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Jul.03

4:30 PM ET

Thursday, 3 Jul 2008

Market 360: The Best and Worst of the Week for US Equities, Commodities, Currencies, and More

For the short Independence week ending Friday, July 3, 2008, the U.S. Markets ended the week in bear market territory with the Dow and the NASDAQ off more than 20% from their market peak set in October, 2007. A weak employment situation, credit concerns, and surging crude oil prices all contributed to the market decline, though the Dow and the S&P were positive on Thursday.

-Next weeks Highlights: The markets will await the kick off of the "official" earnings season with Alcoa [AA Loading... () ] after the bell on Tuesday followed by other Dow components, General Electric and Chevron. Other market moving events include International trade, Pending Home Sales, and Consumer Sentiment.

Market Moving News:
-General Motors [GM Loading... () ] was downgraded on Wednesday by Merrill Lynch which stated that the automobile company could be on the brink of bankruptcy, as GM faces illiquidity. GM’s shares on Wednesday sunk 15% to $9.98, a 54-year low, and are off 12.4% for the week.
*Ford [F Loading... () ] is also suffering from elevated energy costs and a weakening demand for autos as shares also fell 11% for the week.
-Financials got hit by announcements of more write-downs and touched multi-year lows, but despite the negative news, they managed to have a strong week, including Lehman Brothers [LEH Loading... () ] which ended the week up 2.7%; American Express [AXP Loading... () ] was up almost 6%, and Goldman Sachs [GS Loading... () ] was up almost 2.5% for the week.
-Starbucks Corp. [SBUX Loading... () ] shed 4.8% for the week, after the company stated that it will close 600 underperforming stores due to a struggling economy, and plans further foreclosures for the rest of the year.

M&A, Deals, Corp Actions:
-Chesapeake Energy [CHK Loading... () ] entered a joint venture with Plains and Exploration Production Co. [PXP Loading... () ] valued at $3.3 billion, as the company will sell 20% of its Haynesville leasehold. Shares of Chesapeake jumped 4.2% for the week on deal news.
-Energy Recovery [ERII Loading... () ] had a successful market debut on Tuesday, as the stock closed up 16% from its initial public offering price of $8.5. This industrial company focuses on desalination of salt water.
-CIT Group [CIT Loading... () ] agreed to sell its home-lending business for ~$1.8 billion to Lone Star Funds which has been battered by increased delinquencies and charge offs, in order for the company to raise cash and strengthen its balance sheet. CIT’s shares surged ~30% on Tuesday after this positive note.
-Vodafone Group [VOD Loading... () ] announced a partnership with News Corps’ [NWS Loading... () ] MySpace engine to create an online global interactive platform in order to expand the company’s music activity. Vodafone’s ADR edged up 7.8% for the week on deal news.
-France Telecom [FTE Loading... () ] stated that it will abandon merger deal with Nordic telecommunication firm TeliaSonera, previously valued around $42 billion after both companies failed to reach a financial agreement. France Telecom’s ADR traded up 15% for the week as its investors welcomed FTE’s less costly decision.

Commodities:
-Crude Oil for August delivery surged above $145/barrel as it settled at three consecutive records from 7/01-7/03 and hit an all time high of $145.85/barrel on 7/03, led by Iran-Israel conflicts, a drop on weekly crude inventories, and a weak dollar. Crude oil has shot up more than 50% year to date, and is up 3.4% for the week.
**AAA’s fuel gauge report has announced a new record ahead in the national average price of unleaded gasoline, currently at $4.098/gallon as of 7/03 and up over 38% from a year ago.
-Heating Oil for August delivery settled at two consecutive records on 7/02 & 7/03 after it also reached a fresh all-time high of $4.135/gallon on 7/03, and moved up 4.4% for the week on disappointing inventories.
-RBOB gasoline for August delivery closed at two new records on 7/02 & 7/03 and is up 1.5% for the week.
-Copper for September delivery settled at a new record of $4.0635/lb on 7/02, supported by a 0.6% rise in U.S. factory orders, and a continued miner’s strike in Peru. Copper rose 1.8% for the week and up ~30% year to date.
-Corn for December delivery slumped 1.3% for the week, and retreated 2.4% from its all-time high of $7.96/bushel reached on 6/27/08, after government data showed surprise increase in corn acreage. **As per USDA, farmers planted 1.3 million more acres than they had expected from the USDA’s March report. Yet farmers harvested 78.9 million acres of corn or 8.7% less than previous year.
**Ethanol producing stocks such as Aventine Renewable Energy [AVR Loading... () ], VeraSun [VSE Loading... () ], and Pacific Ethanol