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For the week ending Friday, February 15, 2008 the major US Indexes ended the week slightly positve. The markets began the week with a rally on better than expected retail sales, but glum remarks by Bernanke on the economic outlook, weak manufacturing data, consumer confidence at a 16-yr low, and rising oil prices contributed to the week ending on a sour note.
-Volatility still ruled the markets, as the Dow swung more than 350 points from Wed to Thursday. Wednesday’s 178.83 point rally driven by retail sales 0.3% increase, and was the highest point & percentage gain for the month of February. Thursday’s –175.26 point loss was fueled by Bernanke's testimony and comments on "sluggish growth" fueling recession fears. Thursday Greenspan also stated that the economy is "clearly on the edge" of a recession.
*The VIX hit a high for the week of almost 30 on Monday, and values above 30 usually correspond with a high degree of volatility.
-All S&P Sectors ended the week in positive territory, led by the energy sector up 4.71%, except for Financials which fell -1.05% on more subprime write-downs. UBS reported $18 billion in write-downs.
-Merger News: Yahoo rejects Microsoft's bid, as Northwest and Delta hammer out their merger agreement and news of talks between Continental and AMR help lift the sector.
-Platinum for April delivery set a new record high in the electronic session of $2089.5 on Friday, and also closed at a new record of $2063.7 for the 12th day in a row, up 9.54% for the week impacted by continuing electrical-supply problems in South Africa and slow mining operations.
-Central Appalachian Coal that trades on the NYMEX is up 50% in 2008.
*Coal producers fell today on the Goldman downgrades due to historic multiples and the run up in commodity prices that are most likely at a top. Foundation Coal is trading at a P/E of 72.1.
-Soy for July delivery hit a record surpassing $14 per bushel as China's worst winter storm in 50 years damaged 40% of the rapeseed crop so experts feel China will increase its imports of soybeans to compensate
**According to Reuters, China imported 3.44 million tonnes of soybeans in January, a 41.5% increase from last year.
-Oil jumped up 4.06% for the week, closing at $95.50 per barrel.
*Crude Oil is off –4.14% from its record close of $99.62 per barrel hit on January 2nd.
-Dollar: The dollar fell against most major currencies this week on a gloomy U.S. economy, poor consumer confidence and the possibility of future rate cuts.
*Year-to-date the dollar is up 1.72% against the pound and 0.16% vs. the euro. However, many experts feel that the dollar will not hold on to any strength against the euro, and the dollar suffered its worst weekly performance against the euro in 2008, down 1.2% and topping $1.47 per euro for the first time since 2/5.
*YTD the dollar has fallen almost 4% against the yen.
The Dow ended up 166.08 or 1.36% for the week, though it closed down for the day on Friday
-The Dow is Negative YTD down -6.91%
-The Dow is off by -1,816.32 or -12.82% from the market peak on October 9th of 14,164.53
The NASDAQ ended up 16.95 or 0.74% for the week, though it closed down for the day on Friday
-The NASDAQ is Negative YTD down -12.46%
-The NASDAQ is off by -537.32 or -18.79% from the market peak on October 31 of 2,859.12
The S&P 500 ended up 18.70 or 1.40% for the week
-The S&P is Negative YTD down -8.06%
-The S&P is off by -215.16 or -13.75% from the market peak on October 9th of 1,565.15
S&P Sector Performance for the week ending Friday, February 15, 2008:
S&P 500 Energy Sector Up 24.73 or 4.71%
S&P 500 Telecomm Services Sector Up 5.64 or 3.95%
S&P 500 Consumer Discretionary Sector Up 4.99 or 2.01%
S&P 500 Materials Sector Up 4.44 or 1.80%
S&P 500 Consumer Staples Sector Up 4.78 or 1.71%
S&P 500 Industrials Sector Up 5.09 or 1.55%
S&P 500 Utilities Sector Up 2.63 or 1.33%
S&P 500 Health Care Sector Up 3.10 or 0.81%
S&P 500 Information Technology Sector Up 2.73 or 0.79%
S&P 500 Financials Sector Down -3.83 or-1.05%
Here we go again.
Analysts now expect earnings to decline in the first quarter of 2008.
Today, Thomson Financial's earnings growth consensus for the S&P 500 fell to -0.1 percent.
On Jan. 1, analysts expected growth of 5.7 percent On Oct. 1, it was 10.6 percent.
The main drag on earnings continues to be the financial sector.
Forecasts are for a 23 percent decline in financials' profits. On Jan. 1 consensus was an 11 percent decline and on Oct. 1 analysts called for a 5 percent increase.
Excluding financials, the growth forecast jumps to +9.0 percent.
However, other sectors are softening as well. Consumer discretionaries are also expected to decline 4 percent, a big drop from +8 percent consensus on Jan. 1 and a +18 percent forecast on Oct. 1.
Profits in the materials sector is also expected to fall by 3% versus a forecast of 7 percent increase on Jan.1 and 9 percent increase on Oct. 1.
Here's the sector-by-sector breakdown:
Source: Thomson Financial
The market has hit the Financial Sector the most in the past three months. Leading the Financials to the downside in the past 3 months are:
The Dow closed with a triple digit loss today, the 20th plus/minus 100+ point move of the year.
20 triple digit moves of the DJIA in 31 sessions
This is the most 100+ moves ever in the first month and a half of a year. The previous record for the same time period was 14 in 2000.
Historically, there has not been too much love on average from Wall Street on Valentine's Day. On average the major indices have been flat on Feb 14.
The Best Valentine's Days:
Worst Valentine's Days:
Last year's biggest Valentine's day gainers in the S&P were:
On a whim and based on Darren Rovell's interview with Sports Illustrated Covergirl
Maryland, Washington, D.C., and Virginia vote today in the Chesapeake primaries. The Intrade market \(www.intrade.com \) is predicting that McCain and Obama will sweep today's election. According to Intrade, both McCain and Obama are most likely to receive the nomination from their parties.
With a substantial delegate lead, McCain has a 94% probability of getting the GOP nomination, a 7% increase since last week's Super Tuesday primaries.
So far 364 of the S&P 500 companies (just under 75%) have reported earnings.
Here's how things stand:
So far, it is the tech sector that has the biggest surprises to the upside, with Lexmark reporting EPS that was 122% above expectations. In absolute dollars, Exxon still leads with its $982 million surprise. Disney surprised last week by $219 million.
Dow Jones announced two new Dow components today, the first change to this major market index since 2004. Honeywell and Altria are out while Chevron and BofA are in. The change will take effect next week.
The Dow Jones Industrial Average originally was an index of 12 "smokestack" companies and made its debut in 1896. Since then it has expanded to have 30 companies. Of today's members, only General Electric was on the original list. It was replaced by US Rubber in 1898 and then added back in 1907 to replace Tennessee Coal and Iron.
Here are the current components sorted by seniority:
6) Card makers: