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| Weekly Wrap Up |
Last week got off to a very rocky start. The markets ended mixed both Monday and Tuesday, and plunged on Wednesday, mostly due to the ever-increasing price of crude oil futures. On Wednesday alone, the price of a barrel of crude rose $5. On Thursday and Friday, all the major indices ended in positive territory, and Friday's strong gains pushed the Dow Jones into positive territory for the week, but unfortunately weren't enough to keep the NYSE or NASDAQ out of negative territory. Some of the worry this week was caused by a report that the Federal Reserve would likely have to increase interest rates in order to counteract inflation and a weak dollar. Sales figures jumped for the month of May (largely attributed to the recently released stimulus checks), but unemployment figures jumped 5.5% - the largest monthly increase in 22 years. In corporate news, McDonalds (MCD: Charts, News, Offers) and Coca-Cola (KO: Charts, News, Offers) reported strong results. Staples (SPLS: Charts, News, Offers) shares rose after acquiring Corporate Express NV (CXP: Charts, News, Offers), and Anheuser-Busch (BUD: Charts, News, Offers) shares rose as well on news that InBev is considering acquiring the popular United States beer producer. Apple (AAPL: Charts, News, Offers) shares fell, despite the popular announcement of a new, cheaper iPhone. Lehmen Bros. (LEH: Charts, News, Offers) initially stumbled after the company announced they were letting go two executives, but rose again on Friday as investors were relieved to see that BlackRock (BLK: Charts, News, Offers) was purchasing Lehmen Bros. stock. Crude oil prices ended the week at $134.86 a barrel. More Market News
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| Economic News |
The trade deficit jumped to the highest level in 13 months in April as America’s bill for foreign crude oil soared to an all-time high. The Commerce Department reported Tuesday that the gap between what the nation imports and what it sells abroad rose by 7.8 percent to $60.9 billion, the largest imbalance since March 2007. The growing deficit was driven by a $4.3 billion increase in crude oil imports, which jumped to a record $29.3 billion in April, as the average per barrel price rose to an all-time high. The cost of oil imports are expected to climb further in coming months given that crude oil has continued its relentless rise. (Source: MSNBC) Full Story
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Soaring foreclosures are continuing to raise questions about the mortgage industry's claims that they are making a dent in the housing crisis. Foreclosure filings last month were up nearly 50 percent compared with a year earlier. Nationwide, 261,255 homes received at least one foreclosure-related filing in May, up 48 percent from 176,137 in the same month last year and up 7 percent from April, foreclosure listing service RealtyTrac Inc. said Friday.The latest grim foreclosure news comes as criticism mounts that efforts by government and the mortgage industry to stem the tide of foreclosures aren't keeping up with the rising number of troubled homeowners. Critics say a Bush administration-backed mortgage industry coalition, dubbed Hope Now, is falling far short. (Source: Yahoo! Finance) Full Story
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Retail sales jumped by the largest amount in six months in May as 57 million economic stimulus payments helped offset the headwinds buffeting consumers, but the number of people filing new claims for unemployment benefits jumped last week to the highest level since late March. The Commerce Department reported Thursday that retail sales soared 1% last month, the biggest increase since November. A wide variety of retailers enjoyed a good month, including the biggest increase at department stores and other general merchandise stores in a year. Higher gasoline prices gave a lift to service station sales, but even with those stripped out, retail sales rose a strong 0.8%, the biggest increase in a year. (Source: USA Today Full Story
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| Business News |
Gannett Co. (GCI: Charts, News, Offers), the nation's largest newspaper company, will write down its assets by $2.5 billion to $2.8 billion this quarter to reflect the declining value of its operations in the United Kingdom and the United States. At an investor conference in New York, Gannett Chief Financial Officer Gracia Martore said much of the write-down reflects a declining value in Gannett's United Kingdom operation, Newsquest. Stock in Gannett, publisher of USA TODAY and USATODAY.com, has lost roughly half its value in the past year as the newspaper industry struggles with declining revenue and circulation. Martore emphasized that the write-down is an accounting issue and does not affect Gannett's day-to-day business operations. (Source: USA Today) Full Story
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Lehman Brothers Holdings Inc. (LEH: Charts, News, Offers) shook up its management Thursday, removing two top executives in a concession that attempts to quell Wall Street anger over recent losses have failed. The nation's fourth-largest investment bank said Chief Financial Officer Erin Callan and Chief Operating Officer Joseph Gregory have been removed from their positions, days after the investment bank announced a $3 billion quarterly loss. Investors were shaken after the company disclosed Monday it needed $6 billion of fresh capital to offset that loss, its first since going public in 1994. "When you have a stumble of this magnitude, change is not a bad thing," said Lauren Smith, an analyst with Keefe, Bruyette & Woods. (Source: Yahoo! Finance) Full Story
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Investors considered the unsolicited $46.4 billion bid for Anheuser-Busch (BUD: Charts, News, Offers) by its Brazilian-Belgian competitor InBev and apparently found it wanting on Thursday. Stock in Anheuser-Busch, brewer of Budweiser and Michelob beers, jumped Thursday following a $65-per-share, unsolicited all-cash take-over offer, made by Belgium-based InBev late Wednesday after weeks of rumors that such a bid would occur. Anheuser-Busch shares traded up $3.05, or 5.2%, to close at $61.40, on Thursday. Still, it remains 5.5% below the InBev offer, a sign investors have doubts that the deal will go through.Investors considered the unsolicited $46.4 billion bid for Anheuser-Busch by its Brazilian-Belgian competitor InBev and apparently found it wanting on Thursday.
Stock in Anheuser-Busch, brewer of Budweiser and Michelob beers, jumped Thursday following a $65-per-share, unsolicited all-cash take-over offer, made by Belgium-based InBev late Wednesday after weeks of rumors that such a bid would occur. (Source: Forbes) Full Story
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| Technology Focus |
The Dutch office supplies distributor Corporate Express NV (CXP: Charts, News, Offers) accepted a sweetened buyout offer Wednesday of about $2.7 billion from U.S. office supplies retailer Staples Inc. (SPLS: Charts, News, Offers). Staples, which doggedly pursued the deal to broaden its reach in Europe, raised its offer three times, the last two after Corporate Express made a bid for Lyreco of France in a defensive maneuver. Corporate Express is calling off that deal. The board of Corporate Express said it decided to endorse the Staples deal and recommend it to shareholders after the U.S. company raised its offer to 9.25 euros ($14.36) per share, up from the previous bid of 9.15 euros. (Source: Yahoo! Finance) Full Story
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Yahoo Inc. (YHOO: Charts, News, Offers) and Microsoft Corp. (MSFT: Charts, News, Offers) have concluded discussions without reaching a merger agreement, likely putting an end to a five-month tussle over a proposed buyout that would have been the largest deal ever for the high-tech sector.
Instead, Yahoo said it will pursue a partnership with Google Inc. (GOOG: Charts, News, Offers) to have Google provide advertisements for some Yahoo search results. Yahoo issued a statement late in the regular-trading session saying that talks with Microsoft have concluded, followed by an announcement of its deal with Google "Clearly, it's time to move on," Yahoo Chief Executive Jerry Yang said during a conference call with analysts.
Yahoo shareholders, however, took the news badly, pushing the company's shares down more than 10% by the close of trading. (Source: MarketWatch) Full Story
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Shares of Apple Inc (AAPL: Charts, News, Offers) fell for the third day in a row, possibly reflecting shareholder concerns about the shift in its iPhone strategy, although analysts continue to think the company will thrive. Behind the excitement of Chief Executive Steve Jobs' announcement on Monday of new iPhones next month was news that Apple would forsakes the percentage of recurring monthly service revenue it got from wireless carrier AT&T Inc's (T: Charts, News, Offers) iPhone users. Because of this, Apple is expected to see its earnings dip about 3 cents a share this year, according to some estimates. (Source: Reuters) Full Story
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| Your Money |
People without health insurance risk potential financial disaster if they should need expensive medical care, but a growing number of underinsured Americans also find themselves on shaky financial ground. Despite the U.S. economy's growth in the last five years, the number of people with health insurance who face high out-of-pocket medical expenses relative to their incomes has risen sharply since 2003, according to a new study.
More than 25 million working-age Americans were underinsured last year, up 60% from the 16 million who had inadequate coverage in 2003, according to a report from the Commonwealth Fund, a private foundation in New York. The rate of underinsurance nearly tripled among middle- and higher-income families, those with at least $40,000 in family income. (Source: MarketWatch) Full Story
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How bad is inflation for your portfolio? Let us count the ways.
As consumer prices rise, the Federal Reserve and the issuers of bonds hike up interest rates. That brings down the value of the bonds you already own. Your stocks' earnings start to look less attractive compared with the latest bond yields, which puts downward pressure on share prices.
What's more, the inflation-fighting Fed may push the economy - and corporate profits - into a slowdown. So when inflation pops up, every investor who can read the news starts looking for protection. (Source: CNN Money) Full Story
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| Trivia Question |
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What was the smallest payment ever made into the Social Security program?
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| Market Overview |
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| Trivia Answer |
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| Five cents by Ernest Ackerman, who retired one day after the social security program began. |
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