Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : Sioux Nation -- Ignore unavailable to you. Want to Upgrade?

To: coug who wrote (102828)	3/24/2007 4:57:56 AM
From: stockman_scott	Respond to of 361303

From Briefing.com: 4:35 pm Weekly Wrap: It was an amazing week. The broader indices were all up more than 3%. The Dow Jones Industrial average was up every day. The S&P 500 index was up every day except Thursday, when it fell 0.50 points The tone has dramatically improved as bearish factors such as the Shanghai market plunge, the unwinding of yen-carry trades, and even subprime mortgage problems had little impact this week. The focus remained on the macro issues. There was very little corporate news of broad impact. The underlying concern about the strength of the economy and whether factors such as housing weakness would lead to a recession remained the main concern. This week, the news was good. The most important event was the Fed policy statement on Wednesday. The market rallied in advance of the report in anticipation of a softer, gentler stance on the part of the Fed. The market rallied even more after it got exactly that. The Fed dropped the bias towards tightening that had been in previous policy statements. The phrase that "the extent and timing of any additional firming..." was removed and replaced with "(F)uture policy adjustments will depend on the evolution of the outlook for both inflation and economic growth." This change in attitude can certainly be considered good news, but it has to be noted that virtually no one expected any Fed rate hike. The removal of tightening bias that no one believed in the first place hardly seems a reason for a major rally. Nevertheless, there is now a stronger expectation that the Fed is likely to lower the fed funds target by 1/4% by the end of the summer. The economic data this week helped dispel recession fears. On Tuesday it was reported that housing starts rose 9.0% in February after a 14.3% drop in January. February starts were about equal to the average in the fourth quarter of last year. More good housing news came on Friday in the form of a 3.9% increase in February existing home sales. This followed a 2.7% increase in January. At a 6.99 million annual rate, existing home sales are well above the levels of 6.25 to 6.27 posted October through December. The housing market seems to be at least stabilizing. The only other economic release this week was a reported drop in new claims for unemployment for the week ended March 17. Claims dropped to 316,000 from 320,000 the week before, and levels above 330,000 for a number of weeks before that. The labor market remains strong. The earnings news was mostly good. Oracle had an outstanding report. Morgan Stanley easily beat earnings expectations. FedEx and General Mills had good reports. Motorola warned of lower than expected profits and revenue. The earnings reports and corporate news overall were of modest impact, however. Bond yields rose slightly to 4.60% from 4.55% last week due to the good economic news. Oil prices quietly rose to $62.28 a barrel from $57.11 last week. The market rally was very surprising in both its degree and depth. The nervousness from recent weeks has not been completely eliminated, and could arise again quickly, but was virtually absent this week. The focus now will shift to some degree to upcoming first quarter earnings reports. Those will start in mid-April. Earnings expectations for the S&P 500 in aggregated have fallen to about 4% from 7% two months ago. Second and third quarter forecasts are close to 5%. The earnings slowdown is here. Index Started Week Ended Week Change % Change YTD DJIA 12110.41 12481.01 370.60 3.1 % 0.1 % Nasdaq 2372.66 2456.18 83.52 3.5 % 1.7 % S&P 500 1386.95 1436.11 49.16 3.5 % 1.3 % Russell 2000 778.77 808.05 29.28 3.8 % 2.6 % 4:20 pm : For a second straight day, stocks looked rather lethargic as investors again lacked significant data needed to more convincingly support a week of sizable gains. For the week, the S&P 500 surged 3.5%, logging its best performance in four years, while the Nasdaq turned in a similar performance. However, their minimal gains Friday suggests the sustainability of such a rally, predicated largely on revised Fed language that didn't indicate any imminent rate cut no less, will come in question next week as the first quarter comes to a close and fund managers rebalance their portfolios. The Dow also closed slightly higher, posting just enough of an advance to turn positive for the year and extend its winning streak to five days; but that was largely due to a 5.5% surge in General Motors (GM 31.99 +1.67) which accounted for 13 of the Dow's 19 point gain. Shareholders applauded news that GM will pay stock bonuses to top executives for the first time since 2003 while autos were also in focus following reports that Magna International (MGA 75.42 +0.41) teamed up with a private equity partner to pay between $4.6 bln and $4.7 bln for Chrysler Group (DCX 82.36 +4.76). With the Fed recently saying in its policy directive that "the adjustment in the housing sector is ongoing," today's housing data at 10:00 ET was anticipated to set a more definitive tone. Initially, the bulls got what they were hoping for as existing home sales unexpectedly rising 3.9% in February to 6.69 mln, the fastest pace in three years, eased some of the overblown fears of a housing crisis leading to recession. However, the report also greatly reducing the rationale behind the Fed cutting rates anytime soon prompted a reversal in bonds that also took some steam out of equities. Oil prices climbing back above $62/bbl didn't help matters much either. Fortunately for the bulls, oil closed off its best levels yet offered enough of an incentive for the Energy sector to provide some notable leadership. Crude for May delivery surged amid renewed geopolitical tensions after the British Ministry of Defense confirmed that 15 Naval personnel were seized by Iran. Such worries contributed to a cautionary tone going into the weekend. DJ30 +19.87 NASDAQ +4.44 SP500 +1.57 NASDAQ Dec/Adv/Vol 1431/1593/1.65 bln NYSE Dec/Adv/Vol 1368/1853/1.28 bln 4:15PM Market View: Quiet end to impressive week (TECHX) : One week ago Friday the market was a bit nervous as it was range trading just modestly above four month lows set two days prior. The short term technical posture was improved, however, as the indices had rebound off supports (200 day for Dow, S&P 500 and Russell 2000) in an aggressive pattern amid a oversold posture. Steady follow through was noted Mon/Tues with the Fed providing a strong boost Wed. afternoon as the market latched on the dropping of "additional firming" in their statement. Relatively quiet, tightly confined action dominated for the most part Thursday and Friday. The market is extended on a short term basis in the wake of this week's run (S&P 500 +3.9%, Dow/Nasdaq Comp +3.3% low to high) with the daily candlesticks the last two days suggesting a loss of momentum. This allows for some further consolidation early next week but the indices have substantial cushion before any technical damage would be seen to the short term bias. Strength Friday was noted in Transports +1.7% (Railroad +3.6%, Trucking +1.3%), Disk Drive +1.1%, Defense +1%, Oil +0.9%, Broker/Dealer +0.8%. Modest sector pressure was noted in REITs -0.8%, Drug -0.7% and Biotech HOLDRs -2.1% (DNA -3.2% and AMGN -4% represent roughly 50% of the HOLDRs BBH). The Biotech Index BTK was firmer +0.5%.