26.05.2008 10:29

STOCKS: weekly review

U.S. stocks cosed week lower, extending the market's biggest weekly retreat since February, on concern a worsening housing recession and rising energy costs will prolong the slump in corporate profits.The Standard & Poor's 500 Index slid 1.3%. The Dow Jones Industrial Average lost 1.2%. The Nasdaq Composite Index sank 0.8%. Five stocks dropped for each that rose on the New York Stock Exchange.

Ford Motor Co. declined for a sixth day after the second- biggest U.S. automaker said consumers are buying fewer trucks as fuel prices climb. Nordstrom Inc. led retailers to a six-week low as crude rose. Homebuilders posted their biggest weekly tumble since 2001 after a report showing sales of previously owned homes matched an all-time low in April. Goldman Sachs Group Inc. dropped for a ninth day, the longest losing streak since the company went public in 1999, on concern brokerage earnings will be hurt by further writedowns on mortgage-related assets.
General Motors Corp. fell the most in the Dow average, tumbling 4.5 percent to $17.60 after pledging $215 million, $15 million more than its initial estimate, to help end a 12-week strike at a supplier that reduced production at the largest U.S. automaker by 230,000 cars and trucks this quarter. The shares lost 15 percent in the week.
D.R. Horton Inc. led homebuilders in S&P indexes to a sixth- straight decline after the National Association of Realtors said sales of existing homes declined 1 percent to an annual rate of 4.89 million from 4.94 million in March. The median price dropped 8 percent from April last year, the second-biggest decline ever, as the number of houses on the market surged. D.R. Horton retreated 3.1 percent to $12.98. The S&P Supercomposite Homebuilding Index slumped almost 16 percent in the week. Apple Inc. advanced 2.3 percent to $181.17. Merrill Lynch & Co. raised its share-price estimate for the maker of the iPod media player by 16 percent to $215, citing a ``significant increase'' in sales generated by the iPhone.

Thus far we haven't seen the consumer collapse, yet the concerns and strains of rising oil prices took on a new dimension for the market this week when AMR Corp. (AMR) announced it would be cutting 11-12% of its capacity and instituting a $15 fee for the first checked bag on its flights in an effort to combat rising oil prices. Additionally, Ford (F) announced a cutback in production of its full-size SUVs and trucks in North America citing customers' shift in demand for more fuel efficient vehicles.

Cautious outlooks from home improvement retailers Lowe's (LOW) and Home Depot (HD) didn't help matters either.