83, and the Nasdaq composite index added 3.94, or 0.16%, to 2,438.18. Bonds held steady, with the yield on the benchmark 10-year Treasury note flat at 4.88% from late Thursday.

Durable goods orders rose 3.1% in December.
Friday morning, the Department of Commerce released its report on durable goods orders in the month of December. The report showed that durable goods orders rose less than expected due in part to a drop in defense orders. The report showed that durable goods orders rose 3.1 percent in December following an upwardly revised 2.2 percent increase in November. Economists had expected orders to increase by 3.5 percent compared to the 1.6 percent increase originally reported for the previous month. The growth in orders was partly due to a notable increase in orders for transportation equipment, which rose 4.8 percent in December following a 10.2 percent increase in November. Excluding transportation, durable goods orders rose by a more modest 2.3 percent. However, as mentioned above, a decrease in defense orders helped to limit the upside for durable goods orders. Durable goods orders rose 3.9 percent excluding a 17.5 percent decrease in defense capital goods. The report also showed that shipments of durable goods rose 0.8 percent in December following a 0.3 percent increase in November, while inventories of durable goods rose 0.4 percent after increasing by 0.3 percent in the previous month.