Sealed The Week With Modest Gains
The Wall Street struggled to make headway Friday, ended virtually flat after a two-day winning streak, as an unexpected drop in retail sales and high anxiety over the fate of investment bank Lehman Brothers weighed on investor sentiment. Buyers found little motivation to enter the market as uncertainty continues to shroud the financial sector. Although solid gains were made among beaten-down commodities stocks their influence was too small to lift the broader market in material fashion.
The major averages moved to the upside in late day trading, sending the Nasdaq and the S&P 500 above the unchanged line. While the Dow closed down 11.72 points or 0.1 % at 11,421.99, the Nasdaq closed up 3.05 points or 0.1% at 2,261.27 and the S&P 500 closed up 2.64 points or 0.2% at 1,251.69.
Despite the mixed performance on Friday, the major averages all closed higher for the week. The Dow posted a 1.8% gain for the week, while the Nasdaq and the S&P 500 posted more modest weekly gains of 0.2% and 0.8%, respectively.
Lehman Brothers showed significant weakness over the past week, as lingering concerns over the strength of its balance sheet sent traders out of the stock. Lehman was even forced to report preliminary third quarter results along with a series of initiatives in keeping the investment bank solvent earlier in the week.
On the economic front, investors looked over a wealth of economic data throughout the session as well. Among the data, the Department of Commerce said that retail sales unexpectedly decreased in the month of August, although the drop in sales was partly due to lower gasoline prices. Retail sales fell 0.3% in August over July 2008. Worsening this picture was a downward revision to July retail sales from a 0.1% decline to a 0.5% decline. Core retail sales fell by 0.7%.
However, the Reuters/University of Michigan released its preliminary report on consumer sentiment in the month, showing that sentiment is rebounding in September, with the recent drop in energy prices offsetting concerns about inflation. The report showed that the Reuters/University of Michigan Consumer Sentiment index jumped to 73.1 in September from 63.0 in August. The much bigger than expected increase by the index was partly due to a notable improvement in consumers' expectations, with the expectations index surging up to 70.9 in September from 57.9 in August. The current conditions index edged up to 76.5 from 71.0.
Going in details, index wise, Dow Components pared their losses in the afternoon, the blue chip index still ended the session with a slight loss. Of the 30 stocks that make up the Dow, 15 ended the day down and 15 closed higher.
AIG was the clear loser on the Dow, as investors continued to fret over the health of the insurer. The deterioration of the stock's value in recent days has prompted a Citi Investment Research analyst to reduce his price target to $25.50 from $40. Shares of the insurer ended the session down by 30.8%, extending its recent downward move. With the decline, the stock set a fifteen-year closing low.
General Electric also saw significant selling pressure. The stock fell 5 percent, reversing the modest gain posted in the previous session. With the decline, GE set a two-month closing low. Late Thursday, the Defense Department said that it has awarded GE a $96 million contract for the procurement of helicopter engines.
Home Depot posted a substantial loss as well following news that the home improvement retailer expects 50 of its stores along the Gulf Coast to be closed by the end of the day as Hurricane Ike gets closer. The stock closed down 2.4 percent, reversing the previous day's gain.
Financial stocks Citigroup and JP Morgan Chase also closed sharply lower. Citigroup closed down 3.5 percent, while JP Morgan Chase fell 1.2 percent.
Other Dow components that saw weakness include Wal-Mart Stores, Johnson & Johnson and McDonald's. Wal-Mart closed down 1.2 percent, compared to a 0.8 percent decline by Johnson & Johnson. McDonald's ended the session lower by 0.8 percent.
On the other hand, Alcoa saw significant buying interest in the afternoon. Shares of the aluminum producer closed up 3.8 percent, adding to a notable gain posted in the previous session.
General Motors also showed considerable strength after a Goldman Sachs analyst said in a client note that it is more likely than not that a federal loan program for automakers will receive at least partial funding before Congress adjourns this fall. Shares of General Motors closed up 2 percent, at their best level since late July.
Strength in the resource sector helped to pare losses in the broader markets in the afternoon. Gold stocks were among some of the best performing stocks within the resource sector, as the price of gold ended its nine-day losing streak. Gold for December delivery closed up $19.00, at $764.50 an ounce.
Oil ended the session modestly higher on Friday after briefly slipping below $100 a barrel. Light sweet crude oil for October delivery closed at $101.18 a barrel, up 31 cents on the session. Despite the modestly higher close, oil still lost another $3.95 a barrel on the week. Overall, crude has been trending lower since briefly topping the $120 a barrel mark on Aug. 28. Oil producers, Exxon Mobil and Chevron closed notably higher as well. Exxon Mobil closed up 2.6%, while Chevron ended the session up 1.7 %.
In other regional markets, stock markets across the Asian region closed mixed after reports indicated that beleaguered U.S. investment bank Lehman Brothers has put itself up for sale. Japan's Nikkei 225 average closed up 0.9%.
The major European markets ended Friday's session with notable gains. The French CAC 40 Index and the German DAX Index rose 2% and 0.9%, respectively, while the U.K's FTSE 100 Index ended the day up 1.9%.
Looking ahead for week, all eyes will be on the Federal Reserve when it concludes its scheduled meeting on Tuesday. There are several economic reports that could affect the markets as well, including reports on industrial production, the consumer prices and housing starts
The Wall Street struggled to make headway Friday, ended virtually flat after a two-day winning streak, as an unexpected drop in retail sales and high anxiety over the fate of investment bank Lehman Brothers weighed on investor sentiment. Buyers found little motivation to enter the market as uncertainty continues to shroud the financial sector. Although solid gains were made among beaten-down commodities stocks their influence was too small to lift the broader market in material fashion.
The major averages moved to the upside in late day trading, sending the Nasdaq and the S&P 500 above the unchanged line. While the Dow closed down 11.72 points or 0.1 % at 11,421.99, the Nasdaq closed up 3.05 points or 0.1% at 2,261.27 and the S&P 500 closed up 2.64 points or 0.2% at 1,251.69.
Despite the mixed performance on Friday, the major averages all closed higher for the week. The Dow posted a 1.8% gain for the week, while the Nasdaq and the S&P 500 posted more modest weekly gains of 0.2% and 0.8%, respectively.
Lehman Brothers showed significant weakness over the past week, as lingering concerns over the strength of its balance sheet sent traders out of the stock. Lehman was even forced to report preliminary third quarter results along with a series of initiatives in keeping the investment bank solvent earlier in the week.
On the economic front, investors looked over a wealth of economic data throughout the session as well. Among the data, the Department of Commerce said that retail sales unexpectedly decreased in the month of August, although the drop in sales was partly due to lower gasoline prices. Retail sales fell 0.3% in August over July 2008. Worsening this picture was a downward revision to July retail sales from a 0.1% decline to a 0.5% decline. Core retail sales fell by 0.7%.
However, the Reuters/University of Michigan released its preliminary report on consumer sentiment in the month, showing that sentiment is rebounding in September, with the recent drop in energy prices offsetting concerns about inflation. The report showed that the Reuters/University of Michigan Consumer Sentiment index jumped to 73.1 in September from 63.0 in August. The much bigger than expected increase by the index was partly due to a notable improvement in consumers' expectations, with the expectations index surging up to 70.9 in September from 57.9 in August. The current conditions index edged up to 76.5 from 71.0.
Going in details, index wise, Dow Components pared their losses in the afternoon, the blue chip index still ended the session with a slight loss. Of the 30 stocks that make up the Dow, 15 ended the day down and 15 closed higher.
AIG was the clear loser on the Dow, as investors continued to fret over the health of the insurer. The deterioration of the stock's value in recent days has prompted a Citi Investment Research analyst to reduce his price target to $25.50 from $40. Shares of the insurer ended the session down by 30.8%, extending its recent downward move. With the decline, the stock set a fifteen-year closing low.
General Electric also saw significant selling pressure. The stock fell 5 percent, reversing the modest gain posted in the previous session. With the decline, GE set a two-month closing low. Late Thursday, the Defense Department said that it has awarded GE a $96 million contract for the procurement of helicopter engines.
Home Depot posted a substantial loss as well following news that the home improvement retailer expects 50 of its stores along the Gulf Coast to be closed by the end of the day as Hurricane Ike gets closer. The stock closed down 2.4 percent, reversing the previous day's gain.
Financial stocks Citigroup and JP Morgan Chase also closed sharply lower. Citigroup closed down 3.5 percent, while JP Morgan Chase fell 1.2 percent.
Other Dow components that saw weakness include Wal-Mart Stores, Johnson & Johnson and McDonald's. Wal-Mart closed down 1.2 percent, compared to a 0.8 percent decline by Johnson & Johnson. McDonald's ended the session lower by 0.8 percent.
On the other hand, Alcoa saw significant buying interest in the afternoon. Shares of the aluminum producer closed up 3.8 percent, adding to a notable gain posted in the previous session.
General Motors also showed considerable strength after a Goldman Sachs analyst said in a client note that it is more likely than not that a federal loan program for automakers will receive at least partial funding before Congress adjourns this fall. Shares of General Motors closed up 2 percent, at their best level since late July.
Strength in the resource sector helped to pare losses in the broader markets in the afternoon. Gold stocks were among some of the best performing stocks within the resource sector, as the price of gold ended its nine-day losing streak. Gold for December delivery closed up $19.00, at $764.50 an ounce.
Oil ended the session modestly higher on Friday after briefly slipping below $100 a barrel. Light sweet crude oil for October delivery closed at $101.18 a barrel, up 31 cents on the session. Despite the modestly higher close, oil still lost another $3.95 a barrel on the week. Overall, crude has been trending lower since briefly topping the $120 a barrel mark on Aug. 28. Oil producers, Exxon Mobil and Chevron closed notably higher as well. Exxon Mobil closed up 2.6%, while Chevron ended the session up 1.7 %.
In other regional markets, stock markets across the Asian region closed mixed after reports indicated that beleaguered U.S. investment bank Lehman Brothers has put itself up for sale. Japan's Nikkei 225 average closed up 0.9%.
The major European markets ended Friday's session with notable gains. The French CAC 40 Index and the German DAX Index rose 2% and 0.9%, respectively, while the U.K's FTSE 100 Index ended the day up 1.9%.
Looking ahead for week, all eyes will be on the Federal Reserve when it concludes its scheduled meeting on Tuesday. There are several economic reports that could affect the markets as well, including reports on industrial production, the consumer prices and housing starts
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