19.05.2008 10:46

STOCKS: weekly review

Wall Street stocks slipped back on Friday but remained ahead for the week as resurgent oil prices boosted energy stocks but threatened to squeeze already weak consumer spending and financials lost ground. Energy stocks were in sharp focus again. Oil prices hit record highs after analysts at Goldman Sachs raised their oil price forecast for the second half of 2008 from $107 to $141 a barrel. ConocoPhillips shares rose 2.1%, Chevron added 1.4% and an index of energy stocks advanced 1.5%.

Financials also proved a weak spot, slumping 1.7% after Merrill Lynch analysts recommended selling regional banks and Nobel Prize winner Myron Scholes said the worst of the credit crisis may not be over. KeyCorp and Regions Financial led the sector lower, dropping 5.1% and 5.4%, respectively. The benchmark S&P 500 was up 2.1% over the week. The Dow Jones Industrial Average was 0.7% lower at 12,904.32 and the Nasdaq Composite slipped 0.8% to 2,512.90.
The technology sector was notably active last week. Hewlett-Packard, started the ball rolling on Tuesday when it tabled a $13.9bn deal to buy Electronic Data Systems. HP shares fell 5.2% to $46.60 over the week while EDS was among the weeks leading gainers, rising 29% to $24.33.
Earnings from retailers that were not as bad as feared and the stimulating prospects of government rebates played a part in that rally. Consumer discretionary stocks added 3.1% over the week. In the background, the saga surrounding Yahoo and its decision to reject a take-over offer from software giant Microsoft trundled on. Yahoo is now fighting efforts by billionaire activist investor Carl Icahn to replace its board and force the company back into negotiations with Microsoft. Over the week, Yahoo shares rose 7.3% and Microsoft shares added 2.2%.
Homebuilders were also in focus as dismal data and earnings from the sector continued to pour out. But stocks maintained their composure, taking solace from news of efforts in Congress to address the housing slump. Lennar and Centex added 7.1% and 7.2%, respectively, over the week.