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Week in Review: October 5, 2007

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A look back at the week that was...

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Market Recap

The Bulls started off the week in control and finished in the same manner. Citigroup's (C) reversal to the upside on Monday following its earnings warning set the tone for the week capped off with Friday's strong payroll number. The RUS is the only Sister that has not yet confirmed a break to the upside.

Renewed confidence returned to the credit markets further giving credence to an end of the year rally in equities. Friday's strong jobs report fueled a sell-off in treasuries to buy corporate bonds. With the LBO machine back on, expect more shareholder friendly actions in the coming months.

With investors turning their attention to earnings season, the big banks will no doubt take center stage. Today's breakout on the SPX leaves the RUS as the only sister without confirmation to the upside. As mentioned in last week's WIR, a break of 1505 on the SPX would change market sentiment and increase panic levels.


The "Four Sisters" Performance




ETF Watch


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Top Headlines

The ISM Manufacturing Index fell to 52% in the month of September, down from 52.9% in August. The report indicated a slowdown in new orders, production, and prices. (10/1)

The housing market continued to struggle this week as Tuesday`s Pending Home Sales reported a 6.5% decline for the month of August. This drop puts the index at its lowest level since 2001. (10/2)

The ISM Services Index also displayed the effects of a slowing economy as September saw the slowest growth rate since March. The index fell to 54.8% for the month, down from 55.8% in August. (10/3)

The Labor Department reported an 110,000 increase in nonfarm payrolls for the month of September. Payrolls from August were also revised to a gain of 89,000, compared to the initial report of a loss of 4,000. Unemployment increased slightly on the month to 4.7%. (10/5)


Earnings Snapshot

Walgreen's (WAG) disappointed investors this week as 4Q earnings fell by 2.4%. The disappointing results caused share prices to gap to the downside in early trading Monday. (10/1)

Pepsi Bottling Group (PBG) reported an 8% increase in 3Q revenue this week. The company credits the results on strong performance in the U.S., Canada and Europe . (10/2)

Marriott International (MAR) shares prices dropped early Thursday as the hotel giant reported a 7% drop in 3Q income. Despite a disappointing quarter, the company put forth positive 2008 earnings expectations. (10/4)

Research In Motion (RIMM) impressed investors this week as the company reported a 108% increase in 2Q revenues from a year ago. Shares surged 8% once trading began on Friday morning. (10/4)


Market Movers: Winners & Sinners


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