Like a worn-out worker, the market labored through last week sluggishly, until it celebrated Labor Day early because of Friday's employment data.
The week opened with a solid job performance by the market on Monday, helped by falling energy prices.
Despite a greater-than-expected decline in consumer confidence and continued light volume, stocks reached higher on Tuesday afternoon, with investors optimistically reading a positive note into the minutes of the last Fed meeting.
Choppy trading on Wednesday gave way to final-hour buying, resulting in blue chips and tech stocks managing slight gains. Stocks declined fractionally on Thursday ahead of the next day's job figures.
The data turned out to tell an almost perfect picture on Friday. Slightly higher-than-expected job growth buoyed hopes that the economy remains strong, while declining wage inflation sustained views that the Fed will not raise rates in September. Stocks headed into the long weekend with the three major indices posting gains.
Markets were closed yesterday in observance of Labor Day. Later in the week, economic releases will include second-quarter productivity, the ISM Non-Manufacturing Survey, and the Beige Book on Wednesday and wholesale trade on Thursday.
Companies reporting earnings include Dollar Financial, Global Crossing, and Hovnanian on Wednesday, followed by delia's, FuelCell Energy, Jos. A. Bank Clothiers, and National Semiconductor on Thursday.
Stay market-tuned and Foolish!
Capital Markets Summary
U.S.
Equities
|
9/1/06 Close |
Weekly Change (%) |
YTD Change (%) | |
|---|---|---|---|
|
Dow |
11,464.15 |
1.6 |
7.0 |
|
Nasdaq |
2,193.16 |
2.5 |
-0.6 |
|
S&P |
1,311.01 |
1.2 |
5.0 |
Commodities
|
Price ($) |
Weekly Change (%) | |
|---|---|---|
|
Crude oil |
69.25 |
-4.39 |
|
Gold |
633.50 |
0.30 |
Foolish Quiz
1. This index turned in the best performance for August:
(a) Dow
(b) Nasdaq
(c) S&P 500
2. True or false: Stocks reached their best levels since May on Friday.
3. This company reported better than expected earnings:
(a) Ciena (NASDAQ:CIEN)
(b) Heinz (NYSE:HNZ)
(c) JDS Uniphase (NASDAQ:JDSU)
(d) None of the above
4. Which jeweler turned in a sparkling earnings report last week -- Tiffany (NYSE:TIF) or Zale (NYSE:ZLC)?
5. Last week's deal news included acquisition announcements by which of the following companies?
(a) Genzyme
(b) Goldcorp
(c) Kinder Morgan
(d) Western Refining
6. True or false: September is typically the worst month for stock performance.
7. Which retail segment posted impressive same-store sales figures for July?
(a) discount retailers
(b) teen retailers
8. Shares of MetLife advanced Wednesday because of reports of a potential:
(a) special dividend
(b) merger
(c) real estate deal
9. Which company tapped a senior executive of the other to be its new CEO -- Clorox or Coca-Cola?
10. Choose the person or company whose actions last week least embodied the spirit of Labor Day:
(a) Tom Cruise
(b) Radio Shack
(c) Donald Trump
Answers
1. (b). Finally, the Nasdaq had something to cheer about, turning in a 4.5% gain for August. The S&P 500 claimed second place, rising 2.2%, and the Dow advanced 1.8%.
2. True. The Dow and S&P 500 climbed to their highest levels since May, while the Nasdaq reached its best mark since June.
3. (b). Heinz reported on Thursday that it had poured on a 23% jump in first-quarter profits, helped by stronger sales growth and lower taxes. It's not likely, however, that even this will quell its trouble with activist investors who wish to gain power on the company's board of directors. Shares slipped 0.3%.
Reports from the tech sector were not as tasty. Shares of JDS Uniphase tumbled 15.2% the same day, after the company reported a narrower fourth-quarter loss but disappointing gross margins and forecast lower-than-expected first-quarter revenues. Shares of Ciena similarly slumped 7.7% after the company reported a narrowing of its third-quarter loss, but forecast slower revenue growth.
4. Neither. Both jewelers reported earnings on Thursday, and neither report shone. Shares of Tiffany dropped 4.7% after the company announced an 18.8% drop in second-quarter profits because of higher expenses and declining sales. Zale shares slipped 2.2% after the company posted lower gross margins, blamed on clearance events, and forecast a not-so-dazzling outlook for the year.
5. (b), (c), (d). Energy deals dominated Monday's headlines. Kinder Morgan announced that it had agreed to a $15 billion management-led buyout in which shareholders would receive $107.50 per share. Shares of the pipeline operator gained 2.5% and closed at $104.27, after hitting a new 52-week high of $104.50.
In addition, Western Refining also announced that it agreed to acquire Giant Industries for $1.2 billion to expand its refining business and enter retail gasoline sales and distribution. The transaction would result in Western Refining becoming the fourth-largest publicly traded independent oil refiner. Shares of Kinder Morgan fell 3.3%, while those of Giant gushed 15%.
On Thursday, Canadian gold miner Goldcorp announced that it will purchase Glamis Gold for $8.6 billion, in a deal that would close in November and result in the world's third-largest gold miner, based on capitalization. Goldcorp shares finished the day down 9%, tarnished by sentiment that the deal's valuation of Glamis shares at a 33% premium over their previous closing was a bit too rich. Glamis shares, however, received a 19% luster from the news.
Biotech Genzyme can't announce an acquisition, although it did launch a hostile bid on Wednesday for AnorMed, offering $8.55 per share. Shares of AnorMed, a Vancouver biopharmaceutical firm, soared 96.8% even though it rejected the offer. The company is forming a committee to evaluate strategic alternatives.
6. True. Just because stocks got off to a good start on the first day of the month doesn't mean we can expect more of the same. According to the Stock Trader's Almanac, the three major indices typically endure their largest percentage declines of the year in September. Don't say we didn't warn you.
7. (b). Retailers turned in a mixed bag of same-store sales results for August. Specialty teen retailers posted the best data, with American Eagle Outfittersturning in an 11% gain and those at Abercrombie & Fitch rising 6%. Discount retailers turned in a mediocre performance, with same-store sales at Wal-Mart increasing 2.7% and those at Target rising 2.8%.
8. (c). Reports surfaced that MetLife would be putting up for sale an 80-acre apartment complex in Manhattan for up to $5 billion. While the insurer did say in July that it was evaluating options for its properties, the company responded to the reports by saying that no decision was imminent. Shares advanced 0.7%.
9. Clorox. The bleach company announced late Wednesday that it has hired Donald Knauss, Coke's head of North American operations, to fill its CEO slot, which has been vacant since May. Shares of Clorox slipped 0.7% the following day.
10. (a). Mr. Cruise, whose relationship with Paramount Pictures, a unit of Viacom, was terminated recently, has already found an investment partnership to help finance a new independent film company. Perhaps Carolyn Kepcher, who was fired by The Donald last week, could send in her resume to see if they could use her help. One assumes that Mr. Trump told her in person "You're fired!" -- a nicety not enjoyed by the hundreds of employees who received pink slips last Tuesday via e-mail from Radio Shack.
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!
Coca-Cola and Wal-Mart are Motley Fool Inside Value picks. American Eagle is a Motley Fool Stock Advisor selection. Whatever your investing style, the Fool has a newsletter for you.
Fool contributor S.J. Caplan is a former vice president and assistant general counsel of Goldman Sachs and former vice president and derivative finance specialist at Lehman Brothers. She serves as an arbitrator for the New York Stock Exchange and the NASD. The Fool has a disclosure policy.
