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.
Highlights:Markets:
- 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.
Economic Data:
- 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%.
Financials:
Airlines: