Week in Review: September 14, 2007
A look back at the week that was...
A sense of calmness returned to the markets after last Friday's sell-off which brought the SPX to its short-term support level of 1450. The SPX was able to hold this level and work its way back to overhead resistance (1496), as mentioned in last week's WIR.
This week's modest rally was fueled by credit fears subsiding and investors mulling over the possibility of a 50bp cut as opposed to 25bp. Short-term commercial paper lost $8.1bln this week, but was a great improvement from the astounding losses seen in the weeks prior.
Crude oil closed above the $80 mark for the first time ever Thursday over refinery concerns caused by Hurricane Alberto. Gold hit a 16 month high, while the dollar hit a record low against the Euro. The dollar's recent squalor comes ahead of the Fed's meeting where an interest rate cut now seems almost a certainty. Next week investors will have several data points to digest, most notably broker's earnings and the FOMC meeting.
The "Four Sisters" Performance
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Texas Instruments (TXN) narrowed its 3Q expectations this week, as the chip maker expects 4% to 8% in revenue growth. The company credits the growth on increased use of their chips in hard drives and printers. (9/11)
Gold reached $723.50 per ounce this week as investors are flocking to safer investments in metals on fears of the credit crunch, a weak dollar and record oil. (9/11)
China`s consumer price index reached a 10 year high in the month of August as it saw an increase of 6.5% led by rising food prices. (9/11)
The dollar fell to a record low against the euro this week, as the euro peaked at $1.3877. This decline has been fueled by speculation that the fed will cut the federal funds rate by 25 or 50 basis points in their meeting on September 18. (9/12)
Retail sales increased 0.3% for the month of August, led by strong performance in autos. Excluding autos, sales fell 0.4%, with poor performance by malls, grocery stores, and restaurants. Year to date retail sales are up 3.7%. (9/14)
Banks borrowed $7.2 bln from the Fed discount window on Wednesday, up from an average of $2.7 bln per day the week prior. This is an indication of banks struggling to raise funding elsewhere. Commercial paper eased its decline this week as it fell $8.1bln in the past week, down from $51.4bln the week prior. (9/13)
Shuffle Master (SHFL) reported 3Q income of $2.74 mln, compared to $7.27 mln a year ago. These poor results come despite an increase in revenue. (9/10)
Take-Two Interactive (TTWO) reported a net 3Q loss of $58.5 mln. This marks an improvement over last year`s $91.4 mln loss. (9/10)
Jos A Bank Clothiers (JOSB) posted strong 2Q income of $8.2 mln, up from last year`s $7 mln. The company credits the results on a larger than expected increase in sales. (9/12)
Market Movers: Winners & Sinners
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