YAHOO [BRIEFING.COM]: The stock market ended the week 0.6% below
where it began. That is really the result of a dramatic one-day drop, though.
Broad market trade began the week in a relatively choppy,
lackluster manner. Participants generally shrugged off news that early election
polls in
Stocks advanced 1% on Tuesday for their strongest performance of
the week as market participants prepared for announcements from the Fed
scheduled for the following day. The effort gave the stock market its first
finish above its 50-day moving average in more than a month.
Data featured a housing starts number for May that hit an
annualized rate of 708,000, which is a little light relative to the rate of
719,000 that had been generally expected. However, the prior month figures were
revised upward to reflect an annual rate of 744,000 housing starts.
Building permits climbed from the prior month's upwardly revised
rate of 723,000 to 780,000 for May to best the pace of 725,000 that had been
expected, on average, among economists polled by Briefing.com.
Although most of the market’s focus was on forthcoming Fed
commentary, JPMorgan Chase
(JPM 35.99, +0.48) CEO Jamie Dimon provided
participants with some theatre by returning to Capitol Hill for a testimony to
the House Financial Services Committee. Nothing was stated that deviated from
comments made to the Senate Banking Committee last week. FedEx (FDX 90.54, -0.09) posted an upside
earnings surprise, but issued downside guidance, while Oracle (ORCL 28.00, +0.19) had an in-line
outlook on better-than-expected earnings.
On Wednesday it was all about the Fed. The latest FOMC Directive
moved to extend "Operation Twist" through the end of the year in an
effort to extend the average maturity of the Fed's securities holdings. Fed
Chairman Bernanke stated that additional asset purchases would be considered by
the Fed if necessary, but many participants had hoped for more from the Fed
this time around, especially in light of the Fed’s lackluster forecast for
2012.
The Fed now expects real GDP growth for 2012 to range from 1.9% to
2.4%, down from the range of 2.4% to 2.9% that was previously projected.
Unemployment for 2012 is now expected to range from 8.0% to 8.2%, which is up
from the previously forecasted range of 7.8% to 8.0%.
Corporate news was overshadowed, though it featured a disappointing
forecast from Procter & Gamble (PG 59.83, +0.08) and word that JPMorgan
Chase exited some 65-70% of its losing position. Discover Financial (DFS 33.61, +0.16) served up in-line
earnings and guidance that helped earn it favorable
reviews from a few analysts.
Perhaps it was a delayed response to the Fed’s Directive and
forecast, or maybe it was disappointing economic data, but stocks fell more
than 2% on Thursday for their worst single-session slump since December.
Prior to the open market participants learned that China’s PMI
manufacturing report pointed to an eighth consecutive month of contraction.
Germany, Europe’s most diverse and robust economy, also posted a disappointing
number that pointed to tighter activity. Domestic data featured a Flash PMI Manufacturing of 52.9 – the worst reading in 11 months. The
Existing home sales set an annualized rate of 4.55 million units
during May, as had been generally expected, but the pace was stronger in the
prior for month when it registered a rate of 4.62 million units. Leading
Indicators for May increased by 0.3%, which is better than the flat reading
that had been widely forecasted to follow the 0.1% decline in the prior month.
On Friday stocks fought to recover some of their prior session
losses. The effort concluded with the three major equity averages at or near
session highs with varied gains. The Nasdaq
outperformed its counterparts with help from some large-cap Tech players. Blue
chips fared less well, hampering the Dow.
Headlines were relatively light, but news that analysts at Moody’s
downgraded credit ratings several banks created some buzz. Despite the action,
shares of banks and diversified financial services players attracted buyers,
such that the KBW Bank Index climbed in excess of 1%.
All 10 major sectors settled in positive territory. Utilities were
at the bottom end of things as market participants showed little interest for
the defensive-oriented sector. It advanced just 0.1%.
Small-cap stocks scored particularly strong gains, as measured by
the Russell 2000, which settled higher by about 1.4%. The annual reconstitution
of the Russell Indices took place today.
Crude oil trended higher in today’s pit trade and touched a session
high of $80.37 per barrel. The energy component pulled-back slightly as it
headed into the close, but managed to finish with a gain of about 2% at
$79.73 per barrel following two days of losses. Despite today’s strength, crude
suffered a weekly loss of 5.1%. Weakness in previous sessions came on
weaker-than-expected inventory data and a series of economic reports that
included weak PMI manufacturing numbers from abroad and a disappointing
Gold was on a decline in morning pit action, falling to a session
low of $1558.60 per ounce. However, the yellow metal found buying support and
was able to climb out of negative territory in afternoon floor trade. Gold
settled in the black for the first time this week, but the small gain was not
nearly enough to offset losses suffered in previous sessions that followed the
release of the FOMC Directive that announced the extension of "Operation
Twist." In the end, gold finished the week 3.8% lower at $1566.80 per
ounce. Meanwhile, silver extended yesterday's losses, falling to a new 2012 low
of $26.51 per ounce. It inched slightly higher for the remainder of pit trade,
but eventually settled at $26.68 per ounce, or 7.2% lower than last week's
closing price.
Volatility cooled considerably amid the generally improved tone. In
fact, the Volatility Index fell about 10% after it had spiraled higher in the
prior session. DJ30 +67.21 NASDAQ +33.33 NQ100 +1.1% R2K +1.4% SP400 +0.6%
SP500 +9.51 NASDAQ Adv/Vol/Dec 1772/2.26/740 NYSE
Adv/Vol/Dec 2073/1.48 bln/939