The Dow Jones Industrial Average (Dow) closed above 11,000 for the first time since the Lehman Bro’s collapse in September 2008, and ended each day this past week above the psychological barrier. The S&P 500 index was heading for its seventh consecutive weekly increase but erased all its gains on Friday after the Security Exchange Commission (SEC) sued Goldman Sachs for trading irregularities. A rise in U.S. weekly jobless claims and the start of earnings season also influenced trading, as did speculation over Greece’s bailout and reports about China’s economic growth.
For the full week, the S&P 500 fell 0.2 percent to 1,192.13, while the Dow rose 0.2 percent to 11,018.66.
Dow Jones Industrial Average (April 12-16)
European stocks declined on speculation that Greece may trigger a EUR 45 billion loan soon. The FTSE dropped 0.5 percent to 5 744.00 in London, while Germany’s DAX ended down 1.6 percent to 6,180.90. France’s CAC 40 declined 2.2 percent to 3,986.63.
Asian stocks were dragged down by U.S. jobless claims and a decline in commodities prices. The Nikkei 225 slumped 1.8 percent to 11,102.18 in Japan, while the Hang Seng index dropped 2.3 percent to 21,865.26 in Hong Kong. Elsewhere, India’s Sensex index fell 1.6 percent to 17,591.18 and Australia’s All Ordinaries gained 0.5 percent to 5,007.30.
The euro gained for most of the week against the dollar on news that euro-zone nations agreed to lend Greece EUR 45 billion at lower than market interest rates. The dollar pulled back, however, on Thursday and Friday as Greece asked for further discussions on the bailout and on speculation it might trigger the loan sooner than expected.
The result was that the euro fell 0.6 percent against the dollar for the full week to close Friday at $1.3502. The dollar dropped 0.6 percent against the Japanese yen to JPY 92.175. Against the British pound, the greenback remained flat at GBP 0.6509.
EUR-USD (April 12-16)
Gold fell 1.7 percent to $1,136.3 an ounce after tumbling Friday on news that the SEC was suing Goldman Sachs for fraud. The move spurred investors to seek a safe-haven in the dollar away from the precious metal, reversing the positive trend seen during most of the week.
Crude oil has declined for seven of the past eight trading days as weak economic data from the U.S. weighed on prospects for the economic recovery. Wednesday showed the one bright spot for oil during the week, as prices rose after the Energy Department reported an unexpected drop in inventories the previous week, ending a 10-week supply buildup. That wasn’t enough to reverse the slide as oil ended the week down 1 percent to $83.24 per barrel.
Crude Oil (April 12-16)
First quarter earnings season kicked off on Monday with anticipation of Alcoa’s results helping push its stock up 1.3 percent. Palm Inc., which created pre-smartphones, saw its shares jumped 17 percent on reports that it is seeking bids for the company. DynCorp International Inc. surged 48 percent after agreeing to be purchased by Cerberus Capital Management LP. A merger between Mirant Corp. and RRI Energy Inc. helped each share rise more than 14 percent. Among European stocks, National Bank of Greece rose 5.2 percent, while UBS AG gained 3.1 percent after the Swiss bank reported the highest quarterly earnings in almost three years. Infineon Technologies AG fell 3.4 percent after Bank of America downgraded its shares to ‘underperform’ despite reporting better than expected earnings and raising its full year forecast. In Asia, Dentsu gained 3.7 percent after raising its earnings forecast for the fiscal year ending March. BHP Billiton rose 1.2 percent and Rio Tinto was up 1.7 percent. MacArthur Coal surged 7.6 percent even though it denied reports that it had received a takeover offer from Xstrata.
Tuesday saw nuts and bolts retailer Fastenal Co. up 2.1 percent after profit topped analysts’ estimates. Home Depot Inc. rose 2.6 percent and Alcoa slipped 1.6 percent after sales trailed estimates and UBS downgraded the stock to neutral from buy. In Europe, BHP Billiton Ltd. and Total SA fell after Alcoa’s results called into question the strength of the economic recovery. Similarly in Asia, Alumina Ltd., Alcoa’s venture partner, fell 5.6 percent. Nintendo Co. shares dropped 1.1 percent as the yen climbed to the highest level this month versus the dollar, diminishing the value of the company’s U.S. sales.
Intel reported rising sales and record profit margins for its fiscal year sending its shares up 3.3 percent Wednesday. JPMorgan advanced 4.1 percent after reporting record fixed income trading revenue, and CSX rose 4.1 percent to an 18-month high. Mid-week in Europe saw Infineon Technologies AG and STMicroelectronics NV rally among chipmakers after Intel’s results. Allied Irish Banks Plc rose 7.9 percent after Goldman Sachs Group Inc. recommended buying the shares. Intel results also boosted shares in Asia’s Samsung Electronics Co., up 2.1 percent in Seoul. Tokyo Electron Ltd. advanced 3.6 percent in Tokyo after reporting that orders rose.
On Thursday, Intel Corp., Caterpillar Inc. and General Electric Co. led gains on the Dow after the Federal Reserve reported that factory production increased 0.9 percent in February. United Parcel Service Inc. surged 6 percent after raising its earnings forecast, and Mariner Energy Inc. rose 42 percent after Apache Corp. agreed to buy the company. In Europe, EFG Eurobank Ergasias SA led Greek shares higher as the country moved closer to triggering a EUR 45 billion rescue package. Agricultural chemicals maker, Syngenta AG, increased 2.8 percent after reporting that the northern hemisphere’s growing season is progressing well. Among Asian stocks, Aluminum Corp. of China Ltd. gained 2.6 percent after China’s gross domestic product jumped. Toshiba Corp. rose 3 percent as JPMorgan Chase & Co. and United Parcel Service Inc. reported better-than-estimated profit.
Godman Sachs fell 13 percent on Friday after the SEC sued the company for misstating and omitting facts about collateralized debt obligations. JPMorgan Chase & Co., Bank of America Corp. and Morgan Stanley all declined more than 4.7 percent as all 27 shares in a gauge of banks and brokerages retreated on the news. Google Inc. fell 7.6 percent after its earnings were below analyst estimates. European financial shares fell 2.7 percent as news of the SEC suit broke. Shares of mining company Xstrata Plc declined 4.4 percent after copper prices fell. China Overseas Land & Investment Ltd. dropped 4.8 percent after the Chinese government raised down-payment ratios for some home purchases. Shares in Sony Corp fell 1.8 percent in Tokyo.
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