For the week ending Friday, March 28, 2008 the US Markets
ended mixed after starting on a high note Monday extending
last week's market rally. The winning streak came to an
end on Tuesday when the Dow closing down for the first time
in three sessions. The NASDAQ had the strongest
performance of the week managing a positive gain despite weak
earnings from Oracle and poor performance from Google .
Economic data dragged on the markets with consumer sentiment
and confidence at low levels and negative housing data.
-Next week the markets will watch Friday's jobs reportfor evidence of recession, and any revisions on guidance as we move into earnings season. Alcoa kicks off "official" earnings season on Monday, April 7th after the bell. The big companies for next week all hit on Wednesday with RIM , Monsanto and Best Buyall reporting earnings.
- Altria officially split its US and International businesses on Friday, forming two units that will begin trading on Monday. Altria (MO) for the US operations, and Philip Morris International, with new ticker PM for the non-US holdings. Shareholders will receive one share of Philip Morris International for every Altria share they own.
- Personal Incomerose more than expected in February to 0.5%. Personal Spendingrose slightly in February to an anemic level of 0.1% showing an increased tightening of the consumer wallet.
** The overall PCE Indexslowed to 0.1% showing tame inflation, after a 0.3% increase in January. The Core PCE also slowed to a 0.1% rise in February after a 0.2% increment the previous month.
- Consumer Sentiment for March declinedto 69.5 from 70.8 in February, far below economist expectations of 70 bringing in the weakest reading since 1992. These lows can only be compared to prior recessionary periods.
- Consumer Confidencesank in March to 64.5, far below economist’s expectations for a reading of 73 hitting the lowest levels since 2003 for the present situation, and the expectations component hit a new 35-year low over rising inflation and job worries.
- Initial jobless claims showed a slight improvementwith claims falling by 9,000 to 366,000 for the week of March 22, but remained at elevated levels consistent with sluggish labor markets.
-Gross Domestic Product (GDP)- Final was unrevised at a 0.6%annual rate in 4th Quarter 2007, but still much lower than 3rd Quarter 2007 growth of 4.9%. The markets are looking towards Q1 GDP especially after the Chicago Fed data pointed towards lower 1st qtr growth and recession Friday.
- US Durable Orders fell by -1.7%in February and economists had forecasted a slight rise of 0.8%, showing a decline for a second straight month Weakness in February orders was mainly due to a sharp decline in machinery which is at an all-time low.
Housing and Mortgages:
- Existing Home Salesin February were better than expected increasing 2.9%with the first increase since July 2007 in contrast to New Home Sales which were worse than expectedin February falling -1.8% to the lowest mark in 13 years.
**The median price for a new home decreased by –2.7% year-over-year to $244,100 in February. The average price for new home decreased by -7.8% to $296,400 from $321,500 a year earlier.
- The S&P/Case Shiller Home Price Index reflected weak housing prices declining -2.3% in January and an -11.4% drop from a year ago, the steepest drop since S&P started collecting data in 1987.
-Lennar Corp. , one of largest homebuilders posted a Q1 loss, but the loss was better than expected. KB Home also reported a loss this week compared to a profit a year earlier, and lost almost 5% on the news.
Sectors & Stocks:
- JP Morgan raised its bid for Bear Stearns to $10 per share from $2 per share fueled by investor outrage.
-Fortress Investment Group beat analyst expectations and reaffirmed its commitment to acquire Penn National Gaming for $6.1 billion.
Technology: (Watch for earnings on Research in Motion (RIMM) next week)
- Clear Channel Communications reported that the $19 billion acquisition deal with private-equity firms Thomas H. Lee and Bain Capital Partners was in jeopardy due to the credit terms placed by the investment banks that agreed to financial the deal. CCU fell sharply ending the week down almost 17%.
-The US. Department of Justice approved the proposed $4.22 billion merger between Sirius Satellite Radio and XM Satellite Radio , however the deal still requires the approval of the Federal Communications Commission (FCC).
**Both (SIRI) and (XMSR) finished down 1.72% and 0.92% respectively for the week.
- Take-Two Interactive Software rejected the Electronic Arts $26 per share bid considering the deal “inadequate”. Electronic Arts extended its $2B tender offer by a week if Take-Two pulls its poison pill. TTWO also adopted a 180-day “poison-pill” to thwarts a hostile takeover attempt by ERTS.
- Google sufferedas fears grew that the company may miss its Q1 revenue targets, and UBS slashed its price target amongst a decline of 3% in the number of paid ad clicks reported by Comscore.
* Google has plummeted almost 37% year to date. Google closed out 2007 at a price of $691.48, and ended Friday down $253.40 at a close of $438.08
- Motorola announced it would split into two separate public entities to separate its loss-making mobile-device division from its other businesses.
- Oracle disappoints with weak Q3 revenueon "cautious" customer behavior. ORCL shares finished the week down 14.13%.
Retailers pulled down the Consumer Discretionary Sector, ending the week off almost 3% for the second worst performance with Financials bringing up the rear.
-JC Penney cut its Q1 earnings outlook due to Easter sales "well below expectations." and plunged 7.5% Friday also pointing to an increasingly tight-fisted consumer.
* Downgradeswere seen by Tiffany , Blue Nile , Kohl's all shedding more than 4% on Friday.
- ConAgra (CAG)blows out Q3 earnings estimates and announced it will sell its highly profitable commodities trading group for $2.1 billion fearing increased risk and volatility in the markets.
**The CME raised its daily price limits on corn and soybean futures
-Wheatand soyend the week down sharply on Friday with month-end profit taking and expectations of Monday's USDA plantings report. Cornended up as wet and cool weather threaten the spring seedlings.
** Rough Rice continues to be the stand out up 9.09% this week and almost 42% this yearand first quarter to date.
** Monsantoboosted its outlook for 2008 on seed sales and gains in its herbicide business. Monsanto gained almost 18% for the week.
- Crude Oil for May deliveryended the week at $105.62 per barrel, off its highs over $108 per barrel after reported sabotage of an Iraqi export pipeline.
* Retail Gas prices maintain record levelswith the EIA average at $3.259 per gallon as of 3/24, the Lundberg Survey rose to $3.26 per gallon on average as of 3/21, and AAA saw an increase to $3.261 per gallon. AAA reported a high of $3.285 per gallon as of 3/16.
- Gold for April delivery is –7.3% off its record close of $1004.3 set on 3/18/08, but up 1.15% for the week settling at $930.6 an ounceon Friday.
Currencies:The Dollar held firm and did not hit any new lows this week against the euro, yen or pound after personal income and spending numbers and inflation data came in as expected.
- The US dollar lost only -0.31% against the yen for the week, it lost 1.68% against the euro and lost -0.56% against the British pound.
Market Stats:The Dow ended down -144.92 or -1.17% for the week and negative on Friday
-The Dow is Negative YTD down -7.90%
-The Dow is off by -1,948.13 or -13.75% from the market peak on October 9th of 14,164.53
The NASDAQ ended up 3.07 or 0.14% for the week and negative on Friday
-The NASDAQ is Negative YTD down -14.75%
-The NASDAQ is off by -597.94 or -20.91% from the market peak on October 31 of 2,859.12
The S&P 500 ended down -14.29 or -1.07% for the week and negative on Friday
-The S&P is Negative YTD down -10.43%
-The S&P is off by -249.93 or -15.97% from the market peak on October 9th of 1,565.15
S&P Sector Performance for the week ending Thursday, March 28, 2008:
S&P 500 Materials Sector (.GSPM) Up 11.14 or 4.65%
S&P 500 Energy Sector (.GSPE) Up 15.36 or 2.84%
S&P 500 Consumer Staples Sector (.GSPS) Up 2.47 or 0.86%
S&P 500 Telecomm Services Sector (.GSPTS) Up 1.19 or 0.85%
S&P 500 Industrials Sector (.GSPI) Up 0.24 or 0.07%
S&P 500 Utilities Sector (.GSPU) Down -0.30 or -0.16%
S&P 500 Health Care Sector (.GSPHC) Down -1.61 or -0.44%
S&P 500 Information Technology Sector (.GSPT) Down -3.79 or -1.08%
S&P 500 Consumer Discretionary Sector (.GSPD) Down -7.39 or -2.99%
S&P 500 Financials Sector (.GSPF) Down -24.76 or -6.95%
S&P Top 10 Performers for the week ending Thursday, March 28, 2008:
The Bear Stearns Companies Inc (BSC) Up 4.82 or 80.87%
CIT Group Inc (CIT) Up 1.97 or 20.46%
Monsanto Co (MON) Up 17.17 or 17.68%
BJ Services Co (BJS) Up 4.17 or 17.22%
Broadcom Corporation (BRCM) Up 2.12 or 12.52%
Weatherford International Inc (WFT) Up 7.52 or 11.82%
Freeport-McMoRan Copper & Gold Inc (FCX) Up 9.52 or 10.93%
Apache Corp (APA) Up 11.30 or 10.49%
National Oilwell Varco Inc (NOV) Up 5.26 or 10.22%
Nabors Industries Ltd (NBR) Up 3.02 or 9.94%
S&P 10 Worst Performers for the week ending Thursday, March 28, 2008:
Apollo Group Inc (APOL) Down -17.55 or -29.87%
Fannie Mae (FNM) Down -8.28 or -24.14%
MGIC Investment Corp (MTG) Down -3.02 or -23.12%
Lehman Brothers Holdings Inc (LEH) Down -10.78 or -22.16%
Freddie Mac (FRE) Down -7.13 or -21.88%
Jabil Circuit Inc (JBL) Down -2.37 or -20.47%
Clear Channel Communications Inc (CCU) Down -5.44 or -15.70%
Wachovia Corp (WB) Down -4.73 or -15.40%
Merrill Lynch & Co Inc (MER) Down -6.92 or -14.77%
First Horizon National Corp (FHN) Down -2.42 or -14.09%
Dow Top Performers for the week ending Thursday, March 28, 2008:
Caterpillar Inc (CAT) Up 3.27 or 4.43%
ALCOA Inc (AA) Up 1.43 or 4.12%
Merck & Co Inc (MRK) Up 1.15 or 2.65%
AT&T Inc (T) Up 0.81 or 2.20%
E I du Pont de Nemours and Co (DD) Up 0.99 or 2.18%
McDonald's Corporation (MCD) Up 1.06 or 1.95%
Chevron Corp (CVX) Up 1.29 or 1.55%
Exxon Mobil Corp (XOM) Up 0.22 or 0.26%
Procter & Gamble Co (PG) Up 0.07 or 0.10%
3M Company (MMM) Down -0.03 or-0.04%
Dow Worst Performers for the week ending Thursday, March 28, 2008:
Bank Of America Corp (BAC) Down -3.79 or -9.05%
Citigroup Inc (C) Down -1.67 or -7.42%
JPMorgan Chase and Co (JPM) Down -3.26 or -7.09%
American Express Co (AXP) Down -2.83 or -6.15%
American International Group Inc (AIG) Down -2.21 or -4.91%
Intel Corp (INTC) Down -0.96 or -4.41%
Microsoft Corp (MSFT) Down -1.27 or -4.35%
General Motors Corp (GM) Down -0.83 or -4.26%
International Business Machines Corp (IBM) Down -3.76 or -3.18%
The Walt Disney Co (DIS) Down -0.90 or -2.82%
Key Earnings next week:
Monday: Pacific Ethanol (PEIX)
Wednesday: Best Buy (BBY), Carmax (KMX), Monsanto (MON), Research in Motion (RIMM)
Thursday: Constellation Brands (STX), RPM International (RPM)
Friday: Family Dollar (FDO), Mosaic (MOS)
Economic Data next week:
Monday: Chigago PMI
Tuesday: Construction Spending, ISM Manufacturing Index
Wednesday: ADP Employment, Factory Orders, EIA Petroleum Status Report
Thursday: Jobless Claims, ISM Non-Manufacturing Services, EIA Natural Gas Report
Friday: Jobs Report: Nonfarm Payrolls, Unemployment Rate, Hourly Earnings, Average Workweek