AFJ Index Charges Forward

American Fastener Journal, Jul/Aug 2006

provided by Trade Trends Inc.

Despite stratospheric oil prices and faltering home starts, Wail Street was on a tear on news that the Fed's consecutive rate hikes could be nearing an end. Producer prices remained tame-not counting more volatile food and energy costs-rising only 0.1 percent in April. A Commerce Department report issued on the last day of our trading session showed the strongest growth in 2 ½ years in the first quarter of 2006, with inflation at bay. "The U.S. economy is cruising along now," said Bill Cheney, chief economist at John Hancock Financial Services.

The Federal Reserve is widely expected to raise rates again at its May meeting-marking the 16th consecutive increase since June 2004, but Fed Chief Ben Bernanke said that, following that hike, the Fed could take a breather in hiking interest rates. "There's still some danger that inflation could pick up, and higher energy prices could feed into that," said Ed Keon, chief investment strategist for Prudential Equity. "But overall," Keon said, "it does not look like substantial inflationary pressures are developing."

The AFJ Index stormed ahead for our session ended April 28, 2006. Advancing issues clobbered declining issues by a 5-to-1 margin, and two companies-Nucor and Illinois Tool Works, scored double-digit increases. The index increased 61.08 points, or 6.10 percent, and closed at 1063.08.

Nucor left everyone else in the dust by jumping 22.77 points, or 26.46 percent, to close the session at 108.82. For its first quarter, Nucor reported net earnings of $379.2 million, or $2.42 per share, compared with net earnings of $354.7 million in last year's first quarter. Nucor cited a strong rise in shipments. Analysts surveyed by Thomson Financial were expecting Nucor to earn $2.33 per share. Nucor was our top dollar and percentage gainer this session.

Fairchild shed 0.21 points this trading period to close at 2.17. Fairchild said that the company may go private because of compliance costs as a publicly-traded company. "The costs of being a small to midsized public company have increased substantially with the introduction and implementation of controls and procedures mandated by the Sarbanes Oxley Act of 2002," the company said in its filing with the Securities and Exchange Commission. "We are considering all options for reducing costs, including opportunities to take our company private in the coming year." Fairchild said it has appointed a group of independent directors to explore its options. Fairchild closed off 8.82 percent, and was our top percentage loser.

Shares of Illinois Tool hit an all-time high this session after the company's first-quarter earnings blew past Wall Street estimates and the company upped its full-year guidance. ITW earned $365.5 million, or $1.29 per share, a 17 percent increase over earnings of $312.3 million, or $1.06 per share in last year's quarter. Analysts polled by Thomson Financial were expecting profits of $1.25 per share. ITW said it will earn $6.07 for 2006, up from $5.89 per share. Investment firms Credit Suisse First Boston and AG Edwards upped their ratings on ITW; Credit Suisse to "outperform" from "neutral," and AG Edwards to "buy" from "hold." Illinois Tool Works increased 16.86 points, or 19.64 percent, and ended at 102.70.