Good gains for US Market
A strong dollar and lower crude price were the main highlights for the
US Market for the week ended on Friday, 08 August. Stocks at Wall
Street soared and registered good weekly gains. Economic data that hit
the wired during the week were mixed in nature. Also, the Federal
Reserve elected to leave the fed funds rate unchanged at 2% and
provided a policy directive that left investors inclined to think there
won't be a tightening anytime soon. A reassuring earnings report and
outlook from tech bellwether Cisco Systems helped overall market
sentiment improve further.
The Dow Jones Industrial Average
gained 408 points for the week to end at 11,734.32. Tech - heavy Nasdaq
gained 103 points at 2,414.1. S&P 500 gained 36.01 points to end at
1,296.32.
Tighter Chinese controls on currency inflows and
worries about the outlook for economic growth in the euro-zone
countries sent the dollar sharply higher during the end of the week
while the European common currency tumbled to a five-month low against
the greenback.
In the financial sector, government sponsored
enterprises Freddie Mac and Fannie Mae both reported huge quarterly
losses, as did Dow component AIG. But despite these, the financial
sector held its head high for most part of the week. Also, Moody's that
it has placed American Express' A1 rating on review for downgrade.
The economic data seen during the week was mixed. Personal income and
spending for June was better than expected, but the price deflator
provided a negative surprise. The inflation fears were tempered,
though, in the wake of the FOMC decision and with commodity prices
continuing their decline. The ISM Services and Pending Home Sales
reports also brought better than expected results.
Friday's
report on Q2 productivity provided more encouraging inflation news when
it was reported unit labor costs rose just 1.3% from the first quarter.
That was a slower rate of increase than seen in the prior two quarters.
Weekly initial claims, however, were anything but good. They
jumped to 455,000, which moved the 4-week moving average to 419,500
from 392,750. That is the highest 4-week average since July 12, 2003.
Continuing claims increased 0.9% to 3.311 million.
The
consumer discretionary sector was the best-performing sector for the
week. On the other hand, the energy sector and the materials sector
were at the end of the performance table.
Crude-oil futures for
light sweet crude for September delivery closed at $115.2/barrel (lower
by 4.82 or 4.4%) on the New York Mercantile Exchange for the week.
Futures earlier fell to an intraday low of $115.1 a barrel. For the
week, crude prices ended lower by $9.9 (8%). Crude lost $15.92 (11%) in
July, 2008, the biggest ever in dollars.
In the currency
market on Friday, the dollar rallied against the euro. The dollar
surged against major counterparts, mostly as concerns about the
eurozone economy increased following the European Central Bank's
decision to leave interest rates unchanged on Thursday. The greenback
garnered attention following cautions that the European economy would
weaken. As tighter credit and higher costs hit the continent, growth
prospects become dimmed, making it less likely the ECB will hike
interest rates. The dollar index traded 1.6% higher.
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