Weekly Recap - Week ending 11-Sep-09Market participants drove the S&P 500 up 2.6% during the holiday shortened week, with gains seen on three of the four sessions, and the benchmark index hitting fresh highs for 2009.  The advance came despite a relatively slow week, with only a handful of earnings and economic reports.  Investors showed increased risk appetite, with cyclical and small cap stocks leading the way.

Buying interest was broad-based, with nine of the ten sectors posting gains.  Cyclical sectors rose the most, with industrials (+4.2%) and energy (+4.3%) both logging more than 4% gains.  Defensive sectors underperformed on a relative basis, with utilities shedding 0.3%.

 In economic news, weekly jobless claims fell to 26,000 to 550,000, topping the the 560,000 consensus.  Although the beat was welcome, the claims still remain at elevated levels and will result in the unemployment rate ticking upward.  Continuing claims declined 159,000 to 6.088 million. The consensus expected continuing claims to decline a more modest 34,000. But the drop in continuing claims is not due to a decrease in jobless workers -- rather workers are running out of unemployment benefits.

The Fed's Beige Book, a collection of anecdotal economic data from the Fed districts, continued to show that the rate of economic decline is slowing, with manufacturing showing improvement.  But areas such as employment, consumer spending, and construction remain weak.

In corporate news, Kraft (KFT) offered to buy London-based Cadbury (CBY) for $16.7 bln, which Cadbury subsequently rejected.  Shares of Kraft fell 7.1% on the week, as traders speculated the company would raise its offer.

Texas Instruments (TXN) raised its Q3 outlook, though the news had a limited impact on shares.  TXN said it now expects EPS between $0.37-0.41, versus its previous forecast of $0.29-0.39.  The updated guidance tops the $0.35 consensus.

FedEx (FDX) issued upside earnings guidance for its fiscal first quarter, saying that strict cost management and better-than-expected volume in international shipments helped its performance. FedEx said it sees fiscal first quarter earnings of $0.58, well ahead of the $0.44 First Call consensus and up from the company's prior guidance of $0.30 to $0.45. FDX rose 9.1% for the week.

In other news, Treasury Secretary Geithner aided stocks during his testimony before congress. He said that policymakers are in a position to evolve their strategy with the goal of repairing and rebuilding the economy's foundation for future growth. Geithner also said that it is unlikely more bank bailout money will be needed, so its contingency provision can be removed from the budget.

In commodity trading, commodities saw a busy weak.  Oil rallied on news that OPEC is keeping its output unchanged, IEA raised its demand forecast and weekly inventories showed an unexpected decline. Crude settled the week up only +1.8%, however, after giving up more than 3% on Friday.  Meanwhile gold settled at $1006.70, crossing the $1000 mark for the first time since February.

Best performing stocks this week: (AMD, +25.4%), (GNW, +21.6%), (TIE, +18.1%), (PCS, +17.7%), (CHK, +17.7%).

Worst performing stocks this week: (KFT, -7.1%), (AIG, -6.2%), (AEE, -5.4%), (FDO, -5.2%), (MON, -5.1%).

Index	Started Week	Ended Week	Change	% Change	YTD %
DJIA	9441.27	9605.41	164.14	1.7	9.4
Nasdaq	2018.78	2080.90	62.12	3.1	32.0
S&P 500	1016.40	1042.73	26.33	2.6	15.4
Russell 2000	570.50	593.59	23.09	4.0	18.8