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| Currency | US Dollar |
|---|---|
| British Pound to US Dollar | 1.633720 |
| Euro to US Dollar | 1.398406 |
| Japanese Yen to US Dollar | 0.010414 |
| Canadian Dollar to US Dollar | 0.861846 |
Stocks ended the week with a thud as new data suggested the economy may be slowing more than previously thought.
The sell-off raised fears the market rally that erupted in mid-July may be peaking in the final month of the year.
But buying in the last hour or so of trading suggested there's still disagreement over whether market rally is done.
Bulls were saying stocks can rise because the Federal Reserve will be pressured into cutting rates to prevent the softness in the economy from getting out of hand. In fact, bargain hunters bought heavily in the late afternoon and cut today's losses for the indexes by more than half.
At the close, the Dow Jones industrials were down 28 points, or 0.2%, to 12,194. It had been down as much as 123 points.
The Standard & Poor's 500 Index finished down 3.9 points, 0.3%, to 1,397, and the tech-heavy Nasdaq Composite was down 18.6 points, or 0.8%, to 2,413.
Overall market sentiment was negative, with decliners beating gainers 1.2 to 1 on the New York Stock Exchange and 1.6 to 1 on Nasdaq. Only 10 of the 42 indexes that Market Dispatches tracks were higher.
Ten of the 30 Dow stocks were higher, led by Home Depot (HD, news, msgs), up 2.6% on reports that private investors, including Kohlberg, Kravis, Roberts & Co., could be circling the home improvement store chain for a huge leveraged buyout.
The Dow finished the week down 0.7% -- the second weekly decline in a row. The S&P 500 was down 0.3%, and the Nasdaq was down 1.9%.
The idea that the U.S. economy is weakening more strongly than thought helped push the dollar lower against the euro and the British pound. The euro was at $1.33 Friday in New York, up from $1.32 yesterday. So far this year, the euro is up 12.9%. The pound was at $1.98, up from $1.97 yesterday -- a 14-year high. It's up 15.3% against the dollar this year -- 5.7% this quarter alone.
"The cards are stacked against the dollar," Scott Ainsbury, who helps manage about $12 billion in currencies at New York-based FX Concepts, told Bloomberg News. "This is the real deal. It's definitely got more to go."
At the same time, the economic weakness theme pushed bond yields lower. The 10-year Treasury yield fell to 4.425% Friday from 4.58% yesterday.
Next week features one major economic report to watch for: the big payrolls and unemployment report due next Friday morning.
- StockScouter's December picks: MSN Money's stock picking tool sees opportunity in energy and transportation stocks.
| Close for week | Wk. ago close | % chg. | YTD. chg. | |
|---|---|---|---|---|
| Dow Jones industrials | 12,194.13 | 12,280.17 | -0.70% | 13.78% |
| S&P 500 | 1,396.72 | 1,400.95 | -0.30% | 11.89% |
| Nasdaq Composite | 2,413.21 | 2,460.26 | -1.91% | 9.43% |
| Russell 2000 | 781.17 | 792.28 | -1.40% | 16.03% |
| Crude oil per barrel | $63.43 | $58.97 | 7.56% | 3.92% |
| 10-yr. Treasury yield | 4.43% | 4.55% | -2.70% | 0.68% |
| Gold per troy ounce | $646.90 | $629.00 | 2.85% | 24.67% |
Manufacturing weakness slams the market
Two reports combined Friday to slam the market for much of the day. The Institute of Supply Management said that its manufacturing index fell to 49.5 in November. It was fifth month in a row that the index declined and the lowest level since April 2003.Any measure below 50 means the manufacturing economy is in contraction. The ISM's report confirmed worries about a slowdown after Thursday's surprising news that business activity contracted in the Midwest.
Industries such as wood, furniture, appliances, fabricated metal and transportation equipment all slipped last month, the report showed, hit by a housing market slump and bloated automobile inventories.
Today's ISM report was a surprise. Analysts had expected the index to come in at 52. The news comes after yesterday's Chicago Purchasing Managers Index report, which also showed a decline in manufacturing.
While manufacturing is declining, the report does not mean the entire economy is falling back. For that to happen, the report says, the manufacturing index would have to drop to 42 -- a 15% decline from current levels.
Meanwhile, the Commerce Department said construction spending fell 1% in October from September, the largest drop since September 2001. The culprit was residential construction spending, which fell for a seventh month in a row. The construction report said construction overall was running at a seasonally adjusted $1.18 trillion in October.
Did the Fed remain on hold for too long?
The ISM report prompted a lot of economists to ask if the Federal Reserve has waited too long to start cutting interest rates.The Fed has often cut interest rates when the ISM number falls below 50. Nigel Gault, chief U.S. economist for consulting firm Global Insight, told CNBC that Friday's number indicates weakness in the economy beyond the housing sector. Gault said it was easy in hindsight to say some of the problems were due to the Fed.
The Fed's two years of interest rate increases ended in June. Many economists were expecting the Fed to keep its federal funds rate steady at 5.25% when it meets on Dec. 12, its last session for 2006. The fed funds rate is the rate banks charge each other for overnight loans.
The central bank doesn't have to start cutting rates right now, Gault said, but it should look carefully at the outlook for growth next year as well as keep its eye on inflation.
Futures trading on Friday suggested that the federal funds rate will be cut perhaps next spring.
Chrysler, Ford sales dip; GM, Toyota see gains
DaimlerChrysler (DCX, news, msgs) on Friday reported an unexpected rise in November U.S. car sales, but Ford Motor (F, news, msgs) and General Motors (GM, news, msgs) came up short of analysts' targets to dash hopes for a strong month for domestic automakers.As a group, analysts had expected a seasonally adjusted annual sales rate of 16.3 million cars and trucks. The final tally came in at just over 16 million, making for the worst month since October 2005, according to Autodata.
Toyota (TM, news, msgs) turned in another torrid month of double-digit gains, with a big jump in truck sales outpacing results from the car side.
Kerkorian sells off entire stake in GM?
GM's sales came after reports that billionaire Kirk Kerkorian has sold off the last of his shares in the auto giant. It was clear yesterday that Kerkorian had sold 14 million shares for $28.75 per share, or about $400 million, slicing his stake to 4.95%. The Wall Street Journal reported Friday that Kerkorian's investment company, Tracinda Corp., has now sold that remaining stake of 28 million shares, giving him a slight profit.Kerkorian's decision to get out of GM came after talks about an alliance among GM, Renault and Nissan failed. The collapse of the talks led Kerkorian's closest aide to quit GM's board.
The 89-year-old investor had been GM's largest shareholder and paid an average of $31.50 per share when he first started buying stock in the car maker last year.
GM got some good news yesterday. The company said it completed the sale of 51% of its General Motors Acceptance finance unit, raising $7.4 billion in cash. Shares in GM have fallen 36% over the past three years.
More from MSN Money
OPEC looking at another production cut
Get ready, America: The Organization of Petroleum Exporting Countries said it will likely cut oil production. The amount will be determined at this month's scheduled meeting in Nigeria.Oil prices finished the day at $63.43 as a result, up 27 cents on the day. Oil prices had been trending upward, after a report Wednesday showed an unexpected fall in stocks of winter heating fuel. Then, a big winter storm hit the Midwest and was expected to hit the Northeast.
| Fri. | Thur. | Chg. | Month chg. | YTD chg. | |
|---|---|---|---|---|---|
| Crude oil (NYMEX) (per barrel) | $63.43 | $63.13 | $0.3000 | 8.00% | 3.92% |
| Heating oil (per gallon) | $1.8477 | $1.8330 | $0.0147 | 10.84% | 6.93% |
| Natural gas (per million BTU) | $8.8395 | $8.8440 | -$0.0045 | 17.33% | -21.25% |
| Unleaded gasoline (per gallon) | $1.7080 | $1.7008 | $0.0072 | 19.67% | -0.12% |
Revlon's not shining
Shares of makeup giant Revlon (REV, news, msgs) shed more than 8%, to $1.50, after Goldman Sachs downgraded the company to "sell" from "neutral."Analyst Lori Scherwin noted concerns over long-term sustainability of business trends amid stiff competition. She also said Revlon lacked true innovation.
Claire's Stores looks for a buyer
Claire's Stores (CLE, news, msgs) said it is exploring strategic alternatives, including a possible sale. The teen-focused jewelry and accessories chain said it has hired Goldman Sachs as its financial adviser.The company had reported flat same-store sales for November and said it was struggling with its international business. Shares were up more than 4.4%, to $33.20.
Is the corporate bond rally over?
The manager of Pacific Investment Management Co., commonly known as PIMCO, said the bond rally is out of gas. Chief Investment Officer Bill Gross said a jump in derivatives trading is distorting debt prices and gains are not likely to continue. He recommended buying two-year Treasuries to take advantage of the Fed's interest rate cuts.PIMCO is one of the world's biggest bond fund managers. It oversees nearly 70 funds invested in debt securities, with more than $600 billion in assets.
Ni hao China, says MySpace.com
News Corp. (NWS, news, msgs) said it is in talks to bring MySpace.com to China.The Wall Street Journal reported that News Corp. wants to expand internationally, as domestic growth is slowing. Wendi Deng, wife of Chairman Rupert Murdoch, will likely join the board of MySpace China -- her first official position at the company since marrying Murdoch in 1999.
News Corp. shares were down slightly on Friday.
| Fri. | Thur. | Chg. | Month chg. | YTD chg. | |
|---|---|---|---|---|---|
| Treasurys | |||||
| 13-week Treasury bill | 4.890% | 4.890% | 0.00 | -1.01% | 22.71% |
| 5-year Treasury note yield | 4.380% | 4.442% | -0.062 | -4.51% | 0.53% |
| 10-year Treasury note yield | 4.425% | 4.458% | -0.033 | -4.49% | 0.68% |
| 30-year Treasury bond yield | 4.541% | 4.561% | -0.020 | -4.74% | -0.13% |
| Currencies | |||||
| U.S. Dollar Index | 82.42 | 82.85 | -0.43 | -3.16% | -9.39% |
| British pound in dollars | $1.98 | $1.97 | 0.01 | 3.84% | 15.33% |
| Dollar in British pounds | £0.50 | £0.51 | 0.00 | -3.70% | -13.17% |
| Euro in dollars | $1.33 | $1.32 | 0.01 | 4.56% | 12.89% |
| Dollar in euros | € 0.7495 | € 0.7551 | -0.01 | -4.36% | -11.42% |
| Dollar in yen | ¥115.41 | ¥115.73 | -0.32 | -1.32% | -2.09% |
| Commodities | |||||
| Gold* | $644.70 | $646.90 | -$2.20 | 6.25% | 24.24% |
| Copper* | $3.1715 | $3.1875 | -$0.02 | -5.17% | 46.73% |
| Silver* | $14.0060 | $13.9250 | $0.08 | 14.15% | 57.55% |
| Crude oil (NYMEX) (per barrel)* | $63.43 | $63.13 | $0.30 | 8.00% | 3.92% |
By Charley Blaine and Elizabeth Strott
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