Click here for the Weekly Wrap by Briefing.com.
BOTTOM LINE: Overall, last week's market performance was negative. The advance/decline line fell, almost every sector declined and volume was average on the week. Measures of investor anxiety were mostly higher. The AAII % Bulls fell and is around average levels. Mortgage rates declined and are now 36 basis points away from all-time lows set in June 2003. The benchmark 10-year T-note yield broke back below 4% and appears poised to test the lows of 3.77% last seen in March 2004. Cyclicals underperformed substantially as worries over slowing global growth resurfaced. As well, high energy prices and a stronger US dollar added to earnings jitters. I expect the dollar index to break up through resistance at 90.0 over the coming weeks. Energy prices were mostly unchanged even as evidence continues to mount of a significant slowing in global demand. A report on Friday showed China imported 2.45 million barrels of crude oil per day last month, down 18.3% from April and only equal to the average for all of 2004. As of last month, global supply was 85.0M barrels per day and global demand was 82.1M barrels per day. This is the widest gap since May 1998. Steel stocks led all decliners on worries over substantial excess capacity coming from Asia and slowing global demand. Investors took profits in the Homebuilders as home price appreciation appears to have stabilized. On the positive side, I-Banks outperformed substantially for the week on positive news from Morgan Stanley and Legg Mason. As well, Technology shares held recent gains for the most part, led by Semiconductor stocks.
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