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

For the week ending Friday, August 15, 2008, U.S. major Indices finished mixed, after the markets digested negative results including a surge in CPI, a decline in retail sales, and continued expansion in unemployment claims. The Nasdaq Composite prevailed amongst the major U.S. indices, as it edged up 1.59% for the week, marking its fifth week of gains. Nasdaq gains were led by bullish comments on Amazon (AMZN) which gained 7.3% for the week. The likelihood of the eurozone moving toward recession allowed for a stronger dollar against the euro, continued pressure on oil, and a positive impact on U.S. stocks as a potential safe haven.

Next Week's Highlights: Next week the markets will watch Tuesday’s Producer Price Index for more clues on inflation, and Housing Starts will give better guidance on the health of the housing sector. More retailers will be reporting earnings including Home Depot, Target, Lowe’s, as well as big tech names like Hewlett-Packard and Intuit.

M&A, Deals, Corp Actions:

  • Vishay Intertechnologies made a $1.6 billion bid for the power-management chip maker International Rectifier Corp. in a deal that will offer Vishay further expansion in the power management industry. IRF shares soared 21% for the week.

  • CVS Caremark announced an acquisition of smaller rival Long Drug Stores for $2.6 billion in order to tackle the fast-growing prescription markets in California and Hawaii. The deal will add an additional 521 Long stores to CVS. Upon completion of merger, the firm will run 6,800 drugstores in 41 states, including the District of Columbia. Shares of LDG soared 37% for the week on deal news.

  • Japan's biggest bank, Mitsubishi UFJ Financial Group offered to acquire California-based UnionBanCal Corp for a revised $3 billion, in a deal that will allow the Japanese bank to obtain greater presence in the U.S. banking sector. ADRs of Mitsubishi declined 6.6% for the week, while shares of UB leapt 14.4%.

  • Waste Management Inc. raised its buy-out offer by almost 10% to $6.73 billion from its previous offer on 7/14 for rival firm Republic Services due to conflicts of interest by RSG, who in turn, agreed to acquire Allied Waste in late June for $6.24 billion. The new offer can rebut Republic’s own unsolicited bid for Allied Waste. Shares of trash haulers WMI and RSG declined 3.4% and 4.9%, respectively for the week.

Other Market Moving News:

  • General Motors shares rallied 11.5% for the week as the company is seeking to reconfigure its automobile production, shifting away from large pick-up trucks and SUV’s for smaller, yet more fuel-efficient cars such as the Chevy Cruze line. GM, which has been struggling with liquidity, also announced it will slash its North American capacity by 500,000 vehicles in the next two years.

  • The S&P Financial Sector sagged 2.82% for the week as shares of financial companies Lehman Brothers and Goldman Sachs were downgraded due to expectations of weakness in the firms’ financials and further write-downs.
    **Bank of America is another financial stock that had a stormy week, as the company is bound by legal regulatory proceedings on behalf of recently acquired mortgage lender Countrywide. BAC completed the purchase of Countrywide on 7/01 for $2.5 billion, and will have to face Countrywide’s lawsuits related to mortgage delinquencies.
    **Lehman was amongst the biggest losers in the S&P Financials shedding 13.2% for the week, followed by GS which fell 7.3% & BAC down 4.8%.


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  • Crude Oil for September delivery retreated 1.24% at the end of the week, and touched an intraday low of $111.34/barrel on Friday, its lowest level since 5/1, amidst weakening demand. OPEC trimmed its forecast by 30K barrels per day for the rest of 2008 and new reports showed Americans drove 4.7% less in June than the previous year. Crude is down 8.31% month to date.
    **With crude falling to a 3-month low, the national average price of regular gasoline has also dropped 8.33% to $3.771/gallon from its national average record set at $4.114/gallon on 7/17, but is still up 36.5% from a year ago, as per AAA’s and Oil Price Information Service’s Fuel Gauge Report.
    ***The national average retail price of Diesel has also experienced a decline of 8.25% from its highest recorded average price reached on 7/17 of $4.845/gallon. It is still 51.6% higher than a year ago.

  • Gold for December delivery reached a 2008 low, as it sank below the $800/ounce mark, settling at $792.1/ounce on 8/15, the lowest closing price since 11/30/07. Gold also had a steep drop of $36.5/ounce on Monday, marking the biggest one day drop since March 19. Gold shed 8.41% for the week.

  • Wheat for September delivery on the CBOT jumped to an intraday high of $8.87/bushel on 8/14, its highest level since 7/03. Wheat was the agriculture commodity winner for the week, up 7.71% due to U.S. Department of Agriculture figures published earlier this week which showed an increased global demand for grains.
    **US wheat export sales for the week ending 8/08 were 650,300 metric tons, marking the seventh straight week of sales above 600,000 metric tons.

  • Corn for December delivery had a weekly gain of 6.03% as futures were up three straight days, and reached a high of $5.79/bushel on 8/14 during the pit session, but off ~31% as of Friday’s close from its all-time intraday high of $7.96/bushel reached on 6/27. Corn rose on speculation of being oversold, but the commodity could face downward pressure on a large crop production, which the U.S Department of Agriculture estimates at 12.3 million bushels for 2008, down 6% from 2007, but up 17% from 2006.

Currencies: The US dollar continued to gain momentum against most major currencies, as data in the euro zone, Japan, and the United Kingdom pointed to a deteriorating economic outlook. A drop in commodity prices has shifted investors’ interest to the safety of US assets. On Thursday, Goldman Sachs stated the dollar has bottomed.

  • Friday, the dollar index rose to its highest level since January 22, hitting an intraday high of 77.25. The dollar index, which tracks the performance of the greenback versus a basket of six major currencies, has jumped over 5% in the past month.
  • Concerns over the health of the euro zone economy have pushed the euro to a 6-month low against the US dollar. The euro has depreciated nearly 6% versus the greenback in the past month, trading at $1.4666 per dollar on Friday, from $1.4822 late Thursday.
  • The pound sterling fell to a two-year low versus the US dollar on Friday, as investors widely anticipate a rate cut by the Bank of England in the coming weeks. The pound sterling traded at $1.8633 per pound on Friday, from $1.8696 late Thursday, down about 3% for the week.
  • Japan’s economy for the second quarter contracted at its fastest rate in 7 years, pushing the yen to its lowest levels since January 2. The Japanese yen traded at 110.48 yen per dollar on Friday, from 109.70 yen late Thursday. The yen has depreciated about 2.40% in the past month, and is now down approximately 1.10% year-to-date.
  • The Australian dollar declined to as low as $0.8611 versus the US dollar, down 2.53% for the week, while the New Zealand dollar was at $0.7063 per kiwi on Friday, from $0.7000 late Thursday.
  • While tensions between Russia and Georgia escalate, some investors have favored the US currency adding to the greenback’s bullish momentum. The US dollar has appreciated about 5% in the past month against the Russian ruble, with one dollar buying 24.6029 rubles on Friday.

Market Stats:

  • DOW
    • The Dow ended down -74.42 or -0.63% for the week
    • Friday, the Dow closed at 11,659.90, up 43.97 or 0.38%
    • The Dow is Negative YTD down -12.10%
    • The Dow is off by -2,504.63 or -17.68% from the market peak on October 9th of 14,164.53
    • The NASDAQ ended up 38.42 or 1.59% for the week
    • Friday, the NASDAQ Composite closed at 2,452.52, down -1.15 or -0.05%
    • The NASDAQ is Negative YTD down -7.53%
    • The NASDAQ is off by -406.60 or -14.22% from the market peak on October 31 of 2,859.12
  • S&P 500
    • The S&P 500 ended up 1.88 or 0.15% for the week
    • Friday the S&P 500 closed at 1,298.20, up 5.27 or 0.41%
    • The S&P is Negative YTD down -11.59%
    • The S&P is off by -266.95 or -17.06% from the market peak on October 9th of 1,565.15

S&P Sector Performance for the week ending Friday, August 15, 2008:
S&P 500 Consumer Discretionary Sector (.GSPD) Up 5.68 or 2.36%
S&P 500 Telecomm Services Sector (.GSPTS) Up 2.83 or 2.19%
S&P 500 Consumer Staples Sector (.GSPS) Up 4.35 or 1.48%
S&P 500 Information Technology Sector (.GSPT) Up 3.82 or 1.03%
S&P 500 Materials Sector (.GSPM) Up 2.36 or 0.99%
S&P 500 Health Care Sector (.GSPHC) Up 2.90 or 0.75%
S&P 500 Industrials Sector (.GSPI) Down -0.72 or -0.23%
S&P 500 Energy Sector (.GSPE) Down -4.19 or -0.78%
S&P 500 Utilities Sector (.GSPU) Down -2.12 or -1.12%
S&P 500 Financials Sector (.GSPF) Down -8.30 or -2.82%

S&P Top 10 Performers for the week ending Friday, August 15, 2008:
MBIA Inc (MBI) Up 2.65 or 30.92%
NVIDIA Corporation (NVDA) Up 1.96 or 17.82%
MGIC Investment Corp (MTG) Up 1.19 or 16.12%
Wendy's International Inc (WEN) Up 3.29 or 14.32%
Estee Lauder Companies Inc (EL) Up 5.59 or 12.05%
JC Penney Company Inc (JCP) Up 4.19 or 11.72%
General Motors Corp (GM) Up 1.15 or 11.47%
MEMC Electronic Materials Inc (WFR) Up 5.00 or 11.15%
Kohls Corp (KSS) Up 4.92 or 10.50%
Starbucks Corp (SBUX) Up 1.57 or 10.38%

S&P 10 Worst Performers for the week ending Friday, August 15, 2008:
Constellation Energy Group Inc (CEG) Down -11.42 or -15.32%
Wachovia Corp (WB) Down -2.36 or -13.16%
Lehman Brothers Holdings Inc (LEH) Down -2.45 or -13.16%
Fannie Mae (FNM) Down -1.14 or -12.60%
Zions Bancorporation (ZION) Down -4.02 or -12.56%
Harman International Industries Inc (HAR) Down -4.49 or -10.82%
Morgan Stanley (MS) Down -4.16 or -9.24%
General Growth Properties Inc (GGP) Down -2.33 or -8.48%
Union Pacific Corp (UNP) Down -6.31 or -7.59%
American International Group Inc (AIG) Down -1.88 or -7.56%

Dow Top Performers for the week ending Friday, August 15, 2008:
General Motors Corp (GM) Up 1.15 or 11.47%
Home Depot Inc (HD) Up 1.16 or 4.40%
American Express Co (AXP) Up 1.26 or 3.33%
Procter & Gamble Co (PG) Up 1.97 or 2.83%
Wal-Mart Stores Inc (WMT) Up 1.51 or 2.61%
AT&T Inc (T) Up 0.69 or 2.23%
The Walt Disney Co (DIS) Up 0.47 or 1.47%
Verizon Communications (VZ) Up 0.37 or 1.07%
E I du Pont de Nemours and Co (DD) Up 0.39 or 0.86%
Pfizer Inc (PFE) Up 0.13 or 0.66%

Dow Worst Performers for the week ending Friday, August 15, 2008:
American International Group Inc (AIG) Down -1.88 or -7.56%
JPMorgan Chase and Co (JPM) Down -3.00 or -7.30%
The Boeing Co (BA) Down -3.41 or -5.03%
Bank Of America Corp (BAC) Down -1.55 or -4.81%
Citigroup Inc (C) Down -0.84 or -4.33%
McDonald's Corporation (MCD) Down -2.04 or -3.11%
Exxon Mobil Corp (XOM ) Down -1.65 or -2.10%
International Business Machines Corp (IBM) Down -2.45 or -1.90%
Microsoft Corp (MSFT) Down -0.32 or -1.14%
Caterpillar Inc (CAT) Down -0.55 or -0.78%

Key Earnings next week:
Monday: Lowe’s (LOW), BHP Billiton (BHP)
Tuesday: Home Depot (HD), Hewlett-Packard (HPQ), Target (TGT), Analog Devices (ADI)
Wednesday: BJ’s Wholesale (BJ), Suntech Power (STP), Ross Stores (ROST)
Thursday: GameStop (GME), Intuit (INTU), Burger King (BKC), Hormel Foods (HRL)
Friday: AnnTaylor (ANN)

Economic Data next week:
Tuesday: Housing Starts, Producer Price Index
Wednesday: Crude Inventories (weekly)
Thursday: Jobless Claims (weekly), Leading Indicators, Philly Fed Survey