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| Currency | US Dollar |
|---|---|
| British Pound to US Dollar | 1.652346 |
| Euro to US Dollar | 1.495215 |
| Japanese Yen to US Dollar | 0.011279 |
| Canadian Dollar to US Dollar | 0.944198 |
After two days of big gains, the stock market went basically nowhere on Friday as investors fretted about how big a rate cut the Federal Reserve will deliver.
The consensus among economists is that the Fed will cut its key federal funds rate -- the rate the banks charge each other for overnight loans -- to 4.25% from 4.5% now. The announcement will come Tuesday at 2:15 p.m. ET.
Wall Street has been loudly calling for a cut to 4%, and, until Friday, it looked like the bellowing might pay off. But the big rally on Wednesday and Thursday, falling oil prices and an okay jobs report on Friday put the 4% rate in doubt.
So, the Dow Jones industrials finished the day up 6 points to 13,626. The Nasdaq Composite Index was off 3 points to 2,706, and the Standard & Poor's 500 Index was off 3 points to about 1,505.
The Dow finished the week up nearly 254 points, or 1.9%, on top of a 3% gain the week before. The blue-chip index is up 9.3% on the year. The S&P 500 added 1.6% on the week (after a 2.8% gain the week before) and is still up 6.1% on the year. The Nasdaq, up 2.7% the week before, added 1.6% this week and is up 12% on the year.
The week was tumultuous, starting with two losses before investors began to buy stocks in reaction to the Bush administration's mortgage bailout plan. The plan shored up a host of big financial stocks and sent the Dow up more than 371 points over Wednesday and Thursday.
It seemed that many investors who believe fervently that the political establishment has no business getting involved in the mortgage mess held their noses as they pushed American International Group (AIG, news, msgs) up nearly 12% for the week, JPMorgan Chase (JPM, news, msgs) up 11%, Citigroup (C, news, msgs) up 9.3% and General Motors (GM, news, msgs) up 8.9%.
GM shares have struggled of late because of the troubles of GMAC, in which it holds a minority interest.
Next week will be busy for economic reports. In addition to the Fed's rate decision on Tuesday, the government will issue reports on the foreign-trade balance on Wednesday, retail sales and wholesale inflation for November on Thursday, and the consumer price index for November on Friday.
The latter two are likely to show sharp increases because of higher oil and energy prices.
Investment banks start to report earnings next week, with Lehman Bros. (LEH, news, msgs) starting the parade on Thursday. The following week brings reports for Goldman Sachs (GS, news, msgs) and Bear Stearns (BSC, news, msgs).
Costco Wholesale (COST, news, msgs) also reports on Thursday.
| Close for week | Wk. ago close | % chg. | YTD. chg. | |
|---|---|---|---|---|
| Dow Jones industrials | 13,625.58 | 13,371.72 | 1.90% | 9.33% |
| S&P 500 | 1,504.66 | 1,481.14 | 1.59% | 6.09% |
| Nasdaq Composite | 2,706.16 | 2,660.96 | 1.70% | 12.04% |
| Russell 2000 | 785.52 | 767.77 | 2.31% | -0.27% |
| Crude oil per barrel | $88.28 | $88.71 | -0.48% | 44.60% |
| 10-yr. Treasury yield | 4.12% | 3.97% | 3.73% | -12.53% |
| Gold per troy ounce | $800.20 | $789.10 | 1.41% | 25.42% |
American Express drags the Dow lower
Seventeen of the 30 stocks in the index were higher, led by Alcoa (AA, news, msgs), up 2.9% to $36.91.American Express (AXP, news, msgs) was the Dow laggard after Merrill Lynch analyst Kenneth Brude downgraded it, Discover Financial Services (DFS, news, msgs) and Capital One Financial (COF, news, msgs). American Express was off 4.3% to $56.96. Discover dropped 3.2% to $16.76, and Capital One tumbled 5% to $49.80. Bruce sees profits being squeezed by slowing consumer spending.
Only 230 of the S&P 500 stocks were higher on Friday, along with 49 Nasdaq-100 ($NDX.X) stocks. The index was up about 2 points to 2,130, but gains overall were held back by declines in such key stocks as Intel (INTC, news, msgs), Oracle (ORCL, news, msgs) and Amgen (AMGN, news, msgs). Apple's (AAPL, news, msgs) 2.3% gain to $194.30 added 6 points to the index.
Energy stocks were also weaker Friday as crude oil fell back again. Crude in New York settled at $88.28, down 2.2% on the day. Chevron (CVX, news, msgs) fell 0.5% to $90.96. Schlumberger (SLB, news, msgs) fell 1.7% to $97.19. But Dow component ExxonMobil (XOM, news, msgs) finished up slightly at $91.50.
| Mon. | Fri. | Chg. | Month chg. | YTD chg. | |
|---|---|---|---|---|---|
| Crude oil (NYMEX) (per barrel) | $88.28 | $90.23 | -$1.95 | -0.48% | 44.60% |
| Heating oil (per gallon) | $2.5047 | $2.5450 | -$0.0403 | -0.98% | 56.75% |
| Natural gas (per million BTU) | $7.1550 | $7.3300 | -$0.1750 | -2.01% | 13.59% |
| Unleaded gasoline (per gallon) | $2.2690 | $2.3013 | -$0.0323 | 0.44% | 41.63% |
The jobs growth was OK -- not great
Non-farm payrolls growth of 94,000 was above the consensus estimate of 85,000.The good news from the report, said University of Maryland economist Peter Morici is that "labor markets remain slack enough to keep wage increases down." And, he said in a note to clients, "Productivity growth should accommodate those increases and rising energy prices; the Federal Reserve can focus on managing the credit crisis."
The bad news from the report is that it shows modest growth at best since this summer. Indeed, as Philippa Dunne and Doug Henwood of the Liscio Report noted, the private sector added only 64,000 jobs, with bars, restaurants and health care alone accounting for a third of the job gain.
There were declines in the manufacturing sector and the construction and real-estate industries.
The Labor Department cut its estimates of job growth in September from 110,000 to just 44,000. The October job gain was revised upward by just 4,000 jobs. In all, U.S. payrolls have expanded by less than 1% since December 2006.
- Video: More on the jobs report
The unemployment rate was unchanged from October at 4.7%.
Consumer confidence falls
In other economic news, consumers were less excited about the economy in November, according to the Reuters/University of Michigan preliminary index of consumer confidence.The index showed a reading of 74.5 last month -- the lowest level since October 2005, after Hurricane Katrina slammed into Louisiana, Mississippi and Alabama.
"This month's decline reflects the fallout from the ongoing housing-market correction, the turmoil in the subprime market, the volatility in the stock market and rising gasoline prices," Steven Wood, president of Insight Economics, told Bloomberg News.
Former UnitedHealth CEO is returning millions
William McGuire, former chief at health-care-benefits company UnitedHealth (UNH, news, msgs), is giving back another $400 million in benefits, as part of a lawsuit settlement related to stock-options backdating.The settlement is with both the Securities and Exchange Commission and UnitedHealth. McGuire had already surrendered $200 million to his former employer.
"Whenever a corporate officer misleads investors about a company's performance by secretly backdating stock options, the integrity of our markets is undermined," SEC Chairman Christopher Cox said in a statement late Thursday. "As demonstrated in this case, the SEC is committed to holding corporate officers accountable for illegally backdating stock options and will seek the return of undeserved compensation."
- Video: Some energy alternatives
McGuire resigned in October last year after an independent investigation found questionable dating practices on stock options granted to McGuire between 1994 and 2006. McGuire's stock options were valued at $1.6 billion at the end of 2005.
Shares of UnitedHealth were up 1.2% to $56.65 Friday.
Palm to report surprise loss
Shares of handset maker Palm Inc. (PALM, news, msgs) slumped 12.9% to $5.74 Friday. Late Thursday, the company warned that it will report an unexpected fiscal-second-quarter loss.Palm now expects sales between $345 million and $350 million, below previous guidance of between $370 million and $380 million; the company blamed delays in getting an unspecified "key product" shipped in the quarter.
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Palm competes with Research in Motion (RIMM, news, msgs) and its BlackBerry, as well as the Apple iPhone. While Apple was up 2.3% on the day, Research in Motion finished down 0.2% to $103.65.
"There have been market-share losses for Palm, and this increases the concerns," Lawrence Harris, an analyst at Oppenheimer & Co., told Bloomberg News. "We do need to see replacements for the traditional Treo line."
Palm also cited an unexpected rise in warranty-repair expenses and higher-than-expected shipments of its lower-priced Centro smart phone, which pressured profits in the quarter.
National Semi warns of a sales shortfall
National Semiconductor (NSM, news, msgs) late Thursday warned that fiscal-third-quarter sales would miss Wall Street's estimate.National Semi said sales next quarter would be 1% to 5% lower than the $499 million it made in its fiscal second quarter -- which puts them in the range of $474 million to $494 million. The consensus estimate is $496 million in sales.
Shares rose 4.3% to $24.53.
The chip maker also said fiscal-second-quarter net income was $90.6 million, or 33 cents per share, down slightly from $91.4 million, or 27 cents per share, in the same period last year. National Semi had fewer shares outstanding in the same quarter a year ago.
| Mon. | Fri. | Chg. | Month chg. | YTD chg. | |
|---|---|---|---|---|---|
| Treasurys | |||||
| 13-week Treasury bill | 3.020% | 2.960% | 0.060 | -1.63% | -38.18% |
| 5-year Treasury note yield | 3.508% | 3.363% | 0.145 | 2.63% | -25.38% |
| 10-year Treasury note yield | 4.120% | 3.998% | 0.122 | 3.73% | -12.53% |
| 30-year Treasury bond yield | 4.585% | 4.479% | 0.106 | 4.13% | -4.84% |
| Currencies | |||||
| U.S. Dollar Index | 76.34 | 76.42 | -0.08 | 0.20% | -8.40% |
| British pound in U.S. dollars | $2.0329 | $2.0288 | 0.0041 | -1.18% | 3.74% |
| U.S. dollar in British pounds | £0.4919 | £0.4929 | -0.0010 | 1.19% | -3.61% |
| Euro in U.S. dollars | 1.4663 | 1.4650 | 0.0013 | 0.04% | 11.09% |
| U.S. dollar in euros | € 0.6820 | € 0.6826 | -0.0006 | -0.04% | -9.98% |
| U.S. dollar in yen | 111.64 | 111.21 | 0.43 | 0.61% | -6.20% |
| U.S. dollar in Canadian dollars | $1.006 | $1.008 | -0.002 | 0.66% | -13.65% |
| Canadian dollar in U.S. dollars | $0.995 | $0.992 | 0.003 | -0.63% | 15.97% |
| Commodities | |||||
| Gold | $800.20 | $807.10 | -$6.90 | 1.41% | 25.42% |
| Copper | $3.1260 | $3.0485 | $0.077 | -1.84% | 8.88% |
| Silver | $14.5050 | $14.5050 | -$0.12 | 2.40% | 13.07% |
| Crude oil (NYMEX) (per barrel) | $88.28 | $90.23 | -$1.95 | -0.48% | 44.60% |
By Charley Blaine and Elizabeth Strott
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