While many viewers watched Katie Couric's CBS Evening News debut last week, the stock market may have been one show investors wished they could have tuned out, as the market continued to broadcast uncertainty.
When Wall Street sat down for business again on Tuesday following the long holiday weekend, the market behaved as if it were still on summer vacation. Ambling through the day without transmitting strong signals or any perkiness, stocks managed to post slim gains.
Stagflation concerns, caused by data revealing a rise in wages and slowing growth, caused stocks to decline on Wednesday. Each of the major indices fell, with the Nasdaq sinking more than 37 points on its way to recording its biggest daily point decline in over a month. Stocks continued to slide on Thursday amid further signs of a slowing housing market and hawkish inflationary talk from the president of the San Francisco Fed.
Stocks finally rose on Friday, driven by oil's drop to its lowest level since early April and calming comments from the president of the Cleveland Fed. The market signed off on a perkier note, with each of the major indices advancing.
This week opens on the fifth anniversary of Sept. 11, 2001, and the NYSE observed a moment of silence between 9:29 and 9:30 this morning.
Economic reports scheduled for release include international trade tomorrow; the Census Bureau's quarterly services survey for the second quarter on Wednesday; import and export prices, August retail sales, and July business inventories on Thursday; and August consumer price index, industrial production, and consumer sentiment on Friday.
Corporate earnings reports will include Campbell Soup today; Best Buy, Goldman Sachs, and Kroger tomorrow; Lehman Brothers and Xilinx on Wednesday; and Adobe Systems and Pier 1 on Thursday.
Stay market-tuned and Foolish!
Capital Markets Summary
U.S. Equities
|
9/8/06 Close |
Weekly Change (%) |
YTD Change (%) | |
|---|---|---|---|
|
Dow |
11,392.11 |
-0.6 |
6.3 |
|
Nasdaq |
2,165.79 |
-1.2 |
-1.8 |
|
S&P |
1,298.92 |
-0.9 |
4.1 |
Commodities
|
Price ($) |
Weekly Change (%) | |
|---|---|---|
|
Crude oil |
66.19 |
-4.42 |
|
Gold |
617.80 |
-2.48 |
Foolish Quiz
1. Stocks rose Friday on hopes that falling oil prices might increase consumers' appetites for:
(a) burgers
(b) discount fashion
(c) gas-guzzling autos
2. True or false: The Nasdaq recorded a positive return for the year at one point last week.
3. Which of the following companies reported solid earnings?
(a) Broadcom (NASDAQ:BRCM)
(b) Jos. A. Bank Clothiers (NASDAQ:JOSB)
(c) Lennar (NYSE:LEN)
(d) none of the above
4. Which oil company reported a potentially significant new U.S. oil source -- Chevron (NYSE:CVX) or Exxon (NYSE:XOM)?
5. Last week's deal news included acquisition announcements by which of the following companies?
(a) Alcatel
(b) Phelps Dodge
(c) Veritas
(d) all of the above
6. True or false: Homebuilders enjoyed a constructive day last Thursday.
7. A change at the helm is in the works for which of these companies?
(a) Boeing
(b) Ford
(c) Viacom
8. True or false: The admission by Hewlett-Packard that an investigator engaged in pretexting presaged a substantial share drop.
9. Anheuser-Busch plans to attract young males by offering:
(a) beer goggles
(b) an online entertainment network
(c) a set of Clydesdales
(d) a Heineken
10. True or false: Shares of CBS rallied the day following Katie Couric's anchor debut on the CBS Evening News.
Answers
1. (a), (b). The price drop fostered hopes that consumers might still find some greenbacks in their wallets to pay for such things as new sweatpants to wear when gorging on fast food. Shares of McDonald's and Wal-Mart were both up approximately 2.6%, making them the Dow's best gainers for the day.
2. True. The Nasdaq's 12.54-point gain on Tuesday bumped it into positive territory for the year by a whopping 0.38 points.
3. (b). Out of these choices, only Jos. A. Bank displayed its earnings last week, and it proved that folks still like to look like gentlemen at times. On Thursday, the men's apparel retailer pulled off the rack a better-than-expected second-quarter profit due to increased sales. Shares rose 3.9%.
Meanwhile, on Friday, Broadcom reported that it estimates compensation expenses related to past stock option grants will be more than double its prior estimate, and that it will also have to restate financial from 1998 to 1999. Shares fell 1.29%.
Lennar didn't really enjoy Friday, either. The homebuilder joined its peers by lowering its third-quarter outlook, citing a soft market necessitating increased sales incentives. Shares slipped 1.25%.
4. Chevron. Shares of the oil company rose a slick 2.3% after the company and project partners Devon Energy and Norway's Statoil announced a successful extended well test in the U.S. Gulf of Mexico. Shares of Devon surged 12% and American depositary shares of Statoil rose 2.4%.
5. (a), (c). French oil and gas surveyor Geophysique announced on Tuesday that it will acquire U.S. rival Veritas for $3.1 billion in a transaction expected to close at the end of this year. Shares of Veritas surged 11.5% while those of Geophysique dropped 8%. On Thursday, Alcatel and Lucent shareholders approved their firms' $10.7 billion merger, although with lukewarm reception as holders of only 52% of Lucent's outstanding shares voted to proceed. Shares of Lucent ended the day down 0.9%, while those of Alcatel slipped 1.6%. Copper producer PhlepsDodge and Canadian nickel miner Inco decided to call off their planned combination due to lack of shareholder support. Shares of Phelps Dodge took a shine to the news, rising 3%, while those of Inco slipped 0.7%.
6. True. Although KB Home and Beazer Homes both cut their earnings forecasts, and Hovnanian reported earnings which also reflected a slowdown, the Philadelphia Stock Exchange Housing Index still managed to closed the day unchanged.
7. (b), (c). Shares of Ford rose 1.9% on Wednesday after CEO Bill Ford decided he no longer wanted to steer the troubled automaker. Mr. Ford announced that Alan Mulally, a senior executive at Boeing, will replace him in October. Joining Tom Cruise in the No Longer Working for Viacom category is its CEO, Tom Freston, who was dismissed on Tuesday by chairman Sumner Redstone. Shares of the media company fell more than 5% in response to the surprising news.
8. False. Although shares of HP did decline 1% last week, the admission that a hired investigator used the personal information of board members to impersonate them and obtain phone records did less to cause the slippage than did general poor tech performance.
9. (b) The King of Beers plans to launch Bud.TV in February. Geared to the 21- to 34-year old male audience, the estimated $30 million sports and comedy broadband programming venture will include a section where you can create your own beer ad. Hey, dude, just what this country needs! Meanwhile, while the company also said last week that it expects volume growth to moderate during the latter half of this year, Dutch brewing rival Heineken reported a 26% increase in first-quarter profits.
10. False. Although Ms. Couric's show attracted 13.6 million people, substantially more than those who watched rivals NBC and ABC, CBS shares fell 1% the following day. Of course, the market didn't put in a good showing that day, but do you think that still would have occurred if she had already come up with her own sign-off? C'mon, Katie, how about something like "Rock on, Fools!"
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!
Anheuser-Busch and Wal-Mart are Motley Fool Inside Value picks. Best Buy is a 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.
