Emerging from the prior week's deep freeze, stocks warmed up last week to turn in a decent performance.
An Arctic blast startled the Northeast on Monday, sending chills down Wall Street in the form of more overseas-market losses and subprime-mortgage-industry concerns. Stocks continued the prior week's slide, with the Dow losing more than 63 points, and the S&P 500 and Nasdaq each finishing lower, despite reaching positive territory during the trading session.
A rebound in overseas markets helped the ice thaw on Tuesday and lured in bargain hunters. Each of the major indices gained more than 1%, with the Dow rising more than 157 points. The rise continued on Wednesday, until a late-afternoon decline lowered the major indices. On Thursday, stocks followed overseas markets in resuming their upward march, with the Dow temporarily up more than 100 points, before dropping back to register a near 69-point gain.
Friday's eagerly awaited February employment data negated concerns of an economic slowdown. Though stocks soared initially, they subsequently slid on fears in the subprime market and profit-taking. The major indices ended little changed after a day of choppy trading.
Economic data scheduled for release includes February retail sales and business inventories tomorrow, import and export prices on Wednesday, the producer price index on Thursday, and the consumer price index, industrial production, and preliminary March consumer sentiment figures on quadruple-witching Friday.
Corporations reporting earnings include Goldman Sachs, Kroger, and Revlon tomorrow, Lehman Brothers and Speedway on Wednesday, Aeropostale, Bayer, and Bear Stearns on Thursday, and Ann Taylor on Friday.
Stay market-tuned and Foolish!
Capital Markets Summary
U.S. Equities
|
3/9/07 Close |
Weekly Change (%) |
YTD Change (%) |
|
|---|---|---|---|
|
Dow |
12,276.32 |
1.3% |
(1.5%) |
|
Nasdaq |
2,387.55 |
0.8% |
(1.1%) |
|
S&P |
1,402.85 |
1.1% |
(1.1%) |
Commodities
|
Price |
Weekly Change |
|
|---|---|---|
|
Crude oil |
$60.05 |
(2.6%) |
|
Gold |
$650.10 |
(1.3) |
Foolish Quiz
1. True or false: Each of the major indices posted their strongest gains of the year on Tuesday.
2. Which index turned in Tuesday's strongest performance? (a) The Dow, (b) the Nasdaq, (c) the Russell 2000, (d) the S&P 500.
3. True or false: New Century Financial
4. True or false: Shareholders of Take-Two Interactive
5. True or false: Shares of Citigroup
6. Who might AT&T
7. True or false: Optimism over the carry trade helped carry stocks higher last week.
8. Which retail segment turned in better February same-store sales figures: discounters or high-end department stores?
9. True or false: Rudolph Giuliani is losing his capital.
10. True or false: One dollar costs $50 on eBay.
Answers
1. True. Tuesday's relief rally broke a three-day losing streak, and each of the major indices posted their best percentage gains of the year.
2. (c). The Russell 2000. The beaten-up small-cap index, which had borne the brunt of the market decline, jumped 2.5%, its largest-percentage daily gain since July.
3. True. For shareholders of New Century, the future looks grim. The subprime lender began the week by announcing that it faces a federal criminal probe, and ended the week by stating that it's no longer accepting loan applications, because it lacks available financing. Shares lost 78.1% over the last five trading sessions.
4. True. Shares of Take-Two jumped 14% on news Wednesday that an investor group, including OppenheimerFunds and SAC Capital, plans to seek control of the company's board and oust CEO Paul Eibler. The video game maker consistently fails to meet financial targets, and has had issues of illegally backdated stock options and overstated revenue.
5. False. Shares of Citigroup gained 2.7% on Tuesday following the bank's announcement of an $11 billion deal to increase its ownership stake in Nikko Cordial from 4.9% to over 50%.
6. Alltel. According to a report in The Wall Street Journal on Monday, Alltel is trying to ring up interest in its sale to various potential carriers, including AT&T. One relationship AT&T is not interested in expanding is its partnership with Yahoo!, which will likely be cut back, according to an account by the Journal on Friday. Rumors also abounded on Monday that Nokia may want to shake hands with Palm, which is currently evaluating strategic options, including a sale.
7. True. As the dollar regained strength against the yen, traders felt less concerned over the likelihood of the unwinding of carry trades, scenarios in which investors borrow money in low-yielding currencies such as the yen and invest the money in higher-yielding currencies such as the dollar. The carry trade is believed to have spurred demand for equities, and pose a liquidity crunch if unwound in high volume.
8. High-end department stores. Shoppers continued their trend of spending more at Nordstrom and Saks, while cold weather took a bite out of overall weak February retail figures. Although Target beat its mark, most discounters did not, with rival Wal-Mart missing its own projection.
9. True. Giuliani Capital, the investment banking arm of Giuliani Partners, whose clients included Delta Air Lines and U.S. Airways, is being sold to Australian banking firm Macquarie Group for an undisclosed sum, possibly to clear the way for Rudy Giuliani's presumed presidential run. If only dealing with his son Andrew could be so easy.
10. True. Thanks to an error by the U.S. Mint, an undetermined number of the 300 million new George Washington dollar coins were printed without the words "In God We Trust". Not surprisingly, an initial bidding frenzy developed for the first such coin popping up on eBay, which sold for $600. Prices have now settled back to about $50 per coin, illustrating once again the volatility of the currency market, in one form or another.
Scoring
- 8-10 correct: Foolishly impressive.
- 6-7 correct: Almost Foolish.
- 1-5 correct: OK, but just barely.
- 0 correct: Really?! Keep reading the Fool, and watch your scores improve!
Wal-Mart is a Motley Fool Inside Value pick. Palm, eBay and Yahoo! are Motley Fool Stock Advisor selections, while AT&T was a former selection. Alltel is a Motley Fool Income Investor pick. Whatever your investing style, the Fool has a newsletter for you.
Fool contributor S.J. Caplan, a former vice president and assistant general counsel of Goldman Sachs and former vice president and derivative finance specialist at Lehman Brothers, owns shares of Goldman Sachs. She serves as an arbitrator for the New York Stock Exchange and the NASD. The Fool has a disclosure policy.
