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Friday’s Market Recap (8/29/08)

Posted on: August 29, 2008 - Email Article - Printable Version

Brian Clionsky

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Stocks tumbled today sparked by rising oil prices as the threat of Tropical Storm Gustav looms around the Gulf Coast and after the government’s announcement that personal incomes fell in July. Retail gas prices increased today, the first increase in over 40 days (since gas prices peaked at a national average of $4.114 a gallon back on July 17), after analysts warned that if Tropical Storm Gustav were to hit the Gulf Coast, gas prices could soar as high as $5 a gallon. The Gulf Coast is home to a major portion of our energy infrastructure; roughly 25% of America’s crude oil supplies and 40% of our refining capacity is located here. Oddly enough, even with the news, he price per barrel of Crude Oil crude oil fell very slightly, to $115.55 per barrel only dropping $0.04 or 0.03%.

The Commerce Department reported today that personal incomes fell sharply in the month of July. Personal incomes fell by 0.7%, which is the biggest drop in personal incomes in almost three years. Economists expected personal income to drop by only 0.1% in July and this worse than expected report reinforces economists’ fears about the economy. Consumer spending increased by 0.2% in the month of July, which was right in line with analysts’ expectations, but was far below June’s mark of an increase by 0.6%. However, when increased prices was factored in, consumer spending actually fell by 0.4% in July, the weakest consumer spending figure in nearly 4 years. Inflation rose by 0.6% in July bringing our 12 month inflation increase to roughly 4.5%, the greatest year-over-year increase in 18 years. Personal savings were also down in the month of July, and totaled 1.2% of after tax incomes, down from 2.5% in June.

The major news of the day hit the major indices: The Dow, Nasdaq, and the S&P500, all of which traded down on the day. The Dow Jones Industrial Average ended the day at 11543.55, down 171.63 points, or -1.47%. The Dow ended the week down 82.64 points, or -0.71%. The Nasdaq composite index closed at 2,367.52, down 44.12 points, or -1.83%, falling a total of 32.21 points for the week, or -1.34%. The S&P 500 fell to 1282.82, down 17.84 points, or -1.37 from the previous day, with a total loss of 7.65 points or -0.592% for the week.

Gold fell $1.60 or -0.19% to $829.30 per ounce. The Dollar gained on the Euro and is currently at 0.6818 vs. the Euro and fell to 108.78 vs. the Yen. The 10 year Treasury note rose to 3.8130%, up 47 basis points from yesterday.

Microsoft [MSFT: 20.52, +0.19 (+0.93%)] announced that it will acquire Greenfield Online Inc., a European company who owns Ciao, a collection of web-based shopping and consumer review comparison sites that operate in seven different countries throughout Europe. Microsoft believes this will boost its search presence in Europe and can benefit from the 26 million unique visitors per month Ciao averages and the 5 million product reviews on its sites. Microsoft will buy the company for $486 million in cash and Greenfield shareholders will receive $17.50 per share in the transaction expected to take place during the fourth quarter of this year.

Let’s take a look at how the individual sectors of the S&P 500 performed today. This is not the performance of the sector SPDRs, but an actual sector performance analysis as reported by the S&P 500.

In order of top performing for today 8/29/08 (% change):

1. Financials down 0.58%, or -1.67 points to close the day at 285.59
2. Telecommunication Services down 0.91%, or -1.21 points to close the day at 131.71
3. Consumer Discretionary down 1.04%, or -2.52 points to close the day at 240.28
4. Health Care down 1.19%, or -4.54 points to close the day at 378.47
5. Consumer Staples down 1.24%, or -3.63 points to close the day at 289.98
6. Energy down 1.33%, or -3.63 points to close the day at 556.07
7. Materials down 1.40%, or -3.43 points to close the day at 242.46
8. Industrials down 1.41%, or -4.48 points to close the day at 313.11
9. Utilities down 1.85%, or -3.59 points to close the day at 190.18
10. Information Technology down 2.47%, or -9.07 points to close the day at 358.94

Year to Date the Top performing sectors are (% change):

1. Consumer Staples (-3.19%)
2. Materials (-6.69%)
3. Consumer Discretionary (-7.42%)
4. Health Care (-7.62%)
5. Energy (-7.79%)
6. Industrials (-11.64%)
7. Utilities (-12.00%)
8. Information Technology (-12.80%)
9. Telecommunication Services (-21.72%)
10. Financials (-27.16%)

Year to date the S&P 500 is down 12.64%

That’s all for today, catch me next week, same time, same place, for the Bullish Bankers’ Daily Market Recap.

-Brian Clionsky

Disclosure: The mutual fund the author is associated with is long MSFT

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