Another tough week concluded Friday amid higher oil prices and continued fears in the financial space. The SPX violated its June low bringing the year low of 1275 in plain view. As stated last week, risk levels are extremely high and rallies are opportunities to lighten exposure on the long side. With that said, many of these banks are in oversold territory so we would not be surprised to see a modest lift into quarter end.
However, this summer will be a difficult environment for stocks. More financial troubles lay ahead perhaps best foreshadowed by Citigroup’s (C) announcement that it will report a 2Q loss after forecasting more write-downs.
Top Headlines
Financial turmoil continues with the latest saga coming from Fifth Third Bancorp (FITB) as they cut their dividend by nearly 2/3 and will raise $2 billion thru a stock offering. (6/18)
Federal Express (FDX) delivered unimpressive earnings this week hurt by higher fuel costs and a slowdown in the US. The company also gave poor guidance as they see more trouble ahead. (6/18)
Despite beating headline numbers, uncertainty still surrounds Morgan Stanley (MS) as analysts and investors alike try and dissect the underlying results. Shares gapped down Wednesday only to close higher. (6/18)
Often called the best house in a bad neighborhood, Goldman Sachs (GS) reported a dip in their 2Q earnings, but beat Wall Street expectations. The brokerage house’s commodity business came close to matching its 1Q’s record performance. (6/17)
President Bush urged Congress to lift the ban on offshore drilling as energy remains a hot topic especially in an election year. (6/19)
The Chinese government decided to boost fuel prices by as much as 18% this week, but analysts think the price hike will take time to work through the Chinese economy and ultimately decreased consumption. (6/20)
The Empire State Manufacturing Index reported continued deterioration in overall business conditions as signs of inflationary pressures rose. The Philly Fed also reported manufacturing activity below consensus. (6/16)
Winners & Sinners for the Week of 6/16/2008
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