Market 360: A weekly wrap up of the US equity markets, commodities, currencies, and more
For the short week ending Thursday, March 20, 2008 the US Markets ended up. Market moving events included the JPMorgan Chase proposed takeover of Bear Stearns and a Fed rate cut of 75 basis points. The Dow gained 420 points on Tuesday, only to give back 293 points the next day. A rally today kept the Dow, S&P, and NASDAQ up 3.43%, 3.21%, and 2.06% for the week, their best performance in 7 weeks.
Next week, the markets will watch for the economic data including Durable Goods, GDP, and Personal Income numbers. Earnings from Lennar will give another read on the housing sector.
- The Dow, S&P and Nasdaq all gained over 3.5% on Tuesday on the news of the Fed's rate cut, lost over 2% on Wednesday and gained 2% on Thursday. The Dow had its 4th biggest point gain in history since July 29, 2002; and the S&P had its first daily gain over 4% since 2002.
- On Monday, the CBOE Volatility Index remained above the 30-value mark to hit 32.24 signaling continued investor uncertainty and high volatility, but came down with the market rally on Tuesday.
- Earnings news helped the rallies this week with Goldman Sachs , Lehman Brothers , Morgan Stanley , Nike and FedEx all beating analyst estimates.
- The Federal Reserve cut its key Target rate to a three-year low by 3/4 of a percent to 2.25%, and lowered its discount rate by 3/4 of a percent to 2.5%.
- The Producer Price Index (PPI) increased 0.3% in February, while the Core PPI, which excludes food and energy prices, rose 0.5% during the same period. Economists expected a 0.2% rise in the Core PPI.
- Weekly jobless claims were worst than expected, as initial claims increased to 378,000 matching its highest level since October 2005. Weekly jobless claims were up by 22,000 from the prior week.
- The New York Fed manufacturing index fell to a record-low of –22.23 in March. The prior lowest level was recorded in November 2001, with a reading of –19.6.
- The Philadelphia Fed Business Activity Index slightly rose in March to –17.4 from –24 in the prior month, better than the expected reading of –18.
Housing and Mortgages:
- The Mortgage Bankers Association (MBA) Purchase Index for the March 14 week fell by 1% to 365.0 compared to 368.8 applications the prior week; refinancing applications tumbled 4.6% on a week-to-week basis.
**Mortgage rates came down as the average 30-year fixed mortgage rate decreased to 5.98% from 6.37% the prior week.
- Housing starts fell 0.6% in February to a seasonally adjusted 1.065 million annual rate, while building permits dropped 7.8%.
Sectors & Indexes:
- JPMorgan Chase plans a takeover of Bear Stearns (BSC) for $2 a share or $236 million.
- Citigroup (C) plans to lay-off an additional 2,000 employees from its banking unit.
- Goldman (GS), Lehman (LEH), and Morgan Stanley (MS) reported better than expected earnings raising hopes that the credit crunch is near its end.
- Delta (DAL) and United Airlines (UAL) unrolled plans to offset high-fuel prices. Last week, all the major carriers increased round-trip fares by as much as $50.
- The Delta pilot union rejected Northwest's (NWA) idea of submitting to arbitration plans for integrating their seniority lists as part of their merger talks.
Corporate Actions / M&A:
- Visa opened its IPO on the New York Stock Exchange and raised a record $17.86 billion, or $44 a share.
- The Chicago Mercantile Exchange (CME) announced its agreement to acquire Nymex Holdings (NMX) for approximately $9.4 billion.
- H&R Block agreed to sell its sub-prime mortgage arm, Option One Mortgage Corp., to investor Wilbur Ross in a deal that could reach more than $1 billion.
Commodities fell sharply as demand expectations fell due to a slowing economy and the end of the heating oil season arrives.
- Gold April contracts set new record closes of $1002.6 on Monday and $1004.3 on Tuesday. It also hit a record intraday high of $1033.9 an ounce on Monday. Gold tumbled at the end of the week and settled on Friday at $920 an ounce, a fall of 7.95% for the week.
- Crude Oil for May delivery closed down $0.70 to $101.84 a barrel after hitting an intraday low of $98.65 and declined -6.35% for the week.
*The national average price of gasoline fell by $0.40 to $3.275 per gallon, according to AAA and the Oil Price Information Services.
- Natural Gas for April delivery rose by 4.1 cents today to $9.065, but shed 8.14% for the week.
- Heating Oil for April delivery fell by almost 4 cents to $2.9772,and closed down 5.38% for the week.
- Platinum lost $9.7 and settled at $1877.3 an ounce, and it is down 9.57% for the week.
- Wheat for May delivery closed down at $9.87 1/2 per bushel, and fell 17.12% for the week.
- Cocoa had the worst week of major commodities, down 20.8% for the week.
- The US dollar rose to a weekly high against the Euro, or 2.82% off its intraday high price of $1.5901 per euro on Monday. In recent trading, the cost of one Euro equaled $1.5438.
- The US Dollar modestly rose against the Japanese Yen for the week, briefly crossing the 100-yen level on Thursday, but slipped back to 99.02 yen.
- The British Pound depreciated to $1.9820 per dollar on Thursday as the dollar was helped by new negative assessments of European fundamentals.
- The greenback recovered from historic lows against the Swiss Franc, as the dollar appreciated 3.85% from an all time low of .9729 on Monday. One US Dollar purchased as much as 1.0165 Francs on Thursday.
- The US Dollar rebounded against its all time lows versus the New Zealand Dollar last Friday, and appreciated 2.37% from its lows on Monday. One Dollar purchased .7916 New Zealand Dollars during late trading on Thursday.
- The Pound is trading at an all time high versus the Euro, with one Pound purchasing 1.2875 Euros.
· The Dow ended up 410.23 or 3.43% for the week
-Friday, the Dow closed at 12,361.32 up 261.66 or 2.16%
-The Dow is Negative YTD down -6.81%
-The Dow is off by -1,803.21 or -12.73% from the market peak on October 9th of 14,164.53
· The NASDAQ ended up 45.62 or 2.06% for the week
-Friday, the NASDAQ Composite closed at 2,258.11 up 48.15 or 2.18%
-The NASDAQ is Negative YTD down -14.86%
-The NASDAQ is off by -601.01 or -21.02% from the market peak on October 31 of 2,859.12
· The S&P 500 ended up 41.37 or 3.21% for the week
-Friday the S&P 500 closed at 1,329.51 up 31.09 or 2.39%
-The S&P is Negative YTD down -9.46%
-The S&P is off by -235.64 or -15.06% from the market peak on October 9th of 1,565.15
S&P Sector Performance for the week ending Thursday, March 20, 2008:
S&P 500 Financials Sector (.GSPF) Up 37.99 or 11.93%
S&P 500 Telecomm Services Sector (.GSPTS) Up 7.30 or 5.49%
S&P 500 Consumer Discretionary Sector (.GSPD) Up 11.07 or 4.69%
S&P 500 Industrials Sector (.GSPI) Up 11.00 or 3.39%
S&P 500 Consumer Staples Sector (.GSPS) Up 8.36 or 2.99%
S&P 500 Information Technology Sector (.GSPT) Up 8.60 or 2.52%
S&P 500 Health Care Sector (.GSPHC) Up 8.78 or 2.47%
S&P 500 Utilities Sector (.GSPU) Up 0.16 or 0.08%
S&P 500 Energy Sector (.GSPE) Down -22.07 or -3.93%
S&P 500 Materials Sector (.GSPM) Down -14.20 or -5.60%
S&P Top 10 Performers for the week ending Thursday, March 20, 2008:
Freddie Mac (FRE) Up 11.40 or 53.82%
Fannie Mae (FNM) Up 11.94 or 53.40%
Countrywide Financial Corp (CFC) Up 1.28 or 28.44%
JPMorgan Chase and Co (JPM) Up 9.43 or 25.81%
Morgan Stanley (MS) Up 10.12 or 25.59%
Lehman Brothers Holdings Inc (LEH) Up 9.39 or 23.92%
H and R Block Inc (HRB) Up 3.62 or 20.72%
Centex Corp (CTX) Up 4.19 or 20.49%
Pulte Homes (PHM) Up 2.43 or 19.85%
Circuit City Stores Inc (CC) Up 0.68 or 18.38%
S&P 10 Worst Performers for the week ending Thursday, March 20, 2008:
The Bear Stearns Companies Inc (BSC) Down -24.04 or -80.13%
CIT Group Inc (CIT) Down -5.60 or -36.77%
International Paper Co (IP) Down -5.58 or -17.30%
National City Corp (NCC) Down -2.15 or -16.35%
National Oilwell Varco Inc (NOV) Down -8.68 or -14.43%
Freeport-McMoRan Copper & Gold Inc (FCX) Down -14.53 or -14.30%
Newmont Mining Corp (NEM) Down -7.66 or -14.28%
Terex Corp (TEX) Down -7.69 or -11.55%
EOG Resources Inc (EOG) Down -13.83 or -10.97%
Monsanto Co (MON) Down -11.66 or -10.72%
Dow Top Performers for the week ending Thursday, March 20, 2008:
JPMorgan Chase and Co (JPM) Up 9.43 or 25.81%
Bank of America (BAC) Up 6.17 or 17.29%
Citigroup Inc (C) Up 2.72 or 13.75%
American Express Co (AXP) Up 4.97 or 12.12%
General Electric Co (GE) Up 3.67 or 10.85%
American International Group Inc (AIG) Up 3.83 or 9.30%
Home Depot Inc (HD) Up 2.31 or 8.97%
Wal-Mart Stores Inc (WMT) Up 3.41 or 6.84%
Verizon Communications (VZ) Up 2.30 or 6.80%
Coca Cola Co (KO) Up 3.51 or 6.10%
Dow Worst Performers for the week ending Thursday, March 20, 2008:
ALCOA Inc (AA) Down -3.71 or -9.66%
E I du Pont de Nemours and Co (DD) Down -1.53 or -3.26%
Chevron (CVX) Down –2.13 or -2.49%
Boeing (BA) Down -1.43 or -1.88%
Caterpillar Inc (CAT) Down -0.97 or -1.24%
Exxon Mobil Corp (XOM) Down -0.91 or -1.06%
McDonald's Corporation (MCD) Down -0.36 or -0.66%
Pfizer Inc (PFE) Down -0.05 or -0.24%
3M Company (MMM) Up 0.45 or 0.58%
Hewlett-Packard Co (HPQ) Up 0.58 or 1.26%
Key Earnings next week:
Monday: Walgreen(WAG), Tiffany (TIF), Phillips Van Heusen (PVH)
Tuesday: Commercial Metals (CMC), Jabil Circuits (JBL), Pep Boys (PBY)
Wednesday: Oracle (ORCL), Paychex (PAYX)
Thursday: ConAgra (CAG), Lennar (LEN) McCormick (MKC)
Friday: KB Home (KBH)
Economic Data next week:
Monday: Existing Home Sales
Tuesday: Consumer Confidence, ICSC-UBS Store Sales
Wednesday: Durable Orders, New Home Sales, Crude Inventories
Thursday: Chain Deflator (Final), GDP (Final)
Friday: Personal Income, Personal Spending