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| Currency | US Dollar |
|---|---|
| British Pound to US Dollar | 1.705321 |
| Euro to US Dollar | 1.341382 |
| Japanese Yen to US Dollar | 0.009962 |
| Canadian Dollar to US Dollar | 0.850702 |
Crude closed above $140 a barrel for the first time on Friday, sending stocks to their worst weekly loss since February and leaving the Dow Jones Industrial Average on the edge of bear market territory.
Many traders fear that the selling pressure on the stock market all month may increase on Monday as traders and money managers square positions.
Crude closed at $140.21 a barrel in New York -- a new high -- and set an intraday record of $142.99. The move puts more upward pressure on gasoline prices as the summer driving season swings into high gear ahead of the July 4 weekend.
The average price of gasoline Friday was $4.066 for a gallon of regular, the AAA's Fuel Gauge report showed, down slightly from the all-time high of $4.08, set on June 16.
The Dow, meanwhile, fell 107 points, or 0.9%, to 11,347, its eighth loss in 10 sessions and its lowest close since September 7, 2006.
the Standard & Poor's 500 Index was off 5 points, or 0.3%, to 1,278. The Nasdaq Composite Index was off down 6 points, 0.3%, to 2,316, but the Nasdaq-100 Index ($NDX.X) was up slightly at 1,856.
The Dow was down as many at 155 points around 1:40 p.m. and was down more than 20% from its Oct 9 closing high. That's the popular definition of a bear market. At the close, the blue-chip index was down 19.9% from the Oct. 9 high.
The S&P 500 is down 18.3% from its all-time high on Oct. 9; the Nasdaq is down 19% from its Oct. 31 high.
In addition, the Dow is off 10% for June and is on the verge of its worst loss for a June since 1930. The S&P 500 and the Nasdaq may also experience their worst performances for a June.
The S&P 500 is off 8.6% for the month, and the Nasdaq is off 8.1%. For the year, the Dow is down 14.5%, the S&P 500 is down 12.9%, and the Nasdaq is off 12.7%.
The Dow's loss was its 37th loss of 100 points or more in 2008.
The market's pullback came as the dollar moved slightly lower against the British pound, euro and the Japanese yen.
The market decline also continued a rally in bonds as investors sought shelter from the volatility of stocks. The yield on the 10-year Treasury note fell to 3.99% from 4.03% Thursday and 4.14% a week ago.
Only eight of the 30 Dow stocks were higher Friday, along with 187 S&P 500 stocks and 46 Nasdaq-100 stocks.
Merck (MRK, news, msgs) was the Dow leader with a 2.2% gain on news that telcagepant, a migraine drug, is giving good results. The drug is still in tests.
Financial stocks were the market's laggards. JPMorgan Chase was down 3.5% to $35.05, the weakest of the 30 Dow stocks. Citigroup (C, news, msgs) was off 2.4% to $17.25.
The skittishness the market has about financial stocks was in full view this afternoon. Shares of Morgan Stanley (MS, news, msgs) slumped as much as 2% before recovering to a 0.3% loss to $36.71 Friday after Moody's Investors Service warned it is likely to cut its credit ratings on the investment house. The rating agency said Morgan Stanley has made expensive trading mishaps and it's unclear if it can improve its risk management.
Tech stocks were held back by weakness in chip stocks and in Research In Motion (RIMM, news, msgs), which fell 2% to $120.98. The stock fell 16% on the week after investors were disappointed by the company's outlook for its fiscal-second quarter and the 2008-2009 fiscal year.
Microsoft (MSFT, news, msgs) was off 0.4% to $27.63. This was Chairman Bill Gates' last day as a full-time employee; he will now concentrate on his charitable foundation. (Microsoft is the publisher of MSN Money).
| Close for week | Wk. ago close | % chg. | YTD. chg. | |
|---|---|---|---|---|
| Dow Jones industrials | 11,346.51 | 11,842.69 | -4.19% | -14.46% |
| S&P 500 | 1,278.38 | 1,317.93 | -3.00% | -12.94% |
| Nasdaq Composite | 2,315.63 | 2,406.09 | -3.76% | -12.69% |
| Russell 2000 | 698.14 | 725.73 | -3.80% | -8.86% |
| Crude oil per barrel | $140.21 | $134.62 | 4.15% | 46.08% |
| 10-yr. Treasury yield | 3.99% | 4.14% | -3.55% | -1.12% |
| Gold per troy ounce | $931.30 | $903.70 | 3.05% | 11.13% |
Where's the bottom?
The big question traders couldn't answer was where the market may bottom out.In the short run, the answer may depend entirely on crude oil. Some traders expect it will jump to $150 by the July 4 holiday on Friday.
While financial stocks have their own serious problems, the stock market seems to have become hostage to oil prices, "One thing is for certain, if crude continues to rally, stocks are dead," Trends In Commodities' market technician Dale Doelling told MarketWatch.
The Dow's close on Friday was its lowest of the year. The S&P 500 finished the day only 5 points above its closing low on the year -- 1,273.37 on March 10 -- and 21 points above 1,256.98, its 2008 intraday low on March 17, the day after investment bank Bear Stearns agreed to be acquired by JPMorgan Chase (JPM, news, msgs).
JPMorgan, widely hailed as one of the heroes of the Bear Stearns crisis, rallied 35% between March 14 and May 1, but has lost all of those gains in a 29% plunge since then.
A number of sectors in the market have become quite weak just in the last 10 days or so. Aerospace giant Boeing (BA, news, msgs) was down 1.9% to $66.92 Friday and was off 11.8% on the week. Analysts worried that high fuel costs are strangling airlines and may result in cancellations or, at the very least, deferrals of jet deliveries. Lockheed Martin (LMT, news, msgs) was down 4.4% on the week to $99.50 and is off 9.1% this month alone.
Even agricultural stocks, which have been among the year's biggest winners, got hit by the downdraft this week. Fertilizer maker Potash of Saskatchewan (POT, news, msgs) fell 4.7% to $219.20. Monsanto (MON, news, msgs) fell 9.1% to $127.25.
| Fri. | Thur. | Chg. | Month chg. | YTD chg. | |
|---|---|---|---|---|---|
| Crude oil (NYMEX) (per barrel) | $140.21 | $139.64 | $0.57 | 10.10% | 46.08% |
| Heating oil (per gallon) | $3.9066 | $3.8834 | $0.0232 | 6.54% | 47.45% |
| Natural gas (per million BTU) | $13.1980 | $13.2480 | -$0.0500 | 12.77% | 76.37% |
| Unleaded gasoline (per gallon) | $3.5012 | $3.5113 | -$0.0101 | 4.57% | 40.57% |
Crude's surge causes worries
Oil soared Thursday after Chakib Khelil, president of the Organization of Petroleum Exporting Countries, said oil could reach $170 this summer. Oil is up nearly 50% so far this year.The blame game is heating up, with fingers being pointed at OPEC, speculators and the booming economies of China and India. "The tight market has empowered speculators to invest in oil, and the oil market is subject to further spikes in the coming weeks," Victor Shum, an energy analyst with Purvin & Gertz in Singapore, told Reuters.
Meanwhile, Sadad al-Husseini and Nansen Saleri, two former top executives at Saudi Aramco, are taking opposite sides in the industrywide debate over how much oil there is in the world, The Wall Street Journal reported.
Husseini says the world is in supply crisis, which is causing oil prices to skyrocket; Saleri believes more oil can be found with resourcefulness and money.
"The fact is, we have to work harder and harder to get the oil we need," Husseini told the newspaper. Those who believe there is enough supply "claim to have some magic potion, like voodoo, that doesn't exist."
On the other end of the spectrum, Saleri says no magic is needed. "We have consumed only 1 trillion of the 14 or 15 trillion barrels of oil that are out there," Saleri said to the newspaper. "For the next 40, 50 or 60 years, I see no problem at all."
More from MSN Money
"We are of the opinion that if the bears cannot stem the bleeding now, then who is going to prevent this market from going to $150 . . . and beyond?" energy analyst Stephen Schork speculated in his daily note to clients. "We know it's not Boone (Pickens). And, as we found out last Sunday, it is apparently not the Saudis, either."
Saudi Arabia on Sunday confirmed that it will increase oil production by 200,000 barrels, but the market shrugged off the news, and oil prices have continued to rise all week.
Will the Fed help?
The Federal Reserve has been struggling with a monkey on its back: the weak dollar, which is contributing to the rise in oil prices. Crude prices are denominated in dollars and generally rise when the dollar declines.The dollar has been under pressure as the Fed's string of rate cuts from September to April has cut its value compared with other currencies, especially the euro. Expectations that the European Central Bank will raise rates this summer are adding more stress. The ECB's board will meet on Thursday to discuss the question.
- Readers talk: Should the Fed raise interest rates?
The Fed's rate-making body, the Federal Open Market Committee, left interest rates steady at 2% on Wednesday, but the central bank said "upside risks" to prices have increased. The Fed also said that the financial markets remain under "considerable stress." The central bank did little, however, to provide confidence in the dollar.
"We continue to see risks to the dollar to the downside for the time being given the FOMC's shift of stance and with a hawkish ECB expected to deliver on its talk next week," Martin McMahon, currency strategist at Credit Suisse, told MarketWatch.
"We need a stronger dollar, not a weaker one, and (Bernanke and the ECB's Jean-Claude Trichet) are not just destroying the dollar, they are visiting misery upon the world's consumers by tipping their hands and pushing global, dollar-denominated commodities prices higher with the weaker dollar," wrote oil analyst Peter Beutel of Cameron Hanover in his daily note to clients.
Consumer confidence slumps
A final reading on how consumers feel about the economy in June was pretty ugly.The Reuters/University of Michigan index on consumer sentiment fell to a reading of 56.4 in June -- the third-lowest reading since 1952 -- from 59.8 in May. The two readings that were worse came in the spring of 1980.
A preliminary reading for June came in at 56.7. The index peaked at 96.9 in January 2007.
"Surging gas prices, high food prices, disappearing jobs, declining home values and record foreclosures were cited by consumers as the basis for their pessimism, and most consumers expected each of these problems to continue to worsen in the months ahead," according to Richard Curtin, the Director of the Reuters/University of Michigan Surveys of Consumers.
Rebate checks boost spending in May
Consumers managed to spend in May, however, a report from the Commerce Department showed Friday. Consumer spending rose 0.8% last month, higher than economists' expectations of a 0.6% increase. Incomes grew 1.9% in May, thanks in part to the stimulus rebates many Americans received last month. Economists expected incomes to have risen 0.4%."Consumers aren't fooled -- they know this is a temporary boost to their income," Ellen Zentner, economist at Bank of Tokyo-Mitsubishi UFJ, told Bloomberg Television.
A final report from the Commerce Department showed that the economy grew at 1% in the first quarter.
| Fri. | Thur. | Chg. | Month chg. | YTD chg. | |
|---|---|---|---|---|---|
| Treasurys | |||||
| 13-week Treasury bill | 1.630% | 1.680% | -0.050 | -11.89% | -48.09% |
| 5-year Treasury note yield | 3.375% | 3.399% | -0.024 | -0.94% | -2.32% |
| 10-year Treasury note yield | 3.990% | 4.033% | -0.043 | -1.38% | -1.12% |
| 30-year Treasury bond yield | 4.537% | 4.603% | -0.066 | -3.61% | 1.75% |
| Currencies | |||||
| U.S. Dollar Index | 72.670 | 72.790 | -0.120 | -0.38% | -5.25% |
| British pound in dollars | $1.9932 | $1.9904 | 0.0028 | 0.50% | 0.20% |
| Dollar in British pounds | £0.5017 | £0.5024 | -0.0007 | -0.50% | -0.20% |
| Euro in dollars | $1.5758 | $1.5755 | 0.0002 | 1.28% | 7.82% |
| Dollar in euros | € 0.6346 | € 0.6347 | -0.0001 | -1.26% | -7.25% |
| Dollar in yen | 106.17 | 106.84 | -0.67 | -0.20% | -5.08% |
| Canadian dollar in U.S. dollars | $0.990 | $0.987 | $0.0028 | -1.70% | -0.30% |
| U.S. dollar in Canadian dollars | $1.011 | $1.014 | -$0.0029 | 1.73% | 0.30% |
| Commodities | |||||
| Gold | $931.30 | $915.10 | $16.20 | 4.96% | 11.13% |
| Copper | $3.8780 | $3.8250 | $0.05 | 7.54% | 27.52% |
| Silver | $17.7100 | $17.2200 | $0.49 | 5.01% | 18.70% |
| Corn | $7.5475 | $7.5375 | $0.01 | 25.95% | 65.70% |
| Crude oil (NYMEX) (per barrel) | $140.21 | $139.64 | $0.57 | 10.10% | 46.08% |
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