The market finally seemed to get the reality check last week that so many were calling for, as participants realized a quick economic recovery scenario was not realistically in the cards. The Dow posted its first weekly decline in a month and only its third weekly loss since the March 9 low. For the week ended June 19:
Dow: Down 3% to 8539.73
S&P 500: Down 2.6% to 921.23
Nasdaq: Down 1.7% to 1827.47
After briefly turning positive for the year in the prior week, both the Dow and the S&P 500 remain in the red for the year. Financials led the market down for most of the week, as investors digested the Obama administration’s proposed overhaul of the financial regulatory system.
Companies tell all
Taking a look at the company headlines last week gives us a nice picture of where we are.
Let’s start with FedEx
What’s more, fertilizer giant PotashCorp
Bankruptcies continue to occur frequently. Outdoor apparel retailer Eddie Bauer, established in 1920, filed for bankruptcy, caving under a heavy debt burden. Private equity firm CCMP Capital Advisors has offered to pay $202 million for the company’s assets; however, its creditors or other parties could bid for the company’s assets as well.
Job losses still lurk. MySpace, owned by News Corp.
Consumers are still clenching their purse strings tightly. Best Buy
However, it was not all gloom and doom last week. Remember, the tech-heavy Nasdaq is weathering the market slightly better than the other indices.
BlackBerry maker Research In Motion
This is especially interesting given that Apple’s (Nadsdaq: AAPL) iPhone is so popular with the consumer, which is Apple’s core market. It shows RIM is gaining traction in the consumer market. Let’s see how the battle for market share plays out between RIM, AAPL and now Palm’s
What’s in store for this week & beyond
This week, market participants will be focused on the Federal Reserve’s monthly policy-making meeting on Wednesday. While no policy is expected to be made per se, investors will pay close attention to the central bank’s comments -- searching for any slight change in verbiage that could imply a future change in policy. Also on Wednesday, durable goods orders and new home sales for the month of May will be reported, and could be possible market catalysts. This week also brings short-term Treasury auctions and earnings from Walgreen
We’re still searching for the next big catalyst, as markets have traded flat to down over the last two weeks on seasonally low volume. That catalyst could be second-quarter earnings coming up in July. Believe it or not, investors are beginning to look ahead to that. Should companies fall short of the expectations priced into stocks, we could see another leg down. On the bright side, dips offer individual investors the luxury of buying fundamentally sound companies at cheaper prices.
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