Market Review – A Disappointing Week in the Markets
The global markets took a hit on Friday with US stocks closing their worst week in four months. This negativity was nearly unchanged with the market stalling as worries about Europe overcame an unexpected rise in US consumer confidence. As a result, the Dow Jones Industrial Average ended the weekly with a small gain of two points, or 0.02%. This was the worst week it’s had since late May, when stocks bottomed out.
Down 2.2% for the week, the S&P 500 fell 4.25 points, or 0.3%, at 1,428.59, with the consumer-staples sector the best performing of its 10 industry groups. The NASDAQ lost 5.3 points, or 0.2%, at 3,044.11. For every stock rising, almost two fell on the New York Stock Exchange (NYSE), where 624 million shares traded.
Later in the day on Friday, comments from International Monetary Fund (IMF) Director Christine Lagarde stemmed the morning gains when she said that policymakers in Europe and the US need to move more aggressively to address slow economic growth and high unemployment.
The financial services sector were the primary losers today, as the market seemed to not respond as one would normally believe to positive earnings announcements from firms Wells Fargo and JP Morgan Chase. Both banks were buoyed by an improving housing market, as JPMorgan posted an EPS of $1.40 on expectations of $1.21, and Wells Fargo turned in earnings of $0.88 cents per share, a penny ahead of estimates.
Immediately after these announcements, the markets responded positively but the gains were limited, with October so far proving to be a lackluster month for the US stock market. This, in turn, has had a knock-on effect in other areas of the world.
On the other side of the Atlantic, Britishstocks retreated Friday, as shares of resources firms tracked commodity prices lower while fashion firm Burberry Group PLC consolidated after having surged on Thursday. The FTSE 100 index closed out the week with a 1.3% loss.
Currencies – Euro Gains Confidence of Global Market (EUR/USD)
Although the euro ended the trading week on a lower note, it had quite the successful week of trading.
On Friday, the euro’s performance softened slightly against other currencies, including the US dollar, after a report by the International Financing Review that the European Stability Mechanism did not have enough cash to rescue Spain if the nation asked for a bailout before the end of the year.
For most of the week, however, optimism lifted the euro. The euro rose after the euro zone August manufacturing data was released on Friday and it beat expectations.
Germany’s finance minister predicted that most of the uncertainty related to the euro zone crisis will be overcome in a year.
In response, the trading community started to feel greater confidence for the stability of the euro zone countries but also for the single currency. This caused hopes to build that the global economy may be in better shape than expected.
As a result, the EUR/USD currency pair reached a weekly low on Thursday of 1.283 before surging on Friday to a value of 1.289.
It sums up a relatively quite Forex trading week.
Stocks: Two Major Deals for Boeing (Ticker: BA)
Airline manufacturer Boeing was one of the big companies in the financial news last week. Two major announcements were released by the American company that caused the value of its stock to surge.
It was announced on Thursday that Alaska Airlines has ordered 50 jetliners from Boeing and jet engines from a GE Aviation unit in a deal worth a combined $6.2 billion. The order includes 37 of Boeing’s 737 Max airplanes and 13 737-900 extended range planes with a combined list price of $5 billion and is the largest offer in the carrier’s history, according to the Puget Sound Business Journal.
Additionally, it was announced on Wednesday that Boeing has just landed a $2 billion contract to extend its logistics support through 2017, covering 246 C-17 transport planes. The contract includes support for the aircraft, forecasting, purchasing and material management under a Performance-Based Logistics program that began in 1988. Boeing said the sustainment program, which has expanded to 246 aircraft from 42, helps lower costs through economies of scale.
As a result of these two announcements and the positive sentiment it created in the markets, their stock closed out the week on high of $71.85.
Commodities – Oil Prices Rise after Jobs Claims Data
On Friday, the price of oil rose slightly above $92 a barrel after unemployment figures were released. This suggestion of an improved economic picture helped oil climb.
By early afternoon in Europe, benchmark oil for November delivery was up 21 cents to $92.28 per barrel in electronic trading on the New York Mercantile Exchange. The contract gained 82 cents to close at $92.07 per barrel in New York on Thursday.
Brent crude, which is used to price international varieties of oil, was down 53 cents to $115.18 on the ICE Futures exchange in London.
Despite some positive economic and corporate announcements towards the end of the week, the global markets still faced a challenging week. Hopefully if the positivity continues we’ll be able to see improvements in the weeks ahead.