For the short week ending Friday, February 22, 2008, it was hard not to get whiplash. The Dow and the S&P managed to turn in a positive performance for the week with a stunning late-day reversal on Friday, led by news of a bail out for Ambac Financial (ABK).
The NASDAQ approached October 2006 lows, but ended Friday positive for the day, and down only slightly for the week.
The markets began the week with a rally on Wal-Mart's (WMT) and H-P's (HPQ) better than expected earnings but gains were quickly erased as oil surged above $100 per barrel, and settled above $100 for the first time. The FOMC minutes provided some positive momentum indicating that the Fed may continue cutting rates, but the higher than expected CPI, a weak Philly Fed report providing the lowest reading since the 2001 recession, and a downgrade of Fannie (FNM) and Freddie (FRE) applied the negative pressure.
Highlights:
- Geopolitical Unrest: The week started off with Fidel Castro's resignation after almost 50 years of rule in Cuba. Unrest in Serbia and a Turkish invasion into northern Iraq added uncertainty to the markets, especially oil.
- Volatility continues to rule, with an almost 243 point swing for the Dow on Friday to end closing up almost 100 points, Tuesday the Dow erased a 157 point gain to close in negative territory. On Wednesday the Dow traded within a ~240 point range, starting the day down over triple digits but rallying to close up 90 for the day.
*The VIX hit highs of almost 27 this week, coming within range of the key 30 threshold indicating high market volatility
- Merger News: Microsoft (MSFT) considers a proxy battle for Yahoo (YHOO), and the CME (CME) continues to pursue the NYMEX (NMX). Reed Elsevier announced a $4.1 billion acquisition of Choicepoint (CPS) which jumped 43% on the news. The Bain Capital $2.2 billion deal with 3Com (COMS) fell through and the Delta Airlines (DAL) and Northwest Airlines (NWA) talks continue.
- Housing starts showed a modest increase of 1.012 above the expected 1.01 M, but remain badly depressed, down 28% from this time last year. The markets will look towards Existing Home Sales on Monday, and New Home Sales and Toll Brothers (TOL) earnings on Wednesday, for an update on the housing climate.
- Retail Earnings: Many key retailers report next week including Target (TGT), Home Depot (HD), Lowe's (LOW), Nordstrom (JWN), Macy's (M), Limited (LTD), Sears (SHLD), Kohl's (KSS)
Commodity Rally:
-Oil for April delivery hit a record close of $100.74 and hit a record high of $101.32 on Wed. Prices pulled back on Thurs as US stockpiles grew by 4.2M barrels.
- Natural Gas for March delivery closed at over a 2-year high to $9.146 and is up 22.77% in 2008
- Gold for April delivery hit a new record $958.4, and a closing high of $949.2
- Platinum is up almost 42% year-to-date with a new intraday high of 2214.5 and a new closing high of 2188.2 in the April contract.
- Palladium which can be used as a substitute for platinum, is up 36.41% year-to-date
- Appalachian Coal futures on the NYMEX are up over 50% year-to-date.
- Soybeans are up almost 19% year-to-date and hit a new closing high of 1439 per bushel and new intraday high of 1440 in the May contract.
- Soy Meal is up over 7% in 2008, and hit a new intraday high of 367 and a new closing high of 361.7 in the March contract.
Currencies:
- The U.S. dollar lost ground against the yen, euro and pound, and is negative against all three in 2008. The dollar index ended the week down -0.80% on strong euro zone economic data and continued risk aversion.
*The Euro came close to its all-time high against the dollar of $1.4968 touching $1.4863
Market Stats:
The Dow ended up 32.81 points or 0.27% for the week, and positive on Friday
-The Dow is Negative YTD down -6.66%
-The Dow is off by -1,783.51 or -12.59% market peak on October 9th of 14,164.53
The NASDAQ ended down -18.45 or -0.79% for the week but positive on Friday
-The NASDAQ is Negative YTD down -13.16%
-The NASDAQ is off by -555.77 or -19.44% from the market peak on October 31 of 2,859.12
The S&P 500 ended up 3.12 or 0.23% for the week and positive on Friday
-The S&P 500 is Negative YTD down -7.85%
-The S&P 500 is off by -212.04 or -13.55% from the market peak on October 9th of 1,565.15
S&P Sector Performance for the week ending Friday, February 22, 2008:
S&P 500 Energy Sector (.GSPE) Up 14.68 or 2.67%
S&P 500 Materials Sector (.GSPM) Up 5.16 or 2.05%
S&P 500 Financials Sector (.GSPF) Up 3.64 or 1.01%
S&P 500 Consumer Staples Sector (.GSPS) Up 0.97 or 0.34%
S&P 500 Information Technology Sector (.GSPT) Down -0.14 or -0.04%
S&P 500 Consumer Discretionary Sector (.GSPD) Down -0.59 or -0.23%
S&P 500 Industrials Sector (.GSPI) Down -1.29 or -0.39%
S&P 500 Health Care Sector (.GSPHC) Down -2.57 or -0.66%
S&P 500 Utilities Sector (.GSPU) Down -1.61 or -0.80%
S&P 500 Telecomm Services Sector (.GSPTS) Down -9.17 or -6.17%
S&P Top 10 Performers for the week ending Friday, February 22, 2008:
Terex Corp (TEX ) Up 7.84 or 13.11%
DR Horton Inc (DHI) Up 1.40 or 10.13%
MGIC Investment Corp (MTG) Up 1.32 or 9.79%
Fluor Corp (FLR) Up 11.06 or 9.16%
Range Resources Corp (RRC) Up 5.12 or 8.89%
Pulte Homes (PHM) Up 1.13 or 8.32%
CB Richard Ellis Group Inc (CBG) Up 1.59 or 8.19%
TJX Companies Inc (TJX) Up 2.43 or 8.09%
Hewlett-Packard Co (HPQ) Up 3.53 or 8.05%
QLogic Corp (QLGC) Up 1.20 or 7.98%
S&P 10 Worst Performers for the week ending Friday, February 22, 2008:
Intuit Inc (INTU) Down -3.33 or -10.96%
Apollo Group Inc (APOL) Down -6.64 or -9.56%
Quest Diagnostics Inc (DGX) Down -4.65 or -9.09%
Embarq Corp (EQ) Down -4.26 or -8.94%
General Motors Corp (GM) Down -2.05 or -7.85%
Sovereign Bancorp Inc (SOV) Down -0.98 or -7.78%
Dillards Inc (DDS) Down -1.34 or -7.68%
AT&T Inc (T) Down -2.90 or -7.66%
CenturyTel Inc (CTL) Down -2.88 or -7.28%
Safeway Inc (SWY) Down -2.24 or -7.00%
Dow Top Performers for the week ending Friday, February 22, 2008:
Hewlett-Packard Co (HPQ) Up 3.53 or 8.05%
American International Group Inc (AIG) Up 2.77 or 6.01%
ALCOA Inc (AA) Up 0.83 or 2.32%
Chevron Corp (CVX) Up 1.82 or 2.18%
Exxon Mobil Corp (XOM) Up 1.80 or 2.11%
International Business Machines Corp (IBM) Up 1.91 or 1.80%
Caterpillar Inc (CAT) Up 1.23 or 1.76%
JPMorgan Chase and Co (JPM) Up 0.68 or 1.57%
Wal-Mart Stores Inc (WMT) Up 0.53 or 1.07%
E I du Pont de Nemours and Co (DD) Up 0.47 or 1.03%
Dow Worst Performers for the week ending Friday, February 22, 2008:
General Motors Corp (GM) Down -2.05 or -7.85%
AT&T Inc (T) Down -2.90 or -7.66%
Verizon Communications (VZ) Down -1.63 or -4.31%
Merck & Co Inc (MRK) Down -1.46 or -3.07%
Microsoft Corp (MSFT) Down -0.74 or -2.60%
The Boeing Co (BA) Down -2.14 or -2.51%
General Electric Co (GE) Down -0.82 or -2.39%
Intel Corp (INTC) Down -0.29 or -1.44%
Citigroup Inc (C) Down -0.36 or -1.41%
The Coca Cola Co (KO) Down -0.50 or -0.85%
Next week:
Economic News:
- PPI on Tues
- Durable Goods and New Home Sales on Wed
- GDP on Thurs
- Personal Income and Outlays on Fri
Earnings:
- Home Depot and Target on Tues
- Toll Brothers on Wed
- Sprint, AIG, Dell on Thurs
- Berkshire Hathaway on Fri