Last week, while the State of the Union may have been assessed, the state of the stock market was confused.
Techs continued their sell-off by tumbling more on Monday. The Nasdaq lost more than 20 points, while the Dow slid more than 88 points.
Better earnings reports and higher oil prices boosted the market on Tuesday, ahead of the president's speech. On Wednesday, stocks gained broadly, with several big-name techs reporting solid earnings, and the Dow climbed to a record close of 12,622.
On Thursday, stocks took us for a ride in the opposite direction. The Dow fell 119 points, with high bond yields and mixed earnings and housing figures to blame. The ride into negative territory continued Friday, following stronger-than-expected economic data that left investors speculating on the implications for interest rates. Stocks pared their losses later in the day on news of a potential merger in the financial sector.
The Federal Open Market Committee meeting, which begins Tuesday, will take center stage, with the announcement about interest rates on Wednesday afternoon. Economic data scheduled for release includes consumer confidence Tuesday; advance gross domestic product, construction spending, personal income, and the Institute for Supply Management manufacturing index on Thursday; and employment figures, consumer sentiment, and factory orders on Friday.
Corporations reporting earnings include Nomura, Phelps Dodge, Schering-Plough, SYSCO, Tyson Foods, Verizon, and Zimmer Holdings Monday, followed by 3M, Allstate, Black & Decker, Burger King, Chubb, Juniper Networks, Kellogg, Pilgrim's Pride, Procter & Gamble, Sony, E.W. Scripps, U.S. Steel, US Airways, and Wyeth on Tuesday. On Wednesday, we'll hear from BankAtlantic, Boeing, CBOT Holdings, Eastman Kodak, Estee Lauder, Gilead Sciences, Google, Hess, Ingersoll-Rand, L-3 Communications, Pulte Homes, and VeriSign. Thursday will bring reports from Anheuser-Busch, Archer Daniels Midland, AstraZeneca, Boston Scientific, Clorox, Comcast, CVS, Deutsche Bank, ExxonMobil, Goodrich, Marathon Oil, Raytheon, St. Paul Travelers, Standard Pacific, and Starwood Hotels. Finally, Chevron, Gannett, ITT, NYSE Group, Ryder System, and Wendy's will report on Friday
Stay market-tuned and Foolish!
Capital Markets Summary
U.S. Equities
|
1/26 Close |
Weekly Change |
YTD Change |
|
|---|---|---|---|
|
Dow |
12,487.02 |
-0.6% |
0.2% |
|
Nasdaq |
2,435.49 |
-0.6% |
0.8% |
|
S&P |
1,422.18 |
-0.6% |
0.3% |
Commodities
|
Price |
Weekly Change |
|
|---|---|---|
|
Crude oil |
$55.53 |
7.01% |
|
Gold |
$651.70 |
2.5% |
Foolish quiz
1. True or false: Just one day after the Dow finished at a record high, the index had its worst day since November.
2. True or false: Countrywide
3. True or false: Ford
4. AT&T
5. Which Internet company reported stronger earnings: eBay
6. Which industrial company's earnings exceeded estimates: Caterpillar or United Technologies?
7. Two Wall Street firms are teaming up to purchase: (a) energy assets, (b) mortgage assets, (c) porridge.
8. Which sector fared better last week: defense or energy?
9. True or false: Ethanol stocks received an energizing boost from the State of the Union speech.
10. Which party fared better in the market last week: Democrats or Republicans?
Answers
1. True. The Dow's 120-point loss on Thursday followed the index's record high of 12,621.77 the day before. How's that for schizophrenic behavior?
2. Shares of Countrywide spiked to $45.15 before settling back to close on Friday at $42. The 4.2% gain followed a report in the Financial Times that the mortgage company may be acquired by Bank of America, whose shares dropped 0.7%.
3. False. Ford's $5.8 billion quarterly loss, which was attributed to dismal sales and restructuring expenses, ranked second to its $7.4 billion loss in 1992 and pushed the company's full-year loss to a record $12.7 billion. The company forecasts further bleak driving ahead. Still, investors looked for a positive spin and found stronger-than-expected quarterly revenues, so shares were up $0.02.
4. (a), (b). Both of those factors led to the 17% quarterly profit growth AT&T reported on Thursday. The company's recently launched video service, meant to compete with bundled packaging from cable companies, has yet show a profit. Shares of the country's largest telecom rose 0.4%.
5. Online auctioneer eBay reported a 24% jump in fourth-quarter profit after the close on Wednesday, citing strength across its businesses while forecasting a strong full-year outlook and announcing a share repurchase plan. Shares rose 8.2% the following day. Shares of Yahoo! rose 7.3% on Wednesday despite the company's reporting a 61% drop in profits after the close on Tuesday. The company said its new search ad technology would be out next month and add to the bottom line next quarter.
6. United Technologies. The 38% fourth-quarter profit growth it announced on Tuesday exceeded expectations and sent shares up 3.2%. On Friday, shares of Caterpillar rose 2.2% following its forecast of higher than expected revenue growth for 2007, although its report of a 4% increase in fourth-quarter profits fell short of expectations
7. (a). Investing subsidiaries of Goldman Sachs and Morgan Stanley are reportedly working together to make a potential $15 billion private-equity bid for the oil and gas assets of Dominion Resources. Meanwhile, Citigroup was busy last week, agreeing to purchase the mortgage group ABN Amro and making Chief Financial Officer Sallie Krawchek chairman of its global wealth management division. With all those goings-on, who has time for breakfast? Kraft apparently thought that not too many deals were discussed over a bowl of porridge, saying it's selling its Cream of Wheat and related hot-cereal products for $200 million to a subsidiary of B&G Foods.
8. Energy. Of two sectors generally thought to have pro-Bush administration leanings, neither excelled last week. The oil-services sector remained nearly unchanged, while the Dow Jones U.S. Defense Index retreated 1.2%. Go figure.
9. True. Ethanol-related stocks such as agricultural giant Archer Daniels Midland and pure play Pacific Ethanol gained ahead of President Bush's speech, in which he called for increased usage of renewable fuels, only to run out of gas a bit afterward. Still, for the week, the stocks were up 0.4% and 4%, respectively.
10. Republicans. In terms of mutual funds performance, the Republican-leaning Free Enterprise Action Fund declined only 0.6%, in line with the major indexes, while the Democratic-inspired Blue Large Cap Fund fell 1.2%.
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!
3M and Anheuser-Busch are Motley Fool Inside Value picks. Yahoo! and eBay are Stock Advisor selections, and AT&T used to be a selection. SYSCO, Kraft, and Bank of America are Income Investor picks. NYSE Group is a Rule Breakers selection. 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 a former vice president and derivatives finance specialist at Lehman Brothers, does not own shares of the companies mentioned in this article. She serves as an arbitrator for the New York Stock Exchange and the NASD. The Fool has a disclosure policy.
