Market Week in Review

S&P 500 1,360.68 -2.84%*

Click here for the Weekly Wrap by Briefing.com.

*5-Day Change

Weekly Scoreboard*

Indices
S&P 500 1,360.68 -2.84%
DJIA 12,209.81 -3.39%
NASDAQ 2,474.56 -1.91%
Russell 2000 740.37 -1.06%
Wilshire 5000 13,851.35 -2.41%
Russell 1000 Growth 584.44 -2.04%
Russell 1000 Value 727.90 -3.22%
Morgan Stanley Consumer 687.76 -2.39%
Morgan Stanley Cyclical 942.03 -4.08%
Morgan Stanley Technology 602.95 -2.40%
Transports 5,250.l6 -3.44%
Utilities 511.36 -1.97%
MSCI Emerging Markets 146.99 -3.02%

Sentiment/Internals
NYSE Cumulative A/D Line 59,301 +.17%
Bloomberg New Highs-Lows Index -207
Bloomberg Crude Oil % Bulls 29.0 -3.3%
CFTC Oil Large Speculative Longs 216,388 +.18%
Total Put/Call 1.12 +33.3%
OEX Put/Call 1.29 +5.74%
ISE Sentiment 124.0 +13.76%
NYSE Arms 2.61 +143.92%
Volatility(VIX) 23.56 +32.1%
G7 Currency Volatility (VXY) 10.31 +3.51%
Smart Money Flow Index 8,773.33 -.28%
AAII % Bulls 43.38 +38.65%
AAII % Bears 38.04 -16.87%

Futures Spot Prices
Crude Oil 138.05 +8.3%
Reformulated Gasoline 353.0 +5.36%
Natural Gas 12.65 +7.63%
Heating Oil 396.0 +7.9%
Gold 904.50 +1.0%
Base Metals 237.67 +.61%
Copper 363.10 +.51%
Agriculture 423.76 +6.54%

Economy
10-year US Treasury Yield 3.91% -14 basis points
10-year TIPS Spread 2.50% -2 basis points
TED Spread .86 +6 basis points
N. Amer. Investment Grade Credit Default Swap Index 108.93 +8.15%
Emerging Markets Credit Default Swap Index 227.01 +9.30%
Citi US Economic Surprise Index -5.3 +45.36%
Fed Fund Futures 0.0% chance of 25 cut, 100.0% chance of no cut on 6/25
Iraqi 2028 Govt Bonds 74.38 -.19%
4-Wk MA of Jobless Claims 368,500 -.8%
Average 30-year Mortgage Rate 6.09% +1 basis point
Weekly Mortgage Applications 502,300 -15.34%
Weekly Retail Sales +1.8%
Nationwide Gas $3.99/gallon +.03/gallon.
US Cooling Demand Next 7 Days 55.0% above normal
ECRI Weekly Leading Economic Index 132.40 -.30%
US Dollar Index 72.36 -.67%
Baltic Dry Index 11,689 +3.01%
CRB Index 441.51 +4.58%

Best Performing Style
Small-cap Growth -1.01%

Worst Performing Style
Large-cap Value -3.22%

Leading Sectors
Computer Hardware +1.24%
Disk Drives +1.12%
Steel +.87%
Airlines +.58%
Oil Service +.12%

Lagging Sectors
Road & Rail -4.12%
Defense -5.78%
Homebuilders -6.12%
Gaming -6.33%
Banks -8.23%

One-Week High-Volume Gainers

One-Week High-Volume Losers

*5-Day Change

Stocks Finish Sharply Lower, Weighed Down by Airline, Retail, Homebuilding, Financial Shares

Evening Review
Market Summary
Top 20 Biz Stories
Today’s Movers
Market Performance Summary
WSJ Data Center
Sector Performance
ETF Performance
Style Performance
Commodity Movers
Market Wrap CNBC Video(bottom right)
S&P 500 Gallery View
Timely Economic Charts
GuruFocus.com
PM Market Call
After-hours Commentary
After-hours Movers
After-hours Real-Time Stock Bid/Ask
After-hours Stock Quote
After-hours Stock Chart
In Play

Stocks Falling into Final Hour on Parabolic Rise in Energy Prices

BOTTOM LINE: The Portfolio is lower into the final hour on losses in my Medical longs, Internet longs and Software longs. I added (IWM)/(QQQQ) hedges and added to my (EEM) short this morning, thus leaving the Portfolio 75% net long. The tone of the market is very bearish as the advance/decline line is substantially lower, most sectors are declining and volume is about average. Investor anxiety is above average. Today’s overall market action is very bearish. The VIX is rising 21.8% and remains above average at 22.7. The ISE Sentiment Index is below average at 126.0 and the total put/call is above average at 1.12. Finally, the NYSE Arms has been running high most of the day and is currently 1.58. The spike is oil is a major negative for the broad US stock market. However, it has gotten to the point that any rise in oil from current levels will likely result in a corresponding spike in global demand destruction, which should accelerate the bursting of the commodity bubble. Nigeria just said that “OPEC is ready to intervene to cool world oil prices.” Prices anywhere near current levels are doing massive irreparable long-term damage to the future of the Middle East’s major export, in my opinion. This is one of the main reasons that the Middle Eastern bourses remain in their bear markets that began two years ago, in my opinion. The Saudi Tadawul Index is down 52% from its high set in February 2006. Nikkei futures indicate a -389 open in Japan and DAX futures indicate a -11 open in Germany on Monday. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering.

Today's Headlines

Bloomberg:
- President Bush said the administration is seeing signs that the economic stimulus is beginning to work and urged Congress to make permanent his tax cuts. “The last thing America needs is a tax increase,” he said.
- Industrial Production in Germany, Europe’s largest economy, unexpectedly declined in April, the second report in as many days to suggest Europe’s largest economy is cooling.
- Crude oil soared more than $11/bbl. as historic investment fund speculation continues unabated after the US dollar weakened and an Israeli deputy made aggressive comments towards Iran.
- American Superconductor(AMSC), a leading energy technologies company, announced today that it has licenses one of its proprietary wind turbine designs to Taiwan-based TECO Electric & Machinery, Ltd.(TECO), the world’s third-largest motor manufacturer. Under the terms of the contract, AMSC's wholly owned AMSC Windtec(TM) subsidiary will license to TECO the design for its FC-2000, a proprietary 2 megawatt (MW) IEC Class I (high wind speed) wind turbine.

NY Times:
- The FTC has opened a formal antitrust investigation of Intel(INTC), the world’s largest maker of computer microprocessors, for anticompetitive conduct, government officials and lawyers involved in the proceeding said Friday.

NY Post:
- Lehman Brothers(LEH) is considering releasing its second-quarter earnings a week earlier, and tying that announcement to news about a plan to raise capital, as the investment bank looks to quiet doubts about its future.

Washington Post:
- Senate Democrats May Pull Climate Bill. If this week’s Senate debate on a proposed cap-and-trade system for greenhouse gases was supposed to be a dress rehearsal for climate legislation, things are not looking too good for opening night.

Payrolls Fall Less Than Estimates, Unemployment Rises, Earnings Accelerate, Wholesale Inventories at Record Low

- The Change in Non-farm Payrolls for May was -49K versus estimates of -60K and -28K in April.

- The Unemployment Rate for May rose to 5.5% versus estimates of 5.1% and 5.0% in April.

- Average Hourly Earnings for May rose .3% versus estimates of a .2% gain and a .1% increase in April.

- Wholesale Inventories for April rose 1.3% versus estimates of a .4% gain and a .1% increase in March.

BOTTOM LINE: The decline in non-farm payrolls was slightly less than economists had expected and the unemployment rate rose more than expectations, Bloomberg reported. Payrolls at builders fell 34,000 versus a 52,000 decline the prior month. Financial firms pared payrolls by 1,000 versus a 1,000 gain the prior month. Service industries, which include banks, insurance companies, restaurants and retailers, added 8,000 workers. The rise in the unemployment rate, due to an apparent surge in teenage unemployment, is surprising given the other data I analyze. However, it is still around the 20-year average of 5.4%. Moreover, Average Hourly Earnings are growing at a healthy 3.5% rate year-over-year versus the 20-year average of 3.3%. I still expect the job market to improve modestly through year-end.

Inventories at US wholesalers rose more than forecast in April, led by a surge in petroleum and metals, Bloomberg reported. Sales jumped 1.4% after climbing 1.8% in March. Distributors had enough goods on hand to last 1.09 months at the current sales pace, matching the record low set in November of last year. The increase in wholesale inventories was led by an 8.8% jump in petroleum, the largest since January 2006, and a 2.9% increase in metals, the most in more than a year. I still expect inventory rebuilding to help add to overall economic growth through year-end. The US Dollar Index is falling .7% and the 10-year yield is declining 12 basis points on today’s news. However, these declines, along with today’s stock market decline, are mainly the result of the sharp increase in oil. Despite some saber-rattling talk from an Israeli deputy regarding an attack on Iran, the Intrade.com odds of a US and/or Israeli air strike on Iran before year-end are just 27%, which is down from 50% in April. In my opinion, the recent spike in oil is mainly the result of the perception by traders that Congress is going to doing a lot of talking, but will intentionally refrain from any meaningful actions that would prick the commodities bubble. We are at the point that the odds of a severe global slowdown, or even contraction, rise with every uptick in crude from current levels. I continue to believe a bursting of the commodity bubble will lead to substantially higher US stock prices over the intermediate/long-run.