Daily Insight

The roller-coaster ride continued with the Dow posting its second 300-point move of the week and the sixth move of at least 200 points in the last 10 trading days. Meanwhile the S&P 500 jumped 30.25 points higher to finish the week 2.9 percent higher.

Oil futures slid 4 percent to a three-month low of $115.20 a barrel due to expectations of curbing demand and a sharp rebound in the dollar. After tumbling 7.9 percent this week, oil is nearly 21 percent off its early-July highs.

Retailers, manufacturers and transportation companies rallied the most on speculation lower commodity prices will boost profits by reducing pressure on consumer and corporate expenses.

Market Activity for August 8, 2008

Coinciding with tumbling oil prices was a surging dollar that enjoyed its best one-day performance in more than six years. However, the dollar’s rise against the euro may have less to do with the currency’s fundamental strength than the growing feeling that the European Central Bank will focus their attention to the downside risks to growth.

The dollar was also helped by news that worker productivity in the U.S. grew in the second quarter giving investors (and the Fed) positive encouragement on the inflation front.

While three-quarters of S&P 500 companies have reported results that beat or met the average analyst estimates, the misses have been larger in size, chiefly at automobile companies and consumer finance companies. Despite being the worst performing of the S&P 500’s 10 industries, financial and consumer discretionary stocks have led the market’s rebound since July 15 gaining 25 percent and 13 percent, respectively.

There are a number of things to watch this week to see if we can continue this rally.

• Economic data on retail sales as well as earnings this week from retailers like Walmart, J.C. Penny, Kohl’s and Nordstrom should give us an idea of how the good ole U.S. consumer is doing.


• Wednesday we will get the MBA Mortgage Applications number as well as guidance from homebuilder Toll Brothers, which will give us insight into the housing environment.


• One of the most important numbers this week for the Fed will be the Consumer Price Index (CPI), which surged last month signaling the downside risks of inflation may outweigh the downside risks to growth.


• Other economic news to keep an eye on includes import prices, industrial production and jobless claims.

Brent will be back tomorrow to grace you with his words of wisdom once again.


Have a great day!

Peter Lazaroff, Junior Analyst