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| Weekly Wrap Up |
Although it may not appear obvious when you look at the numbers for last week, this October was the worst month, performance-wise, for the stock market in 21 years. After a few rough weeks, the markets managed to recover slightly last week, with all indexes ending significantly higher. Although Monday started the week off with a loss, on Tuesday the major indexes all posted strong gains, with the Dow Jones jumping almost 900 points. On Wednesday the indexes ended mixed, but for the rest of the week they all posted solid gains, leading to a strong finish. Throughout the week, economic and corporate news both contained their fair share of ups and downs. The amount of new home sales in September was higher than expected, while September's consumer spending was surprisingly low. Consumer confidence levels also fell to an all-time low. Arch Coal (ACI: Charts, News, Offers), U.S. Steel (X: Charts, News, Offers), Chevron Corp. (CVX: Charts, News, Offers), and Procter & Gamble (PG: Charts, News, Offers) all topped analysts' estimates. Investors were disappointed, however, by many other companies including Whirlpool (WHR: Charts, News, Offers), Motorola (MOT: Charts, News, Offers), Nissan (NSAN.Y: Charts, News, Offers), and Cigna (CI: Charts, News, Offers). Crude oil futures closed the month at $67.81 a barrel, a significant fall from September's close of $100.64. The value of gold and other commodities continued to fall, as the value of the dollar continued to rise. More Market News
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| Economic News |
Sales of newly constructed homes rose in September, according to the monthly report from the U.S. Census Bureau, inching up 2.7% from August to an annualized rate of 464,000. The reading was above the consensus forecast of 450,000, according to economists surveyed by Briefing.com, and up slightly from the 17-year low in August, which saw 452,000 new home sales. But the reading was still the worst September for new home sales since 1981. Sales are down 33.1% from September of 2007, and far below the pace of the boom years. In 2005, for example, 1.3 million new homes were sold. In response to slower sales, home builders have been reducing their production. As a result inventory has fallen, but there were still about 394,000 new single family residences on the market at the end of September. At the current pace of sales, that would take 10.4 months to sell through. (Source: CNN Money) Full Story
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Consumer spending in the United States dropped in September by the largest amount in four years, while incomes suffered because of Hurricane Ike. The Commerce Department reported Friday that personal spending fell by 0.3 percent last month, the biggest decline since June of 2004. That followed flat readings in both July and August, contributing to the worst quarterly performance in 28 years. Incomes showed a 0.2 percent rise in September, just half of the August increase, a slowdown that partly reflected the adverse effects of Hurricane Ike along the Gulf Coast. The storm cut into rental payments and earnings from businesses affected by the rough weather and its aftermath. (Source: MSNBC) Full Story
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The U.S. consumer is in a foul mood, and the effects on investors and the economy are likely to be harsh. The Conference Board said on Oct. 28 that its consumer confidence index has dropped to an all-time low, from 61.4 in September to 38 in October. Americans were partly reacting to what they saw on the news in the past month: A plunge in the stock market, the dysfunctional credit markets, the failure of major financial firms, passage of a $700-billion bailout package in Washington, and a Presidential campaign focused on the economic crisis. But consumers' fears aren't entirely a media creation (BusinessWeek.com, 10/28/08), economists say. Consumers are starting to feel the economic squeeze where they live. (Source: BusinessWeek) Full Story
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| Business News |
Whirlpool Corp. (WHR: Charts, News, Offers) said Tuesday it is eliminating about 5,000 jobs this year and next, due in large part to the long downturn in the U.S. housing market. The nation's largest home appliance maker also reported that its earnings fell 7 percent during the third quarter on lower global unit volumes and higher material costs. Whirlpool lowered its earnings outlook for the year and announced price increases. Company officials received more sobering news Tuesday upon learning that consumer confidence had plunged to its lowest level on record. The Conference Board reported that its index dropped to 38 in October from 61.4 in September. That bunker mentality makes it more likely shoppers will retrench further, throwing the economy into a tailspin. (Source: Yahoo! Finance) Full Story
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Chevron Corp. (CVX: Charts, News, Offers) said Friday its third-quarter profit more than doubled on the back of record crude prices this summer, though worldwide production fell during the period. The San Ramon, Calif.-based company, the second-largest U.S. oil company, said it made $7.89 billion, or $3.85 a share, in the three months ended Sept. 30, versus $3.72 billion, or $1.75 per share, at the same time last year. Analysts were expecting average earnings of $3.25 per share based on a survey by Thomson Reuters. Revenue shot up 43% to $78.87 billion from $55.2 billion. Shares in premarket trading slipped 19 cents to $73.99. (Source: CNN Money) Full Story
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Boeing Co. (BA: Charts, News, Offers) and its striking Machinists union have agreed to a tentative four-year labor deal that could end a 53-day walkout that has shut the company’s commercial airplane factories, cut into profits and delayed jet deliveries. The union representing 27,000 production workers in Washington state, Oregon and Kansas went on strike Sept. 6 after rejecting a final contract offer by the company. Sticking points were job security and health benefits. More than 90 percent of members are expected to vote on the agreement, reached late Monday, in the next three to five days. Members of the Machinists union walked off the job even as the economy slid into turmoil and credit markets froze. The seven-week strike is their fourth against Boeing in two decades and has cost Boeing an estimated $100 million a day in deferred revenue and pushed back scheduled deliveries of its commercial airplanes, including its long-awaited 787 jetliner. (Source: MSNBC) Full Story
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| Technology Focus |
Verizon (VZ: Charts, News, Offers) matched Wall Street's estimates with its third-quarter profit Monday, as gains in its wireless segment offset weakness in its wireline business. The New York phone giant recorded net income of $1.67 billion, or 59 cents a share, compared with net income of $1.27 billion, or 44 cents a share, in the year-ago quarter. Adjusted for one-time items, Verizon said it had a profit of 66 cents a share, which matches the average estimate of analysts polled by Thomson Reuters. Sales rose 4.1% from a year ago to $24.8 billion; that figure exceeded Wall Street's expectations. Analysts had been looking for a $24.5 billion top line. Verizon Wireless -- jointly owned by Verizon and Vodafone (VOD: Charts, News, Offers) -- continued to show strength, adding 2.1 million net subscribers in the second quarter. The monthly customer defection rate remained at an industry low 1.33%, with post-paid churn slightly above 1%. (Source: TheStreet) Full Story
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Motorola Inc. (MOT: Charts, News, Offers) posted a hefty loss in the third quarter Thursday, citing the continued troubles of its cell phone division. The company will postpone the planned spin-off of the unit, and cut more jobs. The maker of communications gear said it would get rid of 3,000 jobs by April, with about 2,000 of them coming from the cell phone unit. The company last announced 2,600 job cuts in April. Motorola lost $397 million, or 18 cents per share, in the July-September period. It had earned $60 million, or 3 cents per share, in the same period a year ago. Sales fell 15% to $7.48 billion. The loss included 23 cents of charges, mostly for restructuring costs. Without the charges, Motorola would have earned 5 cents a share, reflecting unexpectedly strong results in its non-cell phone operations. (Source: CNN Money) Full Story
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Navigational device maker Garmin Ltd. (GRMN: Charts, News, Offers) said Wednesday its third-quarter profits fell more than 11 percent as a stronger dollar offset a boost in sales.
The company also reduced its forecast for annual revenue and earnings because of the struggling economy and weaker Euro.
Garmin, based in the Cayman Islands but with its headquarters in Olathe, Kan., reported earning $171.2 million, or 82 cents per share, compared with $193.5 million, or 88 cents per share, during the same period a year ago.
Not including the effect of the weakening of the Euro versus the U.S. dollar, the company would have earned 87 cents per share, which is higher than the 84 cents per share expected by analysts surveyed by Thomson Reuters. The company also repurchased 8.2 million shares during the quarter. (Source: Yahoo Finance) Full Story
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| Your Money |
Given the current state of financial markets and the economy, many parents will soon need to explain to their kids why they can no longer afford to buy expensive videogame systems or send them to trendy summer camps next year.
Eric Tyson, author of Let's Get Real About Money! Profit from the Habits of the Best Personal Finance Managers (FT Press), says now is the perfect time to teach your kids valuable lessons about money.
Tyson argues that parents need to get tough with their kids--and that doing so will help them become more financially responsible in the future. The following excerpt and nine essential lessons for kids about money come from Tyson's new book.
If you don't teach your kids about money realities and issues, you're setting them up for unnecessary and easily avoidable problems when they go out into the real world. (Source: Forbes) Full Story
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| Trivia Question |
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How does the price of a new Ford Taurus compare with the original cost of a Model T?
(answer below) |
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| Market Overview |
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| DJIA |
9,325.01 |
+946.06 |
| S&P |
968.75 |
+91.98 |
| NYSE |
6,061.09 |
+633.55 |
| NASDAQ |
1,720.95 |
+168.92 |
| 10Yr |
3.97% |
+0.27 |
| Dollar |
86.345 |
-0.61 |
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| October 31,2008 |
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| October 20-24 |
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| Trivia Answer |
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| A 1999 Ford Taurus LX sells for $17,445. The original 1909 Model T went for $850. By 1924, you could buy a Model T for less than $300. |
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