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| Weekly Wrap Up |
This week was another disappointment for the stock market. After a brief reprieve three weeks ago, the major stock indices have been tumbling over the last two weeks. In the last 2 weeks, the Dow has fallen almost 1000 points, just shy of 500 points each week. Last week the NYSE fell an additional 200+ points, and the Nasdaq lost 90 points. On Friday, the Dow Jones dipped into what is considered a "bear market" - a situation when stocks are down 20% from their yearly highs. The Dow managed to stay above that level by only about 14 points. The other major indices are close to approaching the bear market level as well, with the Nasdaq only about 28 points above the 20% fall. Rising crude oil prices have continued to weigh heavily on investors and consumers, as the price per barrel continues to reach record highs, hitting $143 on Friday. Some merger activity go the week off to a decent start, with the news that Republic Services (RSG: Charts, News, Offers)is purchasing Allied Waste (AW: Charts, News, Offers), and Bunge (BG: Charts, News, Offers) is purchasing Corn Products (CPO: Charts, News, Offers). American Express (AXP: Charts, News, Offers) announced they won a $1.8 billion suit against Mastercard (MA: Charts, News, Offers). Research in Motion (RIMM: Charts, News, Offers) posted strong profits, while competitor Palm (PALM: Charts, News, Offers) posted significant losses; both companies, however, failed to meet analysts' expectations. Economic reports were positive, including a slight rise in GDP, consumer spending, and personal income. The fact that these numbers are still much lower than their desired values, combined with high oil prices that are projected to continue to rise, continued to push the markets down throughout the week. More Market News
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| Economic News |
Lawmakers highlighted investors' role in rising oil prices Monday, pointing out that speculation in crude futures has nearly doubled since 2000. Pension funds, Wall Street banks and other large investors that have no intention of taking delivery of fuel have increasingly pumped money into contracts for oil and other commodities as a hedge against inflation when the dollar falls. After more than a half dozen hearings in Congress on the issue, Democratic House lawmakers said they intend to tighten restrictions on pension funds, investment banks and other large investors which they blame for driving up fuel prices. Many Republicans, analysts and regulators, however, say soaring oil prices are a reflection of macro-economic factors, including the falling dollar, unrest in the Middle East and increased demand from countries like China and India. (Source: BusinessWeek) Full Story
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The economy turned in a better - but still subpar - performance in the first three months of this year, mostly spurred by stronger sales of U.S. products overseas. The 1% annualized increase in gross domestic product, announced by the Commerce Department on Thursday, marked a slight improvement from the government's previous estimate of 0.9% growth for the January-to-March quarter. And, it showed the economy logging stronger growth than the feeble 0.6% pace registered in the final three months of last year. Still, the first quarter's performance pointed to a fragile economy, shaken by housing, credit and financial debacles. That has made people and businesses more cautious in their spending and investment, restraining overall economic activity. More normal growth would be along the lines of a 2.5% to 3% pace, analysts said. (Source: CNN Money) Full Story
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The millions of economic stimulus payments gave a massive jolt to household finances in May, sending after-tax incomes up by the largest amount in 33 years. The payments helped boost consumer spending by the largest amount in six months. The Commerce Department reported that disposable incomes, the amount left after paying taxes, surged by 5.7 percent last month. It was the biggest increase since May 1975, reflecting $48.1 billion in rebate payments made last month. The surge in incomes helped boost consumer spending by 0.8 percent, the biggest gain since last November. The administration is hoping that the $106.7 billion in stimulus payments being made this year to 130 million households will be enough to offset serious drags on the economy at the moment from a prolonged housing slump, a severe credit crisis and soaring energy bills. (Source: MSNBC) Full Story
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| Business News |
Kroger Co. (KR: Charts, News, Offers) said Tuesday that food, gas and drug discounts helped draw budget-conscious consumers into its stores for one-stop shopping, boosting its first-quarter profit by 15%. The nation's largest traditional grocery chain's results beat Wall Street expectations and Kroger raised the lower end of its earnings guidance for the year. Its shares surged almost 8% by midday Tuesday. Kroger earned $386 million, or 58 cents per share, for the quarter ended May 24 compared with a profit of $336.6 million, or 47 cents per share, a year ago. Revenue rose 12% to $23.11 billion from $20.73 billion a year ago. Analysts polled by Thomson Financial expected a profit of 55 cents a share on revenue of $22.32 billion. (Source: CNN Money) Full Story
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American Express Co. (AXP: Charts, News, Offers) has ended another round of litigation with a rival card company, but still faces serious headwinds from its customers. After announcing Wednesday that it will be getting $1.8 billion from MasterCard Inc. (MA: Charts, News, Offers) in settlement of an antitrust suit, the credit card lender -- known for catering to jet-setters and the well-heeled -- revealed that it has again underestimated how quickly its cardholders are falling behind on their debt. "Business conditions continue to weaken in the U.S. and so far this month we have seen credit indicators deteriorate beyond our expectations," said AmEx Chief Executive Kenneth Chenault in a statement. The rocky consumer climate comes amid a tough legal period for credit card companies, which are battling among themselves and with federal authorities around the world over various rules and fees. (Source: Yahoo! Finance) Full Story
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The morning after it unceremoniously rejected a $46 billion takeover bid, Anheuser-Busch Cos. (BUD: Charts, News, Offers) was fighting back, releasing details of cost-cutting and price-increase plans, dramatically upping its profit targets and announcing expanded share buybacks.
In a presentation Friday to analysts that the St. Louis-based company also filed with Securities and Exchange Commission, management raised Anheuser-Busch's cost-cutting target to $1 billion, with most of the savings coming this year and next, while also shooting for "zero overhead growth."
To trim personnel, the company's rolling out an early retirement program in the third quarter that, coupled with attrition, is aimed at achieving a reduction of 10% to 15%. It also lowered its capital-spending goals. (Source: MarketWatch) Full Story
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| Technology Focus |
Shares of Circuit City Stores (CC: Charts, News, Offers) fell more than 18 percent on Monday after analysts cited market concerns about the electronic retailer's ability to turn its business around and prospects for a sale. One analyst said movie-rental company Blockbuster Inc (BBI: Charts, News, Offers) could lower its takeover bid for Circuit City after it posted a wider first-quarter loss on Thursday on plummeting sales, and suspended its dividend to save cash. The Richmond, Virginia, retailer also said it would cut back on capital spending and forecast a wider loss for the current quarter. "The core problem is that management continues to talk about getting traction and remaining positive on the turnaround, but the sales numbers have gotten worse," said Dan Binder, an analyst with Jefferies & Co. (Source: Reuters) Full Story
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Palm Inc. (PALM: Charts, News, Offers) swung to a net loss for its fourth fiscal quarter and saw revenue come in below Wall Street's forecasts as sales of its popular Centro smart phone were unable to make up for declines in other areas.
The maker of smart phones did not offer an outlook, but said it expects to remain unprofitable in the current period as it works through a turnaround designed to re-vitalize its line of handsets in the face of strong competition from rival devices such as the BlackBerry and iPhone. Shares of Palm slid nearly 4% in after-hours trading Thursday following the report. The stock closed the regular session down 4.4% at $6.54. (Source: MarketWatch) Full Story
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Smart phone maker Research In Motion Ltd (RIMM: Charts, News, Offers) reported Wednesday that its fiscal first-quarter profit and revenue more than doubled, fueled by strong sales of its BlackBerry devices.
Falling just shy of Wall Street expectations, the results dampened Research in Motion shares in after-hours trading, when the shares fell $11.54 to $130.80, or 8.1 percent.
For the three months that ended May 31, the Canadian company said it earned $482.5 million, or 84 cents per share, up from $223.2 million, or 39 cents per share, in the same period a year earlier. All figures are in U.S. currency.
RIM said its revenue jumped to $2.24 billion from $1.08 billion a year earlier. (Source: Yahoo Finance) Full Story
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| Your Money |
Many of us 9-to-5 newbies may think that monitoring spending is much too onerous and complicated, but budgeting doesn't have to bog you down. Just understanding how and where you spend your money is an essential start.
To begin, make two lists: one for what you have to spend your money on each month and one for what you want to spend it on. Making these lists is really the most time-consuming part of starting a budget, but it's worth it.
If you're having trouble remembering how you spend your money, there are plenty of ways to get a glimpse of your outflows. If you are a big debit card user, you can print out a bank statement every month to see where your dollars went. If you use credit cards a lot, your statements and the handy spending categories that most cards provide will help you retrace your steps. (Source: Forbes) Full Story
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So where's the money?
In recent weeks, tens of millions of Americans have been flooding the Internal Revenue Service with questions about the government's economic-stimulus payments. Some callers want to know why their payment hasn't arrived and when it will. Others want to know why they didn't get as much as they had expected.
These were among the issues aired at a congressional hearing last week at which IRS officials generally drew praise for handling a massive job relatively smoothly and on short notice. But officials also say the unexpected avalanche of questions has led to unusually long delays for many callers trying to reach the IRS on this and other tax questions. There have also been a few glitches -- including one, scheduled to be remedied next month, affecting hundreds of thousands of parents. (Source: Yahoo Finance) Full Story
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