The Dow Jones Industrial Average set a new closing high on Friday, May 11.
The number of new highs was 268 while new lows totaled 113. Advancing issues overwhelmed decliners 23-8.
Dow 13,326.22 +111.09: Nasdaq 2,562.22 +28.48; S&P 500 1,505.85 +14.38; NYSE Composite 9707.03 +117.66
The markets are becoming more defined but not prohibitive.
Oil, gold and silver showed marginal gains for the day. US equities remain a solid, if not significant, investment. The rally continues.
Friday, May 11, 2007
Thursday, May 10, 2007
Broad Sell-off for US Stocks as Investors Take Profits
While some pundits may claim the sky was falling today and today's trade signals the end of the rally, others will point out that this kind of profit-taking pull-back is quite normal after such a long string of gains.
Just a day after the Fed decided to keep rates unchanged, the Census Bureau and the Bureau of Economic Analysis of the Department of Commerce announced that the US trade deficit increased to $63.9 billion in March, up from a revised $57.9 billion in February. The news was a little surprising though hardly exceptional.
What certainly worried Wall Street more were the string of dismal figures coming in from retailers, which showed April same-store sales falling sharply from the same period a year ago. Topping the list was the nation's largest retailer, Wal-Mart (WMT), which reported a decline of 3.5%. Other notables reporting sluggish sales below last year's levels included JC Penny (JCP), Federated (FD), the Gap (GPS), and Nordstrom (JWN).
Accordingly, investors headed for the exits in many of the retailers, though Wal-Mart escaped with merely an 0.18 loss. Analysts defended the numbers, citing an early Easter and an unusually cold April, especially in the population-dense Northeast.
Dow 13,215.13 -147.74; NASDAQ 2,533.74 -42.60; S&P 500 1,491.47 -21.11; NYSE Composite 9,669.37 -158.56
While the retail numbers and increased trade deficit are causes for concern, most believe the US economy to be in relatively sound shape, though overall growth is expected to stall out at around 1.5 - 2 percent for all of 2007. Such a projection is hardly surprising, considering the slowdown in housing and high fuel prices, both having negative effects on consumers and, ultimately, business.
The serious concern is that the US economy could fall into recession, actually contracting instead of expanding. Current wisdom sees that as a remote possibility. Former Fed Chairman Alan Greenspan gave it a 1 in 3 chance of occurring in 2007. Other economics experts are of similar mind, though calls for the Fed to reduce interest rates are growing louder.
A few more negative signals may induce Ben Bernanke and the FOMC to drop the federal funds rate a quarter point at their next meeting in late June, though most believe the Chairman will move slowly and cautiously, keeping one eye on inflation and the other on the overall health of the economy.
Putting today's action into perspective, it has to be respected that the markets have been on quite a roll, with the Dow rising over 1000 points in less than 2 months. Corporate profits are still strong and the business environment is probably the most lax and calm as it's ever been. Regulators and government interference has been cut to minimal under the pro-business Republican reign. That influence may be waning, though a dramatic shift under Democrats is unlikely as they too receive most of their campaign money from big business.
Declining issues far outpaced advancers, by a 7-2 ratio. New highs remained positive, though less than has been the norm. There were 263 issues making new highs with 121 reaching new lows - the first time in two weeks that the number of new lows have surpassed 100.
Oil edged higher, adding 26 cents to the cost of a barrel, ending the day at $61.81. Gold continued to slide, losing a substantial $15.50 on the day, ending at $667.00. Silver also sold off, though not in such a dramatic fashion, losing .33 to close at 13.14.
Both of the metals have flirted with breakouts recently and failed. Oil, on the other hand, may be headed into a stabilizing period. With high gas prices seen as a major threat to the economy, the US Congress has made noises about investigations and windfall profits taxes, so it may be about time for the Big Oil cartel to back down on its over-aggressive appetite for US greenbacks.
There has been good news from overseas, though few have noticed. After reaching lows against the Yen, Euro and British Pound, the US Dollar has recently shown some resolve and gained strength against most of our major trading partners. Apparently, the world's currency standard still has some muscle.
Just a day after the Fed decided to keep rates unchanged, the Census Bureau and the Bureau of Economic Analysis of the Department of Commerce announced that the US trade deficit increased to $63.9 billion in March, up from a revised $57.9 billion in February. The news was a little surprising though hardly exceptional.
What certainly worried Wall Street more were the string of dismal figures coming in from retailers, which showed April same-store sales falling sharply from the same period a year ago. Topping the list was the nation's largest retailer, Wal-Mart (WMT), which reported a decline of 3.5%. Other notables reporting sluggish sales below last year's levels included JC Penny (JCP), Federated (FD), the Gap (GPS), and Nordstrom (JWN).
Accordingly, investors headed for the exits in many of the retailers, though Wal-Mart escaped with merely an 0.18 loss. Analysts defended the numbers, citing an early Easter and an unusually cold April, especially in the population-dense Northeast.
Dow 13,215.13 -147.74; NASDAQ 2,533.74 -42.60; S&P 500 1,491.47 -21.11; NYSE Composite 9,669.37 -158.56
While the retail numbers and increased trade deficit are causes for concern, most believe the US economy to be in relatively sound shape, though overall growth is expected to stall out at around 1.5 - 2 percent for all of 2007. Such a projection is hardly surprising, considering the slowdown in housing and high fuel prices, both having negative effects on consumers and, ultimately, business.
The serious concern is that the US economy could fall into recession, actually contracting instead of expanding. Current wisdom sees that as a remote possibility. Former Fed Chairman Alan Greenspan gave it a 1 in 3 chance of occurring in 2007. Other economics experts are of similar mind, though calls for the Fed to reduce interest rates are growing louder.
A few more negative signals may induce Ben Bernanke and the FOMC to drop the federal funds rate a quarter point at their next meeting in late June, though most believe the Chairman will move slowly and cautiously, keeping one eye on inflation and the other on the overall health of the economy.
Putting today's action into perspective, it has to be respected that the markets have been on quite a roll, with the Dow rising over 1000 points in less than 2 months. Corporate profits are still strong and the business environment is probably the most lax and calm as it's ever been. Regulators and government interference has been cut to minimal under the pro-business Republican reign. That influence may be waning, though a dramatic shift under Democrats is unlikely as they too receive most of their campaign money from big business.
Declining issues far outpaced advancers, by a 7-2 ratio. New highs remained positive, though less than has been the norm. There were 263 issues making new highs with 121 reaching new lows - the first time in two weeks that the number of new lows have surpassed 100.
Oil edged higher, adding 26 cents to the cost of a barrel, ending the day at $61.81. Gold continued to slide, losing a substantial $15.50 on the day, ending at $667.00. Silver also sold off, though not in such a dramatic fashion, losing .33 to close at 13.14.
Both of the metals have flirted with breakouts recently and failed. Oil, on the other hand, may be headed into a stabilizing period. With high gas prices seen as a major threat to the economy, the US Congress has made noises about investigations and windfall profits taxes, so it may be about time for the Big Oil cartel to back down on its over-aggressive appetite for US greenbacks.
There has been good news from overseas, though few have noticed. After reaching lows against the Yen, Euro and British Pound, the US Dollar has recently shown some resolve and gained strength against most of our major trading partners. Apparently, the world's currency standard still has some muscle.
Wednesday, May 9, 2007
Fed Leaves Rates Unchanged; Dow Soars Again
As expected, the FOMC of the Federal Reserve decided to leave rates unchanged on Wednesday, marking the 7th consecutive meeting the Fed has issued no change in the federal funds rate.
Immediately following the announcement, stocks gyrated, with the Dow zig-zagging in a 50 point range before finally heading higher into the close, setting yet another record. The S&P moved to within 15 points of its all-time high. Despite the Fed offering no surprises, markets reacted positively, as has been the norm of late.
Dow 13,362.87 +53.80; NASDAQ 2,576.34 +4.59; S&P 500 1,512.58 +4.86; NYSE Composite 9,827.93 +39.90
With all eyes on the Fed, there was little else to move markets and volume was moderate.
Advancing issues held sway, beating decliners by an 8-5 margin. New highs outdid new lows 449-71, evidence that investor appetites have not yet been sated.
Possibly the best of the day's news came from the US Department of Energy, which said that stocks of gasoline rose by 400,000 barrels in the week ending May 4. Analysts had forecast a rise of 150,000. The inventory increase was the first in 13 weeks. Crude sold into the news, losing 79 cents to end the day at a moderate $61.47. With heightened demand of the summer driving season looming, this comes as welcome news and could spark a bit of easing of the price at the pump for US drivers.
Keeping with the theme, gold lost $4.90 to $682.50, while silver continued to slide, down another 13 cents to $13.47.
With earnings mostly out of the way and the next Fed meeting not for another 7 weeks, investors will focus on fundamentals and economic news. In the interim, the pace of gains should moderate, as the markets have been red hot of late.
Immediately following the announcement, stocks gyrated, with the Dow zig-zagging in a 50 point range before finally heading higher into the close, setting yet another record. The S&P moved to within 15 points of its all-time high. Despite the Fed offering no surprises, markets reacted positively, as has been the norm of late.
Dow 13,362.87 +53.80; NASDAQ 2,576.34 +4.59; S&P 500 1,512.58 +4.86; NYSE Composite 9,827.93 +39.90
With all eyes on the Fed, there was little else to move markets and volume was moderate.
Advancing issues held sway, beating decliners by an 8-5 margin. New highs outdid new lows 449-71, evidence that investor appetites have not yet been sated.
Possibly the best of the day's news came from the US Department of Energy, which said that stocks of gasoline rose by 400,000 barrels in the week ending May 4. Analysts had forecast a rise of 150,000. The inventory increase was the first in 13 weeks. Crude sold into the news, losing 79 cents to end the day at a moderate $61.47. With heightened demand of the summer driving season looming, this comes as welcome news and could spark a bit of easing of the price at the pump for US drivers.
Keeping with the theme, gold lost $4.90 to $682.50, while silver continued to slide, down another 13 cents to $13.47.
With earnings mostly out of the way and the next Fed meeting not for another 7 weeks, investors will focus on fundamentals and economic news. In the interim, the pace of gains should moderate, as the markets have been red hot of late.
A Little Savings for a Rainy Day
Since the advent of widespread use of the internet circa 1997, individual investors have all but abandoned traditional savings in favor of online trading, which is quick, easy and cheap.
The trouble with investing is that sometimes capital can be tied up for years, borrowed against or outright lost. Therein lies the American dilemma: the lowest savings rate in more than 70 years.
The previous generation of savers and investors - many of whom lived through the rigors of the Great Depression - was more inclined to save rather than invest, but Baby Boomers have lived a life of relative comfort, absent large scale economic catastrophe. Various recessions and the stagflation of the 70s accounted for about the worst of times for the current generation.
Lately, however, there's been a push to devote funds to actual savings - as in savings accounts - as a barrage of banks and other financial institutions have begun offering attractive interest rates on savings.
SavingsAccounts.com affords consumers the opportunity to review the merits of some of the best savings account offers online. The recently launched site features short reviews with links to mostly online banks like FNBO Direct, Wells Fargo, HSBC, AmTrust, Emigrant Direct and others, offering interest rates ranging from 2.75 to as high as 6%.
It's a good place to start or expand your saving regimen as that rainy day seldom announces itself far in advance.
Sponsored Post
The trouble with investing is that sometimes capital can be tied up for years, borrowed against or outright lost. Therein lies the American dilemma: the lowest savings rate in more than 70 years.
The previous generation of savers and investors - many of whom lived through the rigors of the Great Depression - was more inclined to save rather than invest, but Baby Boomers have lived a life of relative comfort, absent large scale economic catastrophe. Various recessions and the stagflation of the 70s accounted for about the worst of times for the current generation.
Lately, however, there's been a push to devote funds to actual savings - as in savings accounts - as a barrage of banks and other financial institutions have begun offering attractive interest rates on savings.
SavingsAccounts.com affords consumers the opportunity to review the merits of some of the best savings account offers online. The recently launched site features short reviews with links to mostly online banks like FNBO Direct, Wells Fargo, HSBC, AmTrust, Emigrant Direct and others, offering interest rates ranging from 2.75 to as high as 6%.
It's a good place to start or expand your saving regimen as that rainy day seldom announces itself far in advance.
Sponsored Post
Tuesday, May 8, 2007
Best Job In America: Do-Nothing Fed Governor
How would you like to have the entire financial community hanging on your every word, meet with your buddies 8 times a years and generally be rewarded handsomely for doing just about nothing?
If that sounds like a sweet gig to you, maybe it's time to look into becoming a member of the Board of Governors of the Federal Reserve. Naturally, some background (make that a lot of background) in economics is a necessary part of the resume, but once you're in, the perks are substantial and the hours are better than those of even the best-paid banker.
For 6 consecutive meetings the Federal Open Market Committee (FOMC) has met and done nothing. Sure, under the guidance of new chief Ben Bernanke, they were supposed to keep the economy cruising and hold the line on inflation, and they've achieved one of those objectives... well, maybe not, but they've managed to get through the last 10 months without changing the federal funds rate (the interest rate at which depository institutions lend balances at the Federal Reserve to other depository institutions overnight) and they aren't expected to do anything about it when they meet tomorrow, May 9, so make it a 7 in a row and a year of doing nothing. Not bad.
While some self-proclaimed experts are calling for a rate decrease, the nearly unanimous opinion is that the Fed will - and should - do nothing. America is pretty stable with a 5.25% fed funds rate, though the first quarter GDP (+1.3%) was the weakest in four years. While lowering the rate may prevent a hard landing later in the year or in 2008, is anybody really prepared to offer the oil companies any incentive to raise gas prices any further?
If anything, America needs to tighten the old economic belt a little. We're still wallowing in the aftermath of former Chairman Greenspan's unprecedented credit creation cycle, epitomized by the bust-up in the mortgage markets and a generally ailing real estate market.
And while loose money isn't exactly sound monetary policy, Wall Street isn't exactly complaining - today's modest decline was only the 4th down day for the Dow in the past 28 sessions.
So, after 2:15 pm tomorrow, expect the stock markets to get back to business and go on another in a long series of shopping sprees. Corporate profits have seldom been as good as the past couple of years and the 1st quarter of 2007 has turned out to be nearly exceptional across almost all industries.
Dow 13,309.07 -3.90; NASDAQ 2,571.75 +0.80; S&P 500 1,507.72 -1.76; NYSE Composite 9,788.03 -37.06
Market Internals: Declining issues held sway over advancers by nearly a 3-2 margin. New highs: 303, new lows: 88, in line, considering the A-D showing.
Oil kicked up a bit after 6 consecutive sessions of declines, gaining 79 cents to end up at $62.26, a manageable level which could actually auger - dare I speak - lower, or only moderately higher prices come summer. Consumers have had about enough pain, especially those driving trucks or SUVs which routinely take $80-100 or more to fill up.
Gold, again tantalizingly close to the $700 mark, backed off $3 to close at $687.40. Silver finished the day down 4 cents at $13.60.
One to watch: Marvel Enterprises (MVL), the people behind Spider-Man, turned in blowout numbers Tuesday morning, though investors thought best to sell into the news. The stock was down as much as 0.84, but gained all day to close down just 0.20 at 29.40. There could have been some options and short shenanigans going on, but the future of the company is still somewhat cloudy as they continue to move parts around. Significant is that Marvel will be making most of their own movies in 2008, as opposed the current practice of licensing their character rights and receiving only a portion of box office receipts.
Analysts expected 35 cents per share, but Marvel shocked with 56. 2007 profits are expected to at least double last year's, so the good news is already partially baked in or the stock could continue to run. It's gone from below 20 to a peak just over 30 in the last 9 months and may be in a consolidation phase. Still, the stock looks like a keeper, a good bet to hit the 38-42 range by next summer.
If that sounds like a sweet gig to you, maybe it's time to look into becoming a member of the Board of Governors of the Federal Reserve. Naturally, some background (make that a lot of background) in economics is a necessary part of the resume, but once you're in, the perks are substantial and the hours are better than those of even the best-paid banker.
For 6 consecutive meetings the Federal Open Market Committee (FOMC) has met and done nothing. Sure, under the guidance of new chief Ben Bernanke, they were supposed to keep the economy cruising and hold the line on inflation, and they've achieved one of those objectives... well, maybe not, but they've managed to get through the last 10 months without changing the federal funds rate (the interest rate at which depository institutions lend balances at the Federal Reserve to other depository institutions overnight) and they aren't expected to do anything about it when they meet tomorrow, May 9, so make it a 7 in a row and a year of doing nothing. Not bad.
While some self-proclaimed experts are calling for a rate decrease, the nearly unanimous opinion is that the Fed will - and should - do nothing. America is pretty stable with a 5.25% fed funds rate, though the first quarter GDP (+1.3%) was the weakest in four years. While lowering the rate may prevent a hard landing later in the year or in 2008, is anybody really prepared to offer the oil companies any incentive to raise gas prices any further?
If anything, America needs to tighten the old economic belt a little. We're still wallowing in the aftermath of former Chairman Greenspan's unprecedented credit creation cycle, epitomized by the bust-up in the mortgage markets and a generally ailing real estate market.
And while loose money isn't exactly sound monetary policy, Wall Street isn't exactly complaining - today's modest decline was only the 4th down day for the Dow in the past 28 sessions.
So, after 2:15 pm tomorrow, expect the stock markets to get back to business and go on another in a long series of shopping sprees. Corporate profits have seldom been as good as the past couple of years and the 1st quarter of 2007 has turned out to be nearly exceptional across almost all industries.
Dow 13,309.07 -3.90; NASDAQ 2,571.75 +0.80; S&P 500 1,507.72 -1.76; NYSE Composite 9,788.03 -37.06
Market Internals: Declining issues held sway over advancers by nearly a 3-2 margin. New highs: 303, new lows: 88, in line, considering the A-D showing.
Oil kicked up a bit after 6 consecutive sessions of declines, gaining 79 cents to end up at $62.26, a manageable level which could actually auger - dare I speak - lower, or only moderately higher prices come summer. Consumers have had about enough pain, especially those driving trucks or SUVs which routinely take $80-100 or more to fill up.
Gold, again tantalizingly close to the $700 mark, backed off $3 to close at $687.40. Silver finished the day down 4 cents at $13.60.
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One to watch: Marvel Enterprises (MVL), the people behind Spider-Man, turned in blowout numbers Tuesday morning, though investors thought best to sell into the news. The stock was down as much as 0.84, but gained all day to close down just 0.20 at 29.40. There could have been some options and short shenanigans going on, but the future of the company is still somewhat cloudy as they continue to move parts around. Significant is that Marvel will be making most of their own movies in 2008, as opposed the current practice of licensing their character rights and receiving only a portion of box office receipts.
Analysts expected 35 cents per share, but Marvel shocked with 56. 2007 profits are expected to at least double last year's, so the good news is already partially baked in or the stock could continue to run. It's gone from below 20 to a peak just over 30 in the last 9 months and may be in a consolidation phase. Still, the stock looks like a keeper, a good bet to hit the 38-42 range by next summer.
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