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| Currency | US Dollar |
|---|---|
| British Pound to US Dollar | 1.661900 |
| Euro to US Dollar | 1.485000 |
| Japanese Yen to US Dollar | 0.011100 |
| Canadian Dollar to US Dollar | 0.930600 |
Stocks suffered their worst week since early February as crude oil's close above $132 a barrel on Friday told investors that there's little relief in sight from soaring fuel prices.
The run-up in crude prices means motorists face record gasoline prices for the Memorial Day weekend and still higher prices ahead.
It battered automobile and airline stocks. General Motors (GM, news, msgs) fell to its lowest level since 1982. United Airlines parent UAL (UAUA, news, msgs) slumped 7.7% to $7.52, losing nearly 46% of its market value in just one week.
And the housing market offered little cheer. A report on existing-home sales wasn't as bad as expected, but inventories rose to their highest level in 23 years.
Crude oil closed at $132.19 a barrel in New York, up 1.1% from Thursday and up 4.7% in a week that saw it hit an intraday high of $135.09 on Thursday and a new closing high of $133.17 on Wednesday.
AAA said the national average price of gasoline hit a new high of $3.875 a gallon on Friday, up 4 cents from Thursday and 27% on the year.
The Dow Jones industrials, meanwhile, were down 146 points, or 1.2%, to 12,480. The Standard & Poor's 500 Index slid 18 points, or 1.3%, to 1,376. The Nasdaq Composite Index fell 20 points, or 0.8%, to 2,445.
For the week, the Dow was off 507 points, or 3.9%. The S&P 500 fell 3.5% and the Nasdaq 3.3%. It was the worst performance for the major averages since the week of Feb. 4, when the indexes fell more than 4%. For the year, the Dow is down 5.9%, the S&P 500 is off 6.3% and the Nasdaq is off 7.8%.
All 10 sectors of the S&P 500 were down on the day, even energy. More importantly, the S&P 500 briefly topped its 200-day moving average on Monday, then sank not just under the moving average but under 1,400. The index may test a support level at 1,320. If it falls under that, the next support would be 1,256.98. That is its 2008 intraday low, which came on March 17 after the Federal Reserve rescued Bear Stearns (BSC, news, msgs) from collapse.
Luckily, investors have the weekend to lick their wounds. Markets will be closed Monday for Memorial Day.
Then they will face challenges next week from reports on new-home sales, gross domestic product and personal income and spending.
But the fact remains that oil's huge gains in May have forced the entire globe to recalibrate how life is conducted.
In this country, there are now questions about whether the bulk of the nation's airlines can survive even if they raise fares. The domestic auto industry, which had made most of its profits from SUVs and pickup trucks in recent years, will be forced to scramble if it wants to remain an economic force.
GM, which was the Dow's biggest loser, fell 4.5% to $17.60. Ford Motor (F, news, msgs) was off 4.1% to $6.87. Ford started the battering automakers absorbed on Thursday when it announced that rising oil prices would prevent the company's North American operations from turning a profit by a 2009, a key goal of CEO Alan Mulally.
For the week, GM was down nearly 15%; Ford was down 10.3%.
Consumers, meanwhile, are trying to figure what to cut from their budgets to cope with higher energy prices.
One possible area: discretionary travel. Gambling companies Wynn Resorts (WYNN, news, msgs) and MGM Mirage (MGM, news, msgs) both fell 2.8% Friday to $99.74 and $47.17, respectively. Cruise operator Carnival (CCL, news, msgs) was down 2.5% to $36.99.
There are signs they are adjusting grudgingly to higher fuel costs. U.S. motorists drove 4.3% less in March -- the biggest monthly drop ever -- the Federal Highway Administration said Friday. The decline in vehicle miles traveled was the first for March since 1979, an agency statement said.
Only four of the 30 Dow stocks finished with gains on the day, led by Coca-Cola (KO, news, msgs), up 0.6% to $58.63. Just 42 S&P 500 stocks had gains, along with 17 stocks in the Nasdaq-100Index ($NDX.X), which tracks the biggest Nasdaq stocks. The index fell 6 points, or 0.3%, to 1,959.
| Close for week | Wk. ago close | % chg. | YTD. chg. | |
|---|---|---|---|---|
| Dow Jones industrials | 12,479.63 | 12,986.80 | -3.91% | -5.92% |
| S&P 500 | 1,375.93 | 1,425.35 | -3.47% | -6.29% |
| Nasdaq Composite | 2,444.67 | 2,528.85 | -3.33% | -7.83% |
| Russell 2000 | 724.10 | 741.17 | -2.30% | -5.47% |
| Crude oil per barrel | $132.19 | $126.29 | 4.67% | 37.73% |
| 10-yr. Treasury yield | 3.83% | 3.85% | -0.49% | -5.06% |
| Gold per troy ounce | $925.80 | $899.90 | 2.88% | 10.48% |
Why crude moved up again
Crude jumped again Friday in part on fears that a more active hurricane season now being projected will threatened oil and gas production facilities in the Gulf of Mexico.The prices also got a boost because of rising global demand, tight supplies and a falling dollar. The greenback was moving lower against the euro, British pound and the yen Friday and is off more than 1% for the week against all of them.
The U.S. dollar index, which measures the dollar against a basket of currencies, was off 0.5% to 72.06.
| Fri. | Thur. | Chg. | Month chg. | YTD chg. | |
|---|---|---|---|---|---|
| Crude oil (NYMEX) (per barrel) | $132.19 | $130.81 | $1.38 | 16.51% | 37.73% |
| Heating oil (per gallon) | $3.8656 | $3.9543 | -$0.0887 | 21.67% | 45.90% |
| Natural gas (per million BTU) | $11.8570 | $11.6970 | $0.1600 | 9.35% | 58.45% |
| Unleaded gasoline (per gallon) | $3.3960 | $3.3297 | $0.0663 | 15.86% | 36.34% |
Oil drilling deal
Oil-field services giant Halliburton (HAL, news, msgs) is offering $3.38 billion for British services provider Expro International Group.Expro said the bid "does not yet constitute a firm intention to make an offer," but that a further announcement would be made soon. Halliburton's offer tops a previous offer from a consortium led by private-equity firm Candover and Goldman Sachs (GS, news, msgs), made in mid-April.
While there is much finger-pointing over who is to blame for record energy prices, the surge has prompted oil companies to boost activity to try to keep up with worldwide demand.
Costs for exploration and production have more than quadrupled since 2000, Bloomberg reported, citing data from Lehman Bros., which said six major oil players will spend a record $98.7 billion in 2008 on exploration and production.
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Some U.S. lawmakers and oil industry officials are pushing to loosen bans that prevent domestic drilling in many parts of the country, The Wall Street Journal reported. Areas off the coasts of Florida and California are off-limits to exploration and drilling, as are many onshore areas in the U.S.
"People have no idea what kind of resources might be out here," Duane Zavadil, a spokesman for Bill Barrett (BBG, news, msgs), a producer active in the Rocky Mountain region, told The Journal.
But environmental and other concerns remain. "We simply cannot drill our way to lower prices at the pump," wrote Democratic Rep. Nick Rahall of West Virginia, chairman of the House Natural Resources Committee.
Existing-home sales fall
A report from the National Association of Realtors didn't offer much optimism for the housing market.Existing-home sales fell 1% in April from March to an annual rate of 4.89 million. Sales were down 17.5% from April of 2007. Economists had expected a decline of 1.6% in April. The median price of a home fell 8% to $202,300 from last April.
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Sales of existing homes make up about 85% of the housing market.
While optimists were happy the sales decline wasn't as bad as feared, investors were clear about their opinion of the report's meaning. Home building shares were all lower. Ryland (RYL, news, msgs) fell 4.3% to $27.52; Lennar (LEN, news, msgs) dropped 2.4% to $16.88.
The Philadelphia Housing Sector Index ($HGX.X) fell 2.1% to 130.92 and lost 10% loss on the week. A week ago, the index had been up on the year. Now, it's down 9.1%.
This Bud's for InBev?
As summer barbecue season arrives, domestic beer is the choice for many thirsty grillers -- and, possibly, for one big international brewer as well.Stock Charts (Year)
Anheuser-Busch
Apple
Should Anheuser-Busch reject an offer, InBev, which owns the Beck's brand in Europe, would take its bid directly to shareholders, the blog said.
"I don't know whether it's true, but the two companies would represent an excellent geographic fit," Wim Hoste, an analyst at KBC Securities in Brussels, told Bloomberg News. "The black hole for InBev is the U.S. Buying Anheuser-Busch would fill up the last major hole in their geographic portfolio."
InBev said it had no comment on the rumor, according to Reuters.
CNBC's David Faber reported that Anheuser-Busch wasn't interested in selling.
InBev closed down 2.% on Friday in trading in Brussels.
Goldman finds Apple tasty
Shares of Apple (AAPL, news, msgs) got a lift Friday after Goldman Sachs added the company to its "America's conviction buy" list. Goldman analyst David Bailey also raised his price target on Apple stock to $220 from $185, saying that Apple will benefit from the launch of its third-generation iPhone in June, as well as from strong sales of its Macintosh computers.Apple shares rose 2.3% to $181.17 on the news. The gain contributed 5 points to the Nasdaq-100's performance on the day.
Merrill Lynch also raised its price target on Apple, from $186 to $215.
Yahoo postpones annual meeting
Yahoo (YHOO, news, msgs) late Thursday said it is postponing its shareholder meeting to sometime at "the end of July," as a proxy battle for the company heats up.The shareholder meeting was supposed to be held July 3, but the company delayed the meeting to give regulators time to review proxy materials.
Last week, billionaire investor Carl Icahn said he planned to nominate a slate of nominees to Yahoo's board. Icahn also said he owns 10 million Yahoo shares and has options to buy 49 million more. Icahn's announcements came after Microsoft (MSFT, news, msgs) withdrew its $33-per-share bid on May 3. (Microsoft is the publisher of MSN Money.)
In a filing with the Securities and Exchange Commission, Yahoo said that two shareholders in addition to Icahn plan to nominate slates of directors, but Yahoo said that the shareholders did not comply with its bylaws.
Shares of Yahoo rose 0.7% to $27.72 on the day. Microsoft was off 1.5% to $28.05.
Yahoo, Google close to ad deal
In related news, Yahoo and Google (GOOG, news, msgs) could announce an advertising deal as early as next week, according to The Wall Street Journal.Earlier this week, Microsoft said it was pursuing a deal with Yahoo that did not include an outright acquisition of Yahoo, which some believed meant Yahoo's search-advertising business. But speaking at a technology conference in Russia on Friday, CEO Steve Ballmer said that "Yahoo was never the strategy we were pursuing," according to Reuters. Ballmer said the company will spend the $50 billion it saved by not buying Yahoo on "some acquisitions."
Yahoo and Microsoft have been struggling to compete with Google, which dominates the online search business. Data from Internet research company comScore showed that Google had 62% of the search market in April, up nearly 2% from March. Yahoo followed with 20% of the market, and Microsoft had 9%.
Google closed down 0.9% to $544.62.
Gap profit jumps
Gap (GPS, news, msgs) late Thursday reported a 40% increase in first-quarter profit, despite the slowdown in the U.S. economy.Stock Charts (Year)
Gap
Sales dipped 5% to $3.38 billion, missing the consensus estimate of $3.42 billion.
Gap saw "no signs of improvement in the psyche of the American consumer," said Murphy. Sales at the company's stores open at least one year fell 11% in the quarter -- the retailer's 15th consecutive decline in same-store sales.
"The customer just doesn't come back overnight," CL King & Associates analyst Mark Montagna told MarketWatch.com. "The question is when they are going to start (to) post positive sales results."
| Fri. | Thur. | Chg. | Month chg. | YTD chg. | |
|---|---|---|---|---|---|
| Treasurys | |||||
| 13-week Treasury bill | 1.800% | 1.825% | -0.025 | 34.33% | -42.68% |
| 5-year Treasury note yield | 3.121% | 3.232% | -0.111 | 2.90% | -9.67% |
| 10-year Treasury note yield | 3.831% | 3.921% | -0.090 | 1.92% | -5.06% |
| 30-year Treasury bond yield | 4.557% | 4.629% | -0.072 | 1.33% | 2.20% |
| Currencies | |||||
| U.S. Dollar Index | 72.055 | 72.400 | -0.345 | -0.91% | -6.05% |
| British pound in dollars | $1.9806 | $1.9806 | 0.0000 | -0.38% | -0.44% |
| Dollar in British pounds | £0.5049 | £0.5049 | 0.0000 | 0.38% | 0.44% |
| Euro in dollars | $1.5770 | $1.5728 | 0.0042 | 0.96% | 7.90% |
| Dollar in euros | € 0.6341 | € 0.6358 | -0.0017 | -0.95% | -7.32% |
| Dollar in yen | 103.36 | 104.10 | -0.74 | -0.55% | -7.59% |
| Canadian dollar in U.S. dollars | $1.011 | $1.016 | -$0.0050 | 1.69% | 1.79% |
| U.S. dollar in Canadian dollars | $0.990 | $0.984 | $0.0057 | -1.58% | -1.74% |
| Commodities | |||||
| Gold | $925.80 | $882.10 | $7.50 | 7.02% | 10.48% |
| Copper | $3.7360 | $3.7125 | $0.02 | -4.32% | 22.85% |
| Silver | $18.2900 | $18.0250 | $0.27 | 10.23% | 22.59% |
| Corn | $5.9975 | $5.9575 | $0.04 | -0.08% | 31.67% |
| Crude oil (NYMEX) (per barrel) | $132.19 | $130.81 | $1.38 | 16.51% | 37.73% |
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