Week in Review
A look back at the week that was...
Large cap issues continued their relative out performance this week as the Bulls have the S&P 500 closing high of 1526 in near sight. Benign inflationary data early gave hope for a Fed rate cut sooner than anticipated. The Bull's feelings were further encouraged after a ramp up in industrial production for the month of April signaling the economy should pick up in the upcoming quarters.
Stronger than anticipated economic data gave the USD a lift and put pressure on the precious metals. Concerns of Nigerian protests and supply shortages returned this week as the retail price of gasoline hit a new record of $3.087 a gallon and the Texas Tea moved over $63 a barrel.
On the technical front, for a confirmed moved higher, the two lagging sisters, NDX & RUS, need to take out their old highs set in late April. The financial sector has seen improved action but the XBD 260 has yet to be breached. As we move into a historically poor time of year for stocks, these levels will be of key interest for clues as to whether this move can continue in the short to intermediate term.
The Four Sisters Performance
Higher energy and grocery prices were offset by weak housing data as the consumer price index came in below expectations at an increase of 0.4% in April. (5/15)
Industrial production rose 0.7% in April versus an expected rise of 0.4%. All market groups recorded increases with motor vehicles being especially strong up 3.3%, the fastest rate since November. (5/16)
Building permits fell 8.9% while new housing starts rose 2.5%. (5/16)
Weekly jobless claims fell by 5,000, the fifth straight weekly decline bringing the four-week average to the lowest level in over a year. (5/17)
Bush and a bipartisan group of senators reached an agreement on how to resolve the divisive issue of immigration. They announced the new plan will treat the estimated 12 million illegal immigrants "with amnesty, but without animosity."
Hewlett-Packard (HPQ) reported earnings of 65 cents vs. consensus estimates of 64 cents but sales grew 13% on strong demand for computers and servers. (5/16)
JC Penney (JCP) reported a 13% jump in first-quarter profit helped by higher margin and same-store sales growth of 2.2%. The company also raised its forecast for the year. (5/17)
A weak housing market and unusual weather weighs down Home Depot (HD) as the company reported a 30% drop in quarterly profit (5/15).
Wal-Mart (WMT) evoked mixed emotions as the retailer met expectations as 1Q earnings rose 8%, but announced 2Q results could miss the mark listing inflation and gas prices affecting their core customers' purchasing power.
John Deere & Company (DE) saw a 16% drop in net income vs. the same quarter last year, but are positive as global demand for equipment will remain "quite strong" as international sales pick up.
Market Movers: Winners and Sinners
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