Week In Review
A look back at the week that was...
The Bulls took charge again this holiday shortened week as the SPX reached an all time high on a closing basis mid week and the NDX reached a six year high. Stocks drifted higher after Friday's economic data which showed higher than expected job creation, contained wage inflation, and healthy manufacturing activity. Several sectors reached new highs including the Transports, Broker/Dealers, and Retailers. It is important to note that this week's gains occurred despite the volatility in the Chinese marketplace, a stark contrast to the late February.
The strong economic data points sent the yield on the 10-year to 4.95%, the highest level in nine months. Bond investors are now shifting sentiment away from a softening bias toward a more hawkish Fed as the economy picks up steam. The US dollar strengthened, but that didn't stop investors from bidding up precious metals after the European Central Bank announced they will not be selling any more gold this year.
The Four Sisters Performance
The minutes from the FOMC meeting showed that members thought downside risks to growth had "diminished slightly" and that inflation remains "uncomfortable high." (5/30)
Wachovia (WB) announced it would acquire A.G. Edwards (AGE) for $6.8 bln to create the second largest retail brokerage in the country. (5/31)
The Commerce Department revised GDP lower to a 0.6% annualized pace in the first quarter, representing the slowest pace in five years. (5/31)
The Labor Department reported that non-farm payrolls increased by 157,000 during May. Most economist expectation had been in the range between 120,000 and 150,000.
The ISM Manufacturing Index rose to 55% from 54.7% during April the highest since April 2006.
Costco (COST) reported third-quarter earnings down 4.9% but in line with analysts' estimates although sales were lower than expected. (5/31)
Sears Holdings (SHLD) reported earnings of $1.40 per share versus expectations of $1.22 thanks to gains not related to its core business while revenue slipped to $11.7 bln from $12bln. (5/31)
Dell (DELL) reported earnings of 34 cents a share against estimates of 26 cents but only up from 33 cents last year. The company will also cut 8,800 jobs in an effort to cut costs and regain market share.
Market Movers: Winners and Sinners
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