Week in Review: September 7, 2007
A look back at the week that was...
"September is when leaves and stocks tend to fall … On Wall Street it's the worst month of all."
- Trader's Almanac
After beginning the holiday shortened week on decent footing, the Four Sisters retraced most of their gains from the past week after troublesome economic data. Wednesday's dismal pending home sales coupled with Friday's unexpected drop in new payrolls caused recessionary fears to resurface as investors continue to try and discount the latest credit crunch.
A flight to quality ensued after Friday's bad jobs number as the yield on the 10-year plunged to its lowest level since January of 2006. However, it is important to note that this latest round of selling has not stirred up the panic we saw earlier this month as the VIX sits well below its August 16th high of 37.50.
On the technical front, this week's high of SPX 1496 will serve as resistance. A break of 1450 will increase the probabilities of retesting 1430 and possibly the August 16th low of 1370.
The Four Sisters Performance
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The Fed's Beige Book reported that economic growth has continued to expand throughout the nation. The indicator reported that recent financial market turmoil has had negative effects on the lending and housing markets, but has largely not disrupted other portions of the economy. (9/5)
Pending Home sales for the month of July fell 12.2%, marking the largest single decrease since the indicators inception in 2001. Each region of the country experienced a decline from the previous month, led by 20.8% in the western portion of the country. (9/5)
Jobless claims fell this week to their lowest levels since August 4, as Thursday's initial claims came in at 19,000. The report also noted the number of Americans receiving state jobless benefits rose to 2.60mln, the highest level since February 17. (9/6)
The ISM Services Index fell to 47.9% this week, its lowest level since February 2003. The decline was a result of only three of the index's eighteen industries reporting an increase in hiring, while eight reduced their workforce. (9/6)
For the first time in four years non-farm payrolls experienced a monthly decline, as August saw an overall decrease of 4,000. This number came as a shock to economists as consensus for this month's report was an increase of 115,000. Despite the miserable payroll figures unemployment held at 4.6% for the month. (9/7)
Casey's General Stores (CASY) reported a 76% increase in 1Q income to $29.8mln, up from $16.9mln a year ago. The company largely credits the results to a 9.1% increase in same-store grocery sales. (9/5)
Campbell Soup Company (CPB) pleased investors this week as the company's 4Q profit rose by 39%. Strong sales in the company's snack and vegetable-based beverages brands were major reasons for the successful quarter. (9/6)
SAIC Corp. (SAI) saw 2Q EPS increase to 31 cents a share, up from 30 cents a share in the year prior. These results far outperformed Wall Street estimates of 21 cents per share, causing the stock to climb in early trading Friday. (9/6)
Hovnanian Enterprises Inc. (HOV) reported disappointing 3Q results this week as the homebuilder suffered a net loss of $77.9mln. A 27% decline in revenue and 35% increase in cancellation rates proved to be too big of a burden to allow for a profitable quarter. (9/6)
Market Movers: Winners and Sinners
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