Friday, June 13, 2008

Stocks End Rough Week With Mixed Results

With volatility firmly back in place, on Friday, investors felt safe establishing positions to hold over the weekend. Stocks had been buffeted about by alternating winds of change during a somewhat tumultuous week, but ended higher on the day, but mixed for the week.

This, after a near-400-point drubbing of the Dow just one week ago.

Dow 12,307.35 +165.77; NASDAQ 2,454.50 +50.15; S&P 500 1,360.03 +20.16; NYSE Composite 9,063.23 +115.50

The Dow Jones Industrials finished the week higher by 97 points, but it was the only major index to record gains. For the week, the NASDAQ was down 20 points, the S&P lost 0.65 and the NYSE Composite ended 89 points lower.

Obviously, there was more work for stocks to do before anyone would say this is a true sustainable rally or that any progress had been made vis-a-vis the economy.

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Investors were encouraged by news that the CPI was up only 0.6% in May, with core inflation - excluding food and energy - only 0.2% higher. While those figures may be of some relief to traders, they still indicate an economy dealing with 7.2% annual inflation, though somewhat tempered in that most of it is coming from the obscene rise in the price of crude oil and motor fuel.

On the session, advancing issues finished well ahead of decliners, 4474-1786, though new lows continued to outperform new highs, 330-96, a persistent, troubling trend.

Oil actually lost some ground heading into the weekend, losing $1.91, to $135.47. Gold finished ahead marginally, up $1.10, at $873.10. Silver also posted minor gains, up 8 cents, to $16.56.

Consumer sentiment was markedly lower, with the University of Michigan June survey checking in at 56.7, from 59.8 in May, the lowest level since 1980.

The mixed results on Wall Street are indicative of contentious times for investors. There still needs to be a complete flushing of weak hands before any substantive move forward is warranted.

On the inflation front, the Fed may be convinced that it's time to tighten the credit spigot a bit to keep prices from spiraling out of control. By merely standing pat, or even raising rates 25 basis points, the markets would surely get the message. Such a move at the June 24-25 meeting would be a very stabilizing influence on markets and a strengthening motivation for the US dollar.

Volume on US equity exchanges was moderately lower than the 4-week average.

NYSE Volume 1,224,933,000
NASDAQ Volume 2,113,058,000

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