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Market 360: The Best and Worst of the Week for US Equities, Commodities, Currencies, and More

For the week ending Friday, June 20, 2008, the markets dropped on disappointing earnings results from the financial sector, and a continued spike in crude oil prices added to investors' concerns over inflation. The Dow closed below 12,000 on Friday for the first time since Mid-March.

Next week, the markets will closely follow economic events such as, GDP figures, Durable Goods Orders, and an awaited FOMC meeting on Tuesday. The next big batch of earnings will come mostly from retailers such as Walgreen's, Bed Bath & Beyond, and Finish Line as well as tech giants, Oracle and Research in Motion.

Highlights:

M&A, Deals, Corp Actions:

  • Yahooand Google expanded their partnering as the two companies agreed to allow their Instant Messaging users to communicate with one another. This comes a week after both companies signed a search-advertising pact. Shares of Yahoo and Google were down 6.31% and 4.39%, respectively for the week.
  • Huntsman Corp. shares tumbled 38% on Thursday, as the company is being sued by Apollo Management and Hexion Specialty Chemical over a termination of a previous merger agreement.
  • Apria HealthCare Group will be acquired by Blackstone Group , in a deal valued at $1.6B. Shares of AHG rallied 26% on Thursday on the acquisition news.
  • Brittania Bulk Holdings , an ocean-shipping services company fell 7.6% on Wednesday during its initial public offering price of $15/share.
  • Cadence offered a $1.5B takeover bid for Mentor Graphics , a microchip design software maker. Mentor rejected the unsolicited offer due to the risk associated with regulatory approval and an insufficient price to support the deal, the company said. Shares of CDNS fell 6.2%, while shares of MENT surged 27% for the week.
  • Landry’s Restaurants agreed to a total buyout offer of $1.3B by its CEO, Tilman Fertitta. The restaurant chain’s stock finished up 11.3% for the week on the news.
  • Allied Waste and Republic Services announced discussions of a possible merger valued at $6.59B, which could help the companies to obtain a competitive advantage. Shares of both companies, Allied Waste and Republic Services, dropped 9.6% and 7.9% respectively for the week.
  • Shares of XM Satellite Radio and Sirius advanced at the beginning of the week after the Wall Street Journal reported that the Federal Communications Commission recommended approval of the planned multi-billion dollar deal; however, the companies stocks tumbled 23.6% and 21.7% respectively on negative recommendations from Goldman Sachs, which stated that demand for satellite radio has declined.

Commodities:

  • Crude Oil contracts for July delivery at the NYMEX climbed to a new all-time intraday high of $139.89/barrel on 6/16, but slightly declined 0.2% for the week after Saudi Arabia announced that it would boost crude supplies by 200,000 barrels per day. China announced an 18% increase in retail gasoline and diesel prices, which will curb demand as it has become a main factor in the rise of crude. News on Friday of geopolitical tensions in the Middle East between Israel and Iran contributed to a 2.04% increase in crude oil prices. At the end of the pit-trading session, Crude Oil closed at $134.62 per barrel.
    **Airlines' stocks such as Continental Airlines (CAL), United Airlines (UAUA), and Northwest Airlines, declined on Friday 8.72%, 11.71%, and 11.44% respectely; as oil prices rebounded. However, some of the airlines' stocks finished the week in positive territory as Continental Airlines and United Airlines plan to cooperate globlally in an offer to offset high fuel costs.
    **Ford (F) announced Friday it would cut 3Q production by 25% and 4Q by as much as 14%, due to declining sales conditions of trucks and SUV’s as a result of escalating gasoline prices. It also postponed the launch of the new F-150 pick-up truck. Shares of Ford shed 7.3% for the week on the negative news.
    **According to AAA, the national average of gasoline prices has presently surpassed more than $4/gasoline in all states, as the current new record of unleaded gasoline stands at $4.08/gallon as of 6/16.
    **AAA’s fuel gauge report has also announced a new record in the price of diesel fuel at $4.797/gallon as of 6/16.
  • Central Appalachian Coal for October delivery rallied 7.42% for the week on continued strong demand for steel production from Asian markets, and heavy usage of electricity in Europe.
    The “Coal rush” has increased analyst’s ratings of many coal companies such as Massey Energy (MEE), CONSOL Energy (CNX), and Peabody Energy (BTU) which are all up 9.2%, 3.8%, and 3.5% for the week, respectively.
  • Grains are on the rise again, as Corn contracts for December delivery, the front month, closed at three new consecutive records from 6/16-6/18, and hit an all-time intraday high of $7.91/bushel set on 6/16 with an increase of 3.25% for the week. Corn’s skyrocketing prices are affected by crop damages from floods in the US Midwest, and tight demand and supplies factors.
  • Oats for December delivery is the top crop gainer for the week reaching an all-time high of $4.59/bushel on 6/16. December Oats' contracts jumped 4.76% for the week.

Currencies: Friday, the U.S. dollar depreciated across the board, as Moody’s Investment Service’s downgraded MBIA (MBI) and Ambac Financial Group (ABK) top insurance ratings, reigniting investors’ concerns over the health of the U.S. financial sector. Next week’s Federal Reserve interest rate-setting meeting will provide further insight into the near-term direction of the monetary policy in the United States.

  • The dollar index fell 1.51% for the week to 73.03, or its largest weekly decline since March 28.
  • Friday afternoon in New York, the euro traded at $1.5626 per euro, from $1.5502 late Thursday. The euro gained momentum against the greenback during Friday’s session as German producer price inflation rose to its highest level since July 2006, mostly due to a sharp increase in energy prices, according to a Federal Statistic data report. Inflation in the euro zone remains a concern for investors, after it hit a record 3.7% in May.
  • The pound sterling traded at $1.9747 per pound, from $1.9721 late Thursday. The pound sterling appreciated 1.48% for the week against the U.S. dollar, helped by retail sales figures released on Thursday showing a 3.5% increase in May from April; the fastest growth rate since records began in 1986.
  • During Friday’s afternoon trading session, the U.S. dollar traded against the yen at Y107.26 from Y108.05 late Thursday, while the dollar traded at 1.0341 Swiss francs, from 1.0451 francs late Thursday. The Swiss National Bank decided on Thursday to keep interest rates at 2.75%.
  • Highlights: Thailand
    Americans thinking of traveling this summer may want to consider Thailand as a vacation destination. The U.S. dollar has strengthened nearly 13% year-to-date against Thailand's baht with one dollar purchasing 33.510 bahts.

Market Stats:

  • DOW
    • The Dow ended down -464.66 or -3.78% for the week
    • Friday, the Dow closed at 11,842.69, down -220.40 or -1.83%
    • The Dow is Negative YTD down -10.72%
    • The Dow is off by -2,321.84 or -16.39% from the market peak on October 9th of 14,164.53
  • NASDAQ
    • The NASDAQ ended down -48.41 or -1.97% for the week
    • Friday, the NASDAQ Composite closed at 2,406.09, down -55.97 or -2.27%
    • The NASDAQ is Negative YTD down -9.28%
    • The NASDAQ is off by -453.03 or -15.85% from the market peak on October 31 of 2,859.12
  • S&P 500
    • The S&P 500 ended down -42.10 or -3.10% for the week
    • Friday the S&P 500 closed at 1,317.93, down -24.90 or -1.85%
    • The S&P is Negative YTD down -10.24%
    • The S&P is off by -247.22 or -15.80% from the market peak on October 9th of 1,565.15

S&P Sector Performance for the week ending Friday, June 20, 2008:
S&P 500 Energy Sector (.GSPE) Down -6.69 or -1.05%
S&P 500 Utilities Sector (.GSPU) Down -2.22 or -1.06%
S&P 500 Materials Sector (.GSPM) Down -5.29 or -1.91%
S&P 500 Health Care Sector (.GSPHC) Down -9.27 or -2.57%
S&P 500 Information Technology Sector (.GSPT) Down -11.14 or -2.90%
S&P 500 Industrials Sector (.GSPI) Down -9.76 or -2.97%
S&P 500 Consumer Staples Sector (.GSPS) Down -10.07 or -3.47%
S&P 500 Financials Sector (.GSPF) Down -14.70 or -4.73%
S&P 500 Consumer Discretionary Sector (.GSPD) Down -12.66 or -5.08%
S&P 500 Telecomm Services Sector (.GSPTS) Down -7.60 or -5.28%

S&P Top 10 Performers for the week ending Friday, June 20, 2008:
WYETH (WYE) Up 4.43 or 10.20%
Wendy's International Inc (WEN) Up 2.21 or 7.94%
Chesapeake Energy Corp (CHK) Up 4.70 or 7.93%
Precision Castparts Corp (PCP) Up 6.88 or 6.64%
Nabors Industries Ltd (NBR) Up 2.65 or 5.96%
Ryder System Inc (R) Up 3.84 or 5.60%
IntercontinentalExchange Inc (ICE) Up 6.68 or 5.43%
United States Steel Corporation (X) Up 8.18 or 4.68%
The Western Union Co (WU) Up 1.07 or 4.45%
Schlumberger Ltd (SLB) Up 4.41 or 4.42%

S&P 10 Worst Performers for t he week ending Friday, June 20, 2008:
Coventry Health Care Inc (CVH) Down -11.11 or -26.35%
Fifth Third Bancorp (FITB) Down -3.06 or -23.23%
General Motors Corp (GM) Down -2.66 or -16.17%
Suntrust Banks Inc (ST) Down -6.89 or -15.60%
Regions Financial Corp (RF) Down -2.06 or -15.51%
Autonation Inc (AN) Down -1.94 or -13.95%
Tesoro Corp (TSO) Down -3.20 or -13.59%
Motorola Inc (MOT) Down -1.19 or -13.03%
Goodyear Tire and Rubber Co (GT) Down -2.80 or -12.10%
The Hershey Co (HSY) Down -4.58 or -11.95%

Dow Top Performers for the week ending Friday, June 20, 2008:
The Boeing Co (BA) Up 0.71 or 0.95%
United Technologies Corp (UTX ) Up 0.24 or 0.35%
Merck & Co Inc (MRK) Down -0.40 or -1.13%
Intel Corp (INTC) Down -0.29 or -1.28%
E I du Pont de Nemours and Co (DD) Down -0.97 or -2.06%
International Business Machines Corp (IBM) Down -3.41 or -2.70%
Chevron Corp (CVX) Down -2.78 or -2.80%
Microsoft Corp ( MSFT) Down -0.84 or -2.89%
Caterpillar Inc (CAT) Down -2.42 or -2.97%
The Coca Cola Co (KO) Down -1.76 or -3.18%

Dow Worst Performers for the week ending Friday, June 20, 2008:
General Motors Corp (GM) Down -2.66 or -16.17%
Bank Of America Corp ( BAC) Down -2.68 or -9.00%
American Express Co (AXP) Down -3.48 or -7.79%
AT&T Inc (T) Down -2.25 or -6.13%
American International Group Inc (AIG) Down -2.08 or -6.09%
General Electric Co (GE) Down -1.77 or -6.07%
The Walt Disney Co (DIS) Down -1.99 or -5.87%
Citigroup Inc (C) Down -1.18 or -5.76%
ALCOA Inc (AA) Down -2.12 or -5.37%
Verizon Communications (VZ) Down -1.95 or -5.22%

Key Earnings next week:
Monday: Walgreens (WAG)
Tuesday: Darden Restaurants (DRI), Kroger (KR)
Wednesday: Monsanto (MON), Nike (NKE), Oracle (ORCL), Research in Motion (RIMM)
Thursday: Lennar (LEN), ConAgra (CAG), Rite Aid (RAD)
Friday: Paychex (PAY)

Economic Data next week:
Tuesday: Consumer Confidence, ICSC-UBS Store Sales
Wednesday: Durable Goods Order, New Home Sales
Thursday: GDP (final), Existing Home Sales, Corporate Profits
Friday: Personal Income and Outlays, Consumer Sentiment