Financial Sense:
>>Gold prices closed out a solid week with addition gains as the dollar weakened against other currencies, boosting demand for the metal from overseas investors. Also playing a part in the price of gold is the current price, as it approaches the $320 to $325 ounce, a lot of short positions are being unwound. If gold pushes closer to that level next week, look for a pretty large battle to be fought to keep prices below the benchmark.<<
Friday, August 9, 2002 Market WrapUp
Follow The Bouncing Ball
Today’s market bounced between gains and losses all day after WorldCom Inc. said it found another $3.3 billion hidden in a binder titled “special income.” Unfortunately that didn’t fit in with GAAP standards and the auditors had to count it against the $3.8 billion in revenues improperly accounted for. Total revenues now improperly accounted for at WorldCom is over $7.5 billion and counting. It's hard to think that back in the telecom heyday, Sprint had agreed to merge into this fiasco. Guess for once someone can thank good ole Uncle Sam for blocking the way.
Gold prices closed out a solid week with addition gains as the dollar weakened against other currencies, boosting demand for the metal from overseas investors. Also playing a part in the price of gold is the current price, as it approaches the $320 to $325 ounce, a lot of short positions are being unwound. If gold pushes closer to that level next week, look for a pretty large battle to be fought to keep prices below the benchmark.
The Rate Debate
You can chalk this week’s market performance up to heightened rate cut expectations. It’s hard to imagine that those expectations have any basis in reality. Considering the sources of those calling for a rate cut, Morgan Stanley among others, it won’t be a surprise if this was simple posturing to help the markets along this week. Besides as it should be, the Fed is generally far more concerned about credit conditions than they are about the stock market. With credit spreads at levels not seen since the 1970’s, lowering rates could do more harm than good at this point.
Even with the revelations from WorldCom Inc, the Dow and the S&P were able to squeak out gains and finish with the largest one-week advance since September 28th. The Dow added 33.43, or 0.4 percent, to 8745.45 today. The S&P 500 rose 3.18, or 0.4 percent, to 908.64. The Nasdaq Composite Index shed 10.40, or 0.8 percent, to 1306.12. Five stocks rose for every four that fell on the New York Stock Exchange while four declined for every three that advanced on the Nasdaq Stock Market. Some 1.25 billion shares traded on the Big Board, according to preliminary statistics, the fewest since July 8.
Treasury Markets
The 10-year Treasury note soared 1 1/8 to yield 4.26 percent while the 30-year government bond surged 1 22/32 to yield 5.11 percent.
© Copyright Scott Middleton, August 9, 2002
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