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Week in Review: December 7, 2007

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A look back at the week that was...

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Market Recap

The tape continued its volatility as the trading week began with the blockbuster merger between videogame giants Activision (ATVI) and Vivendi, creating a sales force that even has Santa frightened this holiday season.

As discussed last week, the key SPX resistance level of 1490 has been breached by the bulls, however on lighter volume, and it remains to be seen if 1490 can be held as future support. The announcement of a government plan to assist homeowners sparked interest in financials and homebuilders, and was ultimately able to push us through the 1490 mark. Regaining the key 1490 level, coupled with a climbing yield on the 10 year, is evidence of investors' willingness to take on more of an appetite for risk in the markets.

Friday's job report came in slightly better than expected, adding further doubt to a 50 basis point rate cut from the Fed. The question now remains as to whether or not a 25 basis point cut has already been discounted into equity prices, and if so will stocks be vulnerable at these elevated levels.


The "Four Sisters" Performance


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ETF Watch


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Top Headlines

Activision (ATVI) announced that it will merge with Vivendi Games, creating a gaming giant to contend with current leader Electronic Arts (ERTS). (12/3)

The ISM Manufacturing Index inched lower for a 5 consecutive month in November. The index now stands just above the 50% mark, which indicates expansion, at 50.8%. The ISM Services Index also slowed, coming in at 54.1% for the month. (12/3)

Job growth substantially outperformed consensus estimates in November, as the ADP employment report showed an 189,000 rise in payrolls compared to a consensus of 60,000. (12/5)

Friday`s job report proved to be slightly stronger than expected as the economy added 94,000 nonfarm payroll jobs in November. This gain allowed unemployment to remain steady at a healthy 4.7%. (12/7)


Earnings Snapshot

Shares of Guess (GES) experienced a volatile week as the retailer reported 3Q income of $58.3 mln, compared to $44 mln a year ago. (12/4)

The Shaw Group (SGR) pleased investors this week as the company reported a 40% rise in quarterly revenue. Shaw's chairman stated that strong global demand for power generation and petrochemicals is continuing to drive growth. (12/6)

National Semiconductor (NSM) reported mixed results this week as sales declined slightly but EPS rose by 3 cents. The company's CEO said that strong growth in personal electronics is fueling record sales and increased margins. (12/6)

Toll Brothers (TOL), the nations leading luxury home builder, reported a 4Q EPS of $0.52 compared to $1.07 a year ago. The company also issued a lowered revenue forecast for 2008. (12/6)


Market Movers: Winners & Sinners




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No positions in stocks mentioned.

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