GM Adds 1.4% After Fall to 1950s Level

• The Standard Poor's 500 stock index dropped into bear country on Wednesday, joining the blue chip Dow Jones industrial average, which last Friday hit the 20-per-cent decline from the high that marks a bear market, and the tech-stock-laden Nasdaq Stock Market composite, which has been ruled by bears since mid-March. (More...)
• The Dow Jones Banking Index ( Chart 2 ) is displaying a similar picture as many world banks only with a deeper bearish tone. (More...)
• The FTSE 100 index closed at its lowest since November 2005 yesterday as it threatened to join counterparts in Asia, the U.S. and Europe in bear market territory. (More...)
• Bear markets tend to follow hard on the heels of bull markets - the bigger the rise, the bigger the fall. (More...)

Dow Jones and FTSE 100 officially enter bear market

CONTENTS:

• NEW YORK (Reuters) -The Dow rose on Thursday, a day after the blue-chip average entered a bear market, on relief payrolls data was not as weak as some had feared and with another record oil price boosting energy shares. (More...)
• Given the Nasdaq's deeper decline relative to the S&P 500 Index and the Dow industrials, I thought it would be an ideal place to look for stocks that might have been "dragged down" by the bearishness of the market. (More...)
• Notwithstanding the foregoing, the Dow Jones content may be copied and sent without charge in the ordinary course of business provided all copyright and other proprietary rights notices, the original source attribution, and the phrase "Used with permission from Dow Jones & Company''' are included. (More...)
• PAUL KANGAS: Wall Street opened on a mixed note as investors analyzed the jobs report and the European rate boost. (More...)
• Stocks in Europe and Asia, following the U.S., dropped as oil topped $144 a barrel, damping earnings prospects for carmakers and airlines and stoking concern the global economy will slow further. (More...)
• Light, sweet crude retreated slightly, after climbing as high as 145.85 U.S. dollars a barrel in premarket electronic trading on the New York Mercantile Exchange, which renewed concerns about inflation. (More...)
• Standard & Poor's 500 gained 1.38 ending at 1262.90 today and for the week, it lost 15.48 points overall. (More...)

NEW YORK (Reuters) -The Dow rose on Thursday, a day after the blue-chip average entered a bear market, on relief payrolls data was not as weak as some had feared and with another record oil price boosting energy shares. The broader S&P 500 index was little changed in a pre-holiday shortened trading session and the Nasdaq composite index fell after graphics chip maker Nvidia slashed its outlook, citing global market weakness. That raised concerns about the outlook for the computer industry. [1] At the close of trading, the Dow Jones industrial average was up 73.03 points, or 0.65 percent, to 11,288.54, while the broader Standard & Poor's 500 index rose 1.38 points, or 0.11 percent, to close at 1,262.90. The technology-based Nasdaq composite lost 6.08 points, or 0.27 percent, to close at 2,245.38, led down by graphics chipmaker Nvidia, whose shares slumped almost 31 percent after announcing its current-quarter sales and gross margin will fall below forecasts due to slower global demand.[2] While oil hasn't yet touched that level, rising prices have continued to weigh on stocks. Oil's rise Wednesday after two uneventful days of trading helped send the Dow down by more than 150 points and left the blue chips and the Nasdaq in bear market territory, where they remained by Thursday's close. The Standard & Poor's 500 index remains just shy of the 20 percent decline from its high that signals a bear market.[3]

The Morgan Stanley Healthcare Payor Index is down 4 percent. Other stocks that are posting notable losses include natural gas, disk drive and oil service stocks. In recent trading, the major averages have moved well off of their session highs, with the Nasdaq and the S&P 500 slipping once again into negative territory.[4]

Trading was light on the New York Stock Exchange, with about 931 million shares changing hands in the shortened session, below last year's estimated daily average of roughly 1.9 billion, while on Nasdaq, about 1.4 billion shares traded, also below last year's daily average of 2.17 billion.[1] Light, sweet crude settled up $1.72 at a record $145.29 per barrel on the New York Mercantile Exchange after trading as high as $145.85 — also a new record. Nearly a month ago, on June 6, oil prices logged their biggest-ever one-day advance with a gain of nearly $11 a barrel.[3] NEW YORK (AP) — Wall Street capped a shortened trading week with a mixed finish Thursday after some uneven economic data: news of a contraction in the nation's services sector and a tame reading on employment. Stocks still had their third dismal week in a row, with the major indexes again posting losses as worries about rising oil prices and the fallout from the credit crisis dogged the market.[3]

The S&P 500 earlier fell below the 1,252.12 threshold that marks a 20 percent bear market retreat. The slide was limited by a 7 percent rally in Lehman Brothers Holdings Inc. Record oil prices and signs the U.S. economy is slowing pushed steelmakers and coal producers in S&P indexes down more than 10 percent this week.[5] Even with positive corporate news, Pado said the leap in oil prices could prevent any rally from taking hold. "When crude climbs and makes records every day, the market cannot focus on the economic news or anything else,'' he noted. Myles Zyblock at RBC Capital Markets said the market is expecting a 10.3 per cent decline in overall earnings for the S&P 500 firms, but that this will be the low-water mark: "Growth for the third and fourth quarter are expected to be up by 14 and 61 per cent, respectively,'' he said.[6]



Given the Nasdaq's deeper decline relative to the S&P 500 Index and the Dow industrials, I thought it would be an ideal place to look for stocks that might have been "dragged down" by the bearishness of the market. Many of these stocks have been excellent performers for traders and investors to the long side. When traders with profits meet markets bent on selling, it tends to make profit-taking sellers out of them. It is in these profit-taking moments that we look to find stocks whose pullbacks have helped create real bargains that were often much higher only a few days or weeks before. [7] The Dow Industrial Average managed to hold on to a decent gain nevertheless, rising 73.03 at 11,288.54. In this four trading session week, it rose three times but still fell 57.97 points overall.[8] The Dow Jones industrial average fell into bear market territory at the close of trading on Wednesday, dropping 166.75 points to close at 11,215.51, falling below the 11,331.63 mark, which was also set Oct. 9.[9]



Notwithstanding the foregoing, the Dow Jones content may be copied and sent without charge in the ordinary course of business provided all copyright and other proprietary rights notices, the original source attribution, and the phrase "Used with permission from Dow Jones & Company''' are included. [10] If you are an individual, you agree not to store, copy, reproduce, modify, distribute, transmit, display, perform, publish, transfer, create derivative works from, broadcast or circulate any Dow Jones content to anyone, including but not limited to others in the same company or organization, without the express prior written consent of Dow Jones.[10]

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PAUL KANGAS: Wall Street opened on a mixed note as investors analyzed the jobs report and the European rate boost. Blue chip buyers were happy though that the employment numbers weren't worse and they helped send the Dow to a 117-point gain by 11:30 this morning. [8] Shares of big manufacturers like 3M rose after the jobs report, aiding the Dow's advance.[1]

Volume on the Nasdaq Market came to 864 million shares. Blue chips are showing the best gains in this holiday-shortened session as investors absorb a mostly tame report on employment.[11]

The report also showed inflation pressures soared to a record high for the survey's 11-year history. The S&P 500 closed above its lows for the session, officially avoiding the start of a bear market, which is a decline of at least 20 percent from an index's recent peak.[1] ArcelorMittal and BHP Billiton Ltd. led commodity producers lower. Nvidia Corp., a maker of computer-graphics chips, tumbled 23 percent in Germany after cutting its sales forecast. Crude oil rose to a record above $144 a barrel in New York as ECB is poised to increase interest rates, a move likely to weaken the dollar further, and U.S. stockpiles unexpectedly fell to their lowest since January.[12] July 3 (Bloomberg) -- Most U.S. stocks fell, leaving the market poised for its worst streak of weekly declines in four years, after a reduced sales forecast by Nvidia Corp. outweighed speculation the Federal Reserve won't raise interest rates. The Standard & Poor's 500 Inde x gained 0.1 percent after earlier dipping below 1,252.12, a 20 percent decline from its Oct. 9 record.[5]



Stocks in Europe and Asia, following the U.S., dropped as oil topped $144 a barrel, damping earnings prospects for carmakers and airlines and stoking concern the global economy will slow further. [12] Zyblock noted that "the runaway oil price and ongoing credit contraction'' is expected to keep anxiety high. "The rocky ride experienced over the past few weeks could be with us for the remainder of the summer months,'' he added. Nigel Gault at Global Insight said the economy held up better than expected in the first half, ekeing out modest growth, but he is unsure about the outlook. "The outlook for the rest of 2008 and early 2009 is darkening, not least because of the seemingly relentless rise in commodity prices,'' he said.[6] The dollar was mixed against other major currencies, while gold prices fell. Oil prices dominated trading during the week as they have for months.[3]



Light, sweet crude retreated slightly, after climbing as high as 145.85 U.S. dollars a barrel in premarket electronic trading on the New York Mercantile Exchange, which renewed concerns about inflation. [13] The NASDAQ was up nine. Oversold conditions had the bulls taking the upper hand in the latter part of today's shortened trading session, so the rally's momentum did fade a little bit however.[8] The NASDAQ closed off 6.08 today at 2245.38 and for the week, it rose once, fell three times, had a net loss of 70.25 points.[8] The coincident index rose 1.3 points to 103.0. Composite indexes measure the momentum of the economy in addition to its direction. The indexes compare the current levels of various economic indicators with their levels three months earlier.[10] What analysts were not expecting was the report that the nation's services sector contracted last month. The Institute for Supply Management's report that its index of the service sector fell below 50 in May touched off renewed worries about the well-being of the economy.[11]

The S&P 500 fell as much as 10.95 shortly after the markets opened, bringing the index down to a reading of 1,252.0.[9]

Nvidia shares sank 30.7 percent to $12.49 and were the biggest drag on a semiconductor index, which shed 1 percent.[1]

TranS1 (TSON) down $4.01. The company cut its second quarter revenue forecast considerably. Those are our stocks in the news tonight.[8] The rise that day to more than $138 a barrel and a nearly 400-point drop in the Dow at the time owed in part to comments from a Morgan Stanley analyst that oil would hit $150 a barrel by the Fourth of July.[3]



Standard & Poor's 500 gained 1.38 ending at 1262.90 today and for the week, it lost 15.48 points overall. [8] The unemployment rate held steady at 5.5 percent, in line with previous estimates. Investors appeared somewhat relieved that the losses weren't steeper, because consumers are likely to cut their spending if they are out of work or are nervous about losing their jobs.[13]

REFERENCES

1. Energy shares, tame jobs data lift Dow - Reuters - National Business News - Portfolio.com
2. Dow Up On Shorter Trading Day
3. The Associated Press: Stocks end mixed following jobs, services data
4. RTTNews - US Market Update, Financial Market News, US Market News,US Market Commentary.
5. Bloomberg.com: Worldwide
6. Wall St rocky as earnings season nears | The Australian
7. Fireworks In Oil, Rigs And Defibrillators - Forbes.com
8. Nightly Business Report . Paul Kangas' Stocks in the News | PBS
9. Markets dip into bear territory - InvestmentNews
10. Japan May Leading Indicators 40.0; Coincident 33.3
11. Stocks post gains
12. Dow Jones and FTSE 100 officially enter bear market
13. Wall Street climbs after job report in line with estimates_English_Xinhua

Dow's bear market run spells trouble for Wall St.

CONTENTS:

• NEW YORK (Reuters) - With the Dow sliding into a bear market on Wednesday, the dark days on Wall Street are far from over, amid record oil prices, struggling consumers and the never-ending credit crisis. (More...)
• Stocks fizzled Wednesday, ending in bear-market territory for the first time in more than 5-1/2 years as oil jumped and fears about the financial health of General Motors mounted. (More...)
• The fall takes the key index to a level more than 20% below the Dow's record high last October, which means the Dow is now in a bear market. (More...)
• A drop in coal prices of $20 a tonne, or about 10 per cent, was behind the nosedive. (More...)
• Shares in General Motors closed below $10 a share, at $9.98, for the first time in more than thirty six years. (More...)
• Dow Jones reporter in the 1920s. (More...)

NEW YORK (Reuters) - With the Dow sliding into a bear market on Wednesday, the dark days on Wall Street are far from over, amid record oil prices, struggling consumers and the never-ending credit crisis. The Dow became the second major U.S. index to enter a bear market, crossing the critical threshold of a 20 percent decline from its peak, following the Nasdaq in February. [1] NEW YORK, July 2 (Reuters) - U.S. stocks slid to session lows on Wednesday, with the Nasdaq falling more than 1 percent, as shares of major technology companies dropped on profit worries and a rebound in oil prices stirred caution about economic growth.[2]

Stocks punished as oil hits new highs North American equity markets fell sharply as oil prices touched another record high near $144 U.S. a barrel on Wednesday. Informant denies telling Khawaja about fertilizer bomb plot The star witness in the trial of the first person charged under Canada's Anti-terrorism Act told an Ottawa court Wednesday that he never discussed a fertilizer bomb plot with the accused. 'It has been my privilege to have served you': Hillier on retirement Gen. Rick Hillier has officially retired as the leader of Canada's military, handing over the reins to Gen. Walter Natynczyk in a ceremony Wednesday in Ottawa. Deadly front-end loader rampage wreaks havoc in Jerusalem Israeli police say a Palestinian who plowed a front-end loader into a string of vehicles on a crowded Jerusalem street Wednesday, killing at least three and injuring dozens, appeared to be acting spontaneously and alone.[3]

Economic worries continued, however, as the ADP Employment Report showed employers shed 79,000 private jobs during May and as oil prices traded over 141 dollars a barrel close to recent record highs.[4]



Stocks fizzled Wednesday, ending in bear-market territory for the first time in more than 5-1/2 years as oil jumped and fears about the financial health of General Motors mounted. The Dow Jones Industrial Average enjoyed brief rallies in morning trading but ended down by 166.75 points at 11215.51, down 20.8% from its record close in October. [5] The list is the Dow Jones Industrial Average: originally 12 companies but now30 companies, updated to include new companies and eliminate drooping ones.[6]

Wary sharemarket investors have driven Wall Street's Dow Jones index down 167 points in the latest session. It is now down more than 20 per cent from last October's peak, an adjustment usually recognised as a bear market.[7] Based on historical patterns of bear markets, Wall Street's current slide has some ways to go before it plays out. Since 1900, whenever the Dow has fallen into a bear market, it has on average shed 30 percent of its value for the duration of the slump.[1]

NEW YORK: Wall Street stocks opened higher on Wednesday despite lingering economic concerns tied to further U.S. job losses, as bargain-hunters scouted out discounted shares.[4] U.S. stocks on Wednesday shed earlier gains to lapse into negative turf as the price of crude rose and with investors feeling heat ahead of Thursday's jobs report.[8] The Commerce Department reported orders for U.S.-made factory goods gained by 0.6% in May, with the overall number roughly in line with expectations. Ahead of open, stock futures pared their gains in the wake of the ADP employment index data, which found private-sector firms in the U.S. shed 79,000 jobs in June, the largest decline since November 2002. "Today's activity will certainly set the stage for tomorrow's number, which will be interesting in its own right with an early close the Fourth of July holiday weekend.[8]

Today shares of General Motors Corp. stocks plunged to the lowest level since September 1954. It's a rude awakening for a stock long listed as "blue chip," and one that's sent stock market pundits into a prediction-fueled frenzy. Does this signal the end ofthe thinking that established-big-company blue chipstockslow risk? Indeed, stocks in smaller companiestracked by the Russell 2000 Index have outpaced the S&P 500 Index by 80 percent over the past eight years, according to MSN's "Blue Chip Stocks with Momentum" coverage. It certainly signals a reason for anyone who has let their retirement and investment accounts coast to reevaluate the picks within those accounts.[6] The broader S&P 500 index retreated 23.39 points, ending at 1,261.52. Shares of General Motors lost 15 per cent, or $1.77 U.S., to end at $9.98 on the NYSE. Earlier, Merrill Lynch said the automaker needed to raise $15 billion U.S. to shore up its finances and added that bankruptcy was "not impossible" if conditions in the auto sector don't improve.[3]

The Nasdaq composite rose 6.98 points (0.30 percent) to 2,311.95 while the Standard & Poor's 500 index gained 5.13 points (0.40 percent) to 1,290.04. "How the market opens isn't as important as how it closes, particularly at this point when the market seems ripe for a bounce after an extended period of selling that has seen the S&P drop 8.3 percent since the end of May," said Patrick O'Hare, an analyst at Briefing.com.[4]



The fall takes the key index to a level more than 20% below the Dow's record high last October, which means the Dow is now in a bear market. [9] The broad index has so far averted lapsing into a bear market, but it is drawing closer. It is now down 19.4% from its October high and off 14.1% on the year. Investors are increasingly worried about the toll that expensive energy will exact on corporate profits in the months ahead as companies struggle to pass along fuel costs and consumers cut back on purchases of various goods and services to cover their bills at the pump.[5]

Major stock indexes last suffered a bear market in the wake of the dotcom meltdown, with the Dow returning to a bull market in October 2002.[5]

Stocks have subsequently moved to the downside in recent trading, with the Nasdaq sliding into negative territory.[10] The major indices have moved lower in the final leg of trading, touching new session lows. The negative sentiment prevailing among traders has mixed with rising fuel costs to push transportation and airline stocks out of favor this session.[11]

Crude, which had languished much of the day following a weekly report on inventories, took off in afternoon trading and settled $2.60 higher, up 1.8%, at a record $143.57 a barrel in New York.[5] Crude-oil futures gained after the American Petroleum Institute reported a fall of 1.3 million barrels in crude supplies last week, with the front contract ahead 33 cents at $141.30 a barrel on the New York Mercantile Exchange.[8]



A drop in coal prices of $20 a tonne, or about 10 per cent, was behind the nosedive. [3] Stocks in Toronto were led down by a 7.5 per cent drop in the mining sector.[3]

While participating inCNBC'snow-running Million Dollar Portfolio Challenge, I wanted to have one portfolio devoted to what's known as "blue chip" stocks -- stocks that are tried and true, from companies that have been around for a long while, that are known for solid growth.I figured there would be a list of some kind, an industry selection of "blue chip" picks for us lay investors to select from.[6] Insurance, pharmaceutical and disk drive stocks are staying positive. Heading into mid-afternoon trading, the major averages have pulled up from their session lows but remain in the red.[12] The blue-chip average had flirted with bear territory during each of the last three trading sessions, but in each instance attracted enough buyers by day's end to miss the mark by a few tenths of a percentage point.[5]



Shares in General Motors closed below $10 a share, at $9.98, for the first time in more than thirty six years. [9] Traders said General Motors' shares would remain in focus after the automaker announced better-than-expected June sales a day earlier, which were nonetheless down a hefty 18.5 percent from a year earlier.[4]

Merrill Lynch analysts downgraded GM's shares to the equivalent of a "sell" from "buy" and wrote that bankruptcy for the iconic Detriot auto maker is "not impossible if the market continues to deteriorate and significant incremental capital is not raised." GM shares, which rallied Tuesday after the company said that its sales in June weren't as bad as many had feared, slipped beneath the $10 level for the first time in decades.[5]



Dow Jones reporter in the 1920s. [6] Thomson Reuters is the world's largest international multimedia news agency, providing investing news, world news, business news, technology news, headline news, small business news, news alerts, personal finance, stock market, and mutual funds information available on Reuters.com, video, mobile, and interactive television platforms.[2] Once again, a notable increase by the price of oil is contributing to the weakness in the markets, with oil-sensitive airline stocks turning in some of the market's worst performances.[13] Traders are digesting an upswing in oil prices and a disappointing employment report.[12]

The lack of follow-through on the upward move was partly due to negative sentiment generated by the release of ADP's private sector employment report, which showed a bigger than expected decrease in jobs in June.[10] The disappointing jobs data bodes poorly for Thursday'''s June labor report, with consensus estimates for non-farm payrolls calling for a loss of 60,000 jobs, while the unemployment rate is widely expected to improve to 5.40%, from 5.50%.[9]

REFERENCES

1. Dow's bear market run spells trouble for Wall St. | Reuters
2. US STOCKS-Market falls on tech profit worries, oil | Markets | U.S. | Reuters
3. Stocks punished as oil hits new highs
4. Wall St opens higher amid bargain-hunting- Global Markets-Markets-The Economic Times
5. Today's Markets - WSJ.com
6. The Bottom Line: What is a blue chip stock? by Ms. Meacham: Money Maven - money correspondent, money, financial blog | Gather
7. Local market to be hit by US slide - ABC News (Australian Broadcasting Corporation)
8. MARKET SNAPSHOT: U.S. Stocks Down Ahead Of Thursdays Jobs Data
9. U.S. stocks end day sharply lower
10. RTTNews - US Market Update, Financial Market News, US Market News,US Market Commentary.
11. Briefing.com: Dow Drops 100 Points
12. RTTNews - Latest Earnings,Upcoming Earnings, Pos Pre Announcements, Pos Pre Announcements , Positive Surprises, Negative Surprises, Hot Stocks, Stock Split Calendar, Stock Buybacks, Dividends, Negative, Positive PreAnnouncements,Surprises .
13. RTTNews - Latest Earnings,Upcoming Earnings, Pos Pre Announcements, Pos Pre Announcements , Positive Surprises, Negative Surprises, Hot Stocks, Stock Split Calendar, Stock Buybacks, Dividends, Negative, Positive PreAnnouncements,Surprises .

Dow Jones dodges the claws of a bear market

CONTENTS:

• Besides the punishing effect of higher oil, which threatens the stifle consumer spending and in turn, an economy still struggling to grow, the stock market is still contending with warnings of losses at financial companies _ the continuing fallout of the housing slump and the credit crisis that began nearly a year ago. (More...)
• As a dicey first half ends, the investors who fared the best were the ones who bet on the worst. (More...)
• Even with the flooding, the food supply should not be much lower (if at all) than previous years. (More...)
• InBev ( INBVF ) has made a plea to Anheuser ( BUD, Fortune 500 ) shareholders to challenge the company's decision to turn down the buyout. (More...)
• Oil also remains an influence of market sentiment. (More...)
• COMEX gold for August delivery rose $16.20 to settle at $944.50 an ounce. (More...)
• Five straight drops gives you ursine thoughts. (More...)
• The NASDAQ OMX Clean Edge Global Wind Energy Index is a modified market-capitalization index and includes companies that are primarily manufacturers, developers, distributors, installers, and users of energy derived from wind sources. (More...)

Besides the punishing effect of higher oil, which threatens the stifle consumer spending and in turn, an economy still struggling to grow, the stock market is still contending with warnings of losses at financial companies _ the continuing fallout of the housing slump and the credit crisis that began nearly a year ago. These problems that show little sign of being resolved soon left Wall Street in tatters as the first half was ending. The Dow Jones industrials are down nearly 20 percent from their record high of 14,198.09, set in October, putting the blue chips on the threshold of a bear market. [1] The major indexes closed out the first six months of 2008 with double digit declines, and are perilously close to the levels of a bear market. This was the worst first half for the Dow Jones industrials since 1970, when the country fell into recession. The more diverse Standard & Poor's 500 and Nasdaq composite indexes had their worst first half since 2002, when Wall Street was still suffering through the aftermath of the dot-com bust, the Sept. 11, 2001, terror attacks and a recession. Stocks pulled back in the early going as oil reached yet another record, this time, above $143 a barrel.[2]

The Nasdaq Composite fell back 1 per cent to 2,292.98. Last week, surging oil prices, poor earnings reports from the technology sector and a slump in financials pushed the Dow Jones Industrial Index into bear market territory and the S&P 500 to within a hair's breadth of its March lows. That pattern was repeated yesterday. The Dow fell to its lowest level since September 2006 - down more than 20 per cent from its October highs - before recovering. The index lost 7.4 per cent over the quarter and 10.2 per cent this month - its worst June performance since the Great Depression.[3]

Peter Cardillo, chief market economist at New York-based brokerage house Avalon Partners Inc., contends that the market must first see nervous investors pull more money from the stock market before Wall Street will begin to show meaningful signs of stabilizing. He said the coming earnings reports for the second quarter could indicate that while some parts of the economy, like the financial sector, are struggling, others might show decent earnings. "With the Dow nearing bear market territory, it's going to keep investors on edge," he said. He is looking at economic data due this week on manufacturing and employment as possibly offering some reassurance.[4] Typically, in bear markets--or periods when the stock market drops 20 percent--there are few places to hide. That was the case in the second quarter, which ended Monday with the Dow Jones industrial average down 7.4 percent for the past three months and 19.9 percent from its Oct. 9 peak. Financial stocks, the sector that started unnerving investors last summer, were brutal to those who thought companies had worked their way through their mortgage messes and were on their way to a recovery after the emergency sale of Bear Stearns in March.[5]

The Dow Jones Industrial Average--which people often call a "leading indicator"--tends to go up or down based on nothing in particular. Earlier this month, whenever President Bush spoke about the economy, Wall Street traders dumped stocks like a gangsta rapper dumping his syphilitic 'ho. This week, stocks rose after traders were greeted with the sight of Adelphia honchos John Rigas and his sons, Timothy and Michael, being led away in handcuffs by federal agents for stealing hundreds of millions of dollars from the company they founded. They shot up directly after New York's billionaire Mayor Mike Bloomberg said on a local radio show later that morning: "I'm just telling you what I'm doing with the monies that I have.[6] The main reason is that there is no historical precedent for what's happening in either the energy or credit markets. "Take the models, throw them in the trash," said David Kotok, chief investment officer of Cumberland Advisors. "Stocks do not like uncertainty, and they've got plenty of it." It's possible that Wall Street is reaching its bottom, but investors - who have been burned several times already - do not want to make that bet until they see clear, positive signs that both inflation and economic growth are under control. Wall Street this week is going to be watching the price of oil, as well as economic data.[7] For the climate to improve on Wall Street, Swanson feels one of the three main negatives weighing down on investor spirits - high oil prices, housing weakness and the credit crunch - will need to ease. "It will be tough for stocks to rally until residential real estate stops going down," said David Daughtrey, a chartered financial analyst at Copperwynd Financial in Scottsdale.[8]

The turmoil on Wall Street and rising price of oil is coming at a time when there are renewed concerns about another sector of the economy: banking, which continues to see large write-offs from the subprime mortgage crisis. That could be helping to drive some investors from stocks into commodities, including oil. This, in turn, keeps the price of oil moving higher even as supply-and-demand fundamentals deteriorate.[9] Wall Street has ended an arduous first half quietly, with stocks showing mostly modest declines. Investors again based their trades on the price of oil, the dominant force in the market as the first half ended.[10]

Pressured by rising oil prices, plunging consumer sentiment, ongoing banking woes and lingering recession fears, investors have dumped stocks at a reckless pace throughout the first half of 2008.[8]

New York stocks bounced back weakly yesterday as soaring oil prices boosted energy stocks but the rally was too little, too late to prevent the S&P 500 from registering its worst month since September 2002. The relentless rise in oil prices has been the scourge of stock markets this month, undercutting investor confidence with the threat of inflation and turning modest gains in April and May into significant losses in June. Oil, which hit $143 a barrel in early trading before easing back, took its toll on consumer-facing stocks again yesterday.[3] American Express ( AXP, Fortune 500 ) gained after UBS upgraded it to "neutral" from "sell" as part of a broader upgrade of the credit card sector, saying that the stock is now fairly valued relative to the difficult outlook. CIT Group ( CIT, Fortune 500 ) rallied on news it is selling its home lending business to Lone Star Funds for $1.5 billion and the assumption of $4.4 billion in debt. CIT is also selling its mobile home mortgage business for $300 million to Vanderbilt Mortgage and Finance. ( Full story ). UBS ( UBS ) shares slipped after the company said it will reshuffle its board following big subprime mortgage losses. On the downside, companies that derive a large portion of their profits from fuel suffered as oil prices rose.[11]

Among other automakers, Ford Motor ( F, Fortune 500 ) reported June U.S. sales slipped 28.1%, reflecting the impact of rocketing oil prices and a lack of investor confidence ( Full story ). The Dow and the Nasdaq both briefly fell to levels that meet the technical definition of a bear market before bouncing back a little.[11] The pessimists, however, say the market's turmoil may be the start of a bear market, which is often calculated to be a drop of 20 percent from the last peak. All three indexes - the Dow, S&P, and Nasdaq - are nearly 20 percent below the high points they reached in the fall. In other economic data this week, the Institute for Supply Management will release its June indexes on the manufacturing and service sector, and the Commerce Department will report on construction spending in May.[7] In June, the Dow Jones fell by 10.2 per cent, the NASDAQ by 9.1 per cent, while the S&P 500 fell 8.6 per cent, in what the report said was 'the S&P's worst monthly reversal in five years'.[12]

As it has in many recent sessions, the Dow Jones industrial average moved inversely to the price of crude. The Dow's occasional declines early in the session had left the index off 20 percent from its high in October, putting the blue chips officially in bear market territory.[13] Year-to-date, the 30-share Dow Jones industrial average is off 14.4%. That's due largely to the pummeling taken by its five financial, one automaker and two drugmaker stocks.[14]

Last week saw a decline in the stocks due to a record increase in the oil price along with the poor dollar position which added to the financial chaos. Considering the sell off of the last week, Monday'''s trade was comparatively better than what was expected as the sell off of previous week sent Dow 20% down since its high in October.[15] Pounded in the last six weeks by the noxious mixture of rising oil prices, falling home values and continued losses in the banking sector, the Dow and the broader Standard & Poor's 500 index concluded the quarter with tepid gains Monday.[16] Last week, the Dow lost 358 points in a single day, dropping to a 21-month low on rising oil prices, a weaker dollar, slumping automakers and more woes for the bank sector. For the month of June, the Dow lost 10.2%, marking its worst June performance since the Great Depression.[14]

Wall Street investors took a "wild ride" with the "bulls" and the "bears" last week, making "margin calls," selling "short," buying "low" and finally accepting that the "Dow" needed to make a "correction" after the "telecom sector" dragged down the economy, even those typically reliable "index funds" and "blue chips" on the "big board."[6] Though the Dow and other major averages so far have averted the 20% drop that historically has defined a bear market, many on Wall Street are convinced that a bear is underway and that it may be a particularly bruising one given the tangle of problems afflicting the economy.[16]

Wall Street set for dismal start to third quarter, with blue-chips on the verge of bear market territory, oil near record highs and a selloff in overseas markets.[17]

An interest-rate increase might also help stabilise the dollar, which sank further after the European Central Bank signaled last week it was likely to raise interest rates to counter inflation. While the price of oil has been rising, financial stocks such as Citigroup and Lehman Brothers on Wall Street have been falling.[9] To wit: the market has gotten out of hand. There he was last month, quietly trying to talk the market down by discreetly letting it be known (via the Nov. 25 issue of The Wall Street Journal) that the Fed was worried about stock prices' becoming a sort of financial "bubble" that was destined to burst.[18]

When stocks are priced in sixteenths, the minimum spread shrinks by half. That means it's at least possible that you could pay 40 3/16,or $4018.75, for your shares. Do six bucks and two bits amount to a hill of beans? That depends on you: how often you buy or sell stocks, how much money you have to invest to begin with, whether you're a penny pincher or a spendthrift. Clearly, over years of investing, such savings could add up. As for Wall Street, our gain is its loss: brokers profit heavily from playing the spread, and a few forsaken pennies really pile up over millions of shares.[19] Wall Street gave up more ground at the start of the third quarter Tuesday, with stocks falling on investors' ongoing concern about the damage rising. Wall Street is paring its losses after news of a surprising upturn in manufacturing.[10] Evil, greedy, shortsighted investment professionals panicked on Monday by dumping stocks indiscriminately, while noble, wise, long-term Main Street investors stepped into the breach and bailed out the market by buying stocks on Tuesday. It's a wonderful, heartwarming story--but probably not true. It looks to me that it was large buy orders from Wall Street rather than lots of small orders from Main Street that touched off Tuesday's rally.[20]

The optimists on Wall Street are hoping that last week's plunge marks the third low in what stock market technicians call a "triple bottom" - a trading pattern of three lows, followed by a rally.[7] Perhaps more worrisome, economic weakness has started to spread globally, with some foreign stock markets - in Europe and China, for example - getting hit harder in recent weeks than Wall Street.[8]

Don't despair. This isn't another end-of-the-world commentary advising you that the stock market is doomed, corporate America is hopelessly rotten and the only way to protect yourself is to hide under your bed, close to all the cash you've stuffed under your mattress. There are serious problems in corporate America--problems that I doubt President George W. Bush will address directly (and maybe not even indirectly) in his much ballyhooed Wall Street speech this Tuesday.[21]

"Oil's been the knife in the back of the market and getting twisted on a daily basis," said Marc Pado, U.S. market strategist at Cantor Fitzgerald. Stocks undoubtedly were beaten down in recent days by end-of-quarter window dressing on Wall Street -- the quarterly ritual in which money managers prune losing stocks from their portfolios to avoid reporting ownership of them in quarterly mailings to shareholders.[16]

On the downside, we could go to 10,700, and perhaps lower. The market is being hit by both higher oil prices and the credit crunch on Wall Street. The fact that it's only down around 20 percent shows how strong it really is. It could be a lot worse.[22]

NEW YORK'(CNNMoney.com) -- Stocks were poised for a bleak start to the third quarter on Tuesday as overseas markets closed lower and concerns about surging oil prices continued to dog investors.[17] Stocks were narrowly mixed early Monday as investors contended with another spike in oil prices and awaited a regional manufacturing reading for hints about economy.[23]

Till now, oil prices and stock markets across the globe moved in tandem, but things changed when the oil prices skyrocketed to above $100 a barrel level. When oil rates moved up defying gravity, the Sensex started its southward journey. According to market analysts, the reason for this is that, no stock market in the world likes uncertainty.[9]

"The average bear market takes us down 30%," said Peter Boockvar, equity strategist at New York brokerage house Miller Tabak & Co. "If that's just the average, we have a way to go. If you believe this is the worst economic environment in decades, you can even make the argument that maybe we're only halfway there." The April-to-June quarter started on an up note for the stock market after the 11th-hour fire sale of Bear Stearns Cos. in mid-March raised hope that the global financial system had withstood its biggest threat in decades.[16]

For the past two years the average S&P 500 stock has risen about 1 percent a year, while the index has lost 16.5 percent a year. The reason for these disparities: the S&P indexes weight stocks by market value. This means giant stocks like GE, Tyco, Intel, IBM and AOL Time Warner that have done terribly are dragging down the S&P 500. Those five stocks account for almost a third of its loss for the year.[21] With a pool of large and easily accessible underlying stocks, the S&P GCC 40 Index will provide a unique way for international investors to take part in the Gulf'''s growth story.'''[24] There are nearly a thousand reasons why that isn't making investors feel much better. Better-than-expected sales from General Motors (GM) helped the Dow recover from a 167-point loss to close up 32 points at 11,382 19.6% below its record high in October. Two-thirds, or 994, of stocks in the broad Standard & Poor's 1500 index are down 20% or more from their 52-week highs.[25] With Monday as the last day of the second quarter, institutional investors could be looking to make any changes that will put the best light on battered portfolios. The Dow's 10.2 percent decline this month as of Friday's close leaves the index on pace for its worst June since the Depression.[13]

Alka Banerjee, vice president of Standard & Poor'''s Index Services, said: '''The new index has been designed in response to investor demand for access to the largest and most liquid stocks in the region'''s equity markets. It is different to existing GCC indices which are more focused on providing benchmark performance data.[24] Because spreads would potentially narrow to as little as a penny, decimalization would place even more of a squeeze on the Street. No wonder that brokers have reesisted change for so long-and why they're worried about the future. "Firms in the business of buying and selling stocks will have to find more efficient ways to run their business, if they're to stay profitable," says Junius Peake, a retired vice chairman of the National Association of Securities Dealers and now a professor of finance at the University of Northern Colorado. That upheaval, he predicts, will produce an explosion of competition in securities trading, including the creation of new "virtual" exchanges where investors buy and sell directly over the Internet, bypassing fee-grubbing middlemen altogether.[19] What news events and trends tend to influence investors to buy and sell stock? Why do stock brokers turn against a high-flying telecommunications giant like WorldCom because of something as simple as mistakes on expense forms? (If my friends turned against me every time I fudged an expense form, well, I'd be pretty damn lonely.)[6]

Stocks ended a choppy session mixed on Monday, as investors kept a close eye on the price of oil after it set another record intraday high.[26] Stocks gained momentum as oil fell by several dollars and investors felt justified in hunting for bargains after last week's steep sell-off.[13] The Nasdaq closed 24% off the October highs in March before staging a temporary recovery in May. "We're looking at some terrible investor sentiment right now technically and we could see some sort of reversal, but I also don't see unbridled fear out there," he said. Typically, the fear factor would need to be worse in order for the market to be set up for a big bounce back, he said. Thursday's market could be critical in determining whether stocks have put in a bottom this week or whether the "bear market" is going to take a firmer hold, said Donald Selkin, chief market strategist at National Securities.[11]

The first half of the year was bad for most stock investors, unless you opted to bet against the dollar and the consumer - and for rising inflation.[14] After climbing for the first half of the quarter, stocks gave way in mid-May to a more prosaic concern -- that a weakening economy could cause long-resilient consumers to wilt under the pressure of soaring gas and food prices.[16] Professional investment managers also forecast a drop in energy prices. Their bullishness for oil-company stocks fell to 43 percent last quarter from 55 percent in the first, according to a recent survey of 330 professionals by Russell Investments.[8]

Just because U.S. stocks have fallen off (and are still going down) doesn't mean your investments have to be. Oil has been going up, and if you think it's going to keep going up, you can own oil through United States Oil fund (or USO), an exchange traded fund (or ETF) that tracks the price of oil. (Keep reading for more on what an EFT is.) Or, you can own oil companies through their stocks, or through mutual funds, and so on.[22] Vanguard Group managing director Gus Sauter, who runs the company's index funds, says asset allocators were active. These players shift huge pools of capital rapidly among stocks, bonds and other investments, based on those assets' price relationship to each other.[20]

By 1986 and 1987, stock prices had made a strong recovery from the stagflation and the extended, painful bear market of the 1970s to 1982. Both the U.S. bull market and the economy had been rising for almost five years, and were starting to look long in the tooth, while inflation and interest rates had been declining, and price-earnings ratios had been rising.[27] Swanson points out that stock prices usually recover well before the overall economy bottoms, as investors start to anticipate improvements. Nor do recessions tend to last long.[8] Detroit automotive stocks, as ever battling competition from overseas makers, are also being pummeled by the sagging economy and higher energy prices.[1]

You call your broker. He executes your order at 40 1/4 and debits your account for $4,025, not counting any fees or commission. Your broker hasn't bought the stock at that "ask" price; more likely he's paid a "bid" price of 40 1/8, and he's pocketed the difference, or "spread," of 12.5 cents a share.[19] The Australian share market fell 7.6 per cent in June, with only 27 of the top 200 stocks making gains in the final month of the financial year.[12]

The Russell 2,000 index of smaller companies fell 8.48 points, or 1.2%, to 689.66. The BKX bank-stock index slumped 1.9% as investors cleaned financial shares out of their portfolios.[16] Standard & Poor's, the global index provider, has launched a new index which will provide investors with an exposure to forty large Gulf-based listed companies.[24]



As a dicey first half ends, the investors who fared the best were the ones who bet on the worst. That betting pool included a prolonged bloodletting for the housing and credit markets, a weak U.S. dollar, and an ongoing surge in oil and gas prices. [14] Oil and gas prices jump: U.S. light crude for August delivery rose 97 cents to settle at $140.97 a barrel on the New York Mercantile Exchange, an all-time closing high.[11] The national average price for a gallon of regular unleaded gas rose to a record $4.087 from a record $4.086 the previous day, according to AAA. ( Full story ). Other markets: In currency trading, the dollar fell versus the euro and the yen.[11] Stocks were mixed in the last hour of trading, having repeated what has become a familiar pattern of late _ moving in the opposite direction from crude. The market pulled back in the early going as oil reached yet another record, this time, above $143 a barrel.[1]

Commodity prices could be volatile through the rest of the year, but the trend is generally expected to remain up. That means those stocks are likely to continue rising in the second half. An OPEC official said Thursday that prices could hit $170 this summer.[14] Gold stocks are showing considerable strength, as the price of the precious metal climbs more than $17 an ounce.[28]

Allocators sold bonds and bought stocks. Suppose interest rates had been moving up as stock prices fell, which is often the case? Who knows what would have happened? It looks like the market's recovery was a close call rather than a sure thing. We stockholders were lucky this time.[20] Monday is the end of a rough time for Wall Street. It is also an end to the volatile market that leads to numerous ups and down in the stock exchange market.[15] The result on Wall Street is a grim acknowledgment that an assortment of ailments -- including the home-loan meltdown and the credit crunch -- are far more intractable than even pessimists had once thought. "Coming into the quarter there was great hope that the financial crisis would be behind us, that the economy had enough flexibility to provide overall growth and that the consumer would hang in there," said Joe Battipaglia, market strategist for the private-client group at Stifel Nicolaus & Co. "Unfortunately, we found out we're still in the midst of the credit crisis, the economy is not as flexible as once thought and the consumer is rolling over in a material way," he said.[16] Lehman ( LEH, Fortune 500 ) tumbled 11% Monday amid renewed speculation that the bank's ongoing credit woes could force it to sell all or part of itself sometime soon. Swiss bank UBS AG ( UBS ) has restructured its board to counter criticism from shareholders over the "clubby nature of its ranks," the Wall Street Journal reported.[17]

A 20 percent drop from a market peak is considered the start of a bear market -- although many analysts say Wall Street already has a bear market mentality.[4] The year is half over, and Wall Street appears to be on even shakier ground than when 2008 began. This shortened week ahead of the Fourth of July holiday is unlikely to bring the market enough proof that the economic climate is improving.[7] A famed Wall Street strategist says he's haunted by today's parallels to the bust 20 years ago, even knowing history is no guide.[27]



Even with the flooding, the food supply should not be much lower (if at all) than previous years. This should be good news for the markets. It make be temporarily bad news for Agriculture stocks. Even the author writing about this seemed to think the report was too optimistic about the acreage that would be productive this year (after the flooding). To me this means that the Ag stocks can bounce back, and the inflation situation due to Ag is not too bad. I think this should allow the markets to move higher. [29] You can find ETFs for all kinds of investments. In addition to oil and gold, as I mentioned, they also exist for international markets, specific stock sectors (like coal or nuclear energy), and so on. They're well worth your research (and there are far too many Web sites devoted to them for me to list here).[22] Continued concerns over the financial sector are also contributing to the negative sentiment. Financial stocks may see additional weakness after CIT Group (CIT) announced the sale of its home lending business to Lone Star Funds for $1.5 billion.[26] Respected economists and market gurus were warning that stocks were getting expensive, that inflation and interest rates would soon be rising, and that unsound and speculative financial practices were rampant. They railed against programmed trading, options, the newfangled hedge funds and something called portfolio insurance. They were right to fret, but they were too early, which in investing can be the same as being wrong.[27] In London, stocks lost 4 percent in early trading, recouping half later in the day.[18] I'm told, large computerized buy orders for hundreds of stocks appeared, firming up prices, letting orderly trading resume, touching off the rebound.[20] Steel, networking, and housing stocks are also under considerable pressure, while gold stocks are bucking the downtrend. In recent trading, the major averages have moved well off their worst levels of the day, although they continue to post notable losses.[30]

Mutual funds that buy foreign stocks were down 11.9 percent on average in the second quarter, compared with a 9.7 percent average decline for domestic-stock funds.[8] Mutual funds were still exotic. Owning stocks then was water torture-prices kept falling drop by drop. It was normal for stocks to sell for seven times annual per-share earnings and carry dividend yields of 5 percent.[31] Consumer staples, stocks of companies that sell products people need--such as toothpaste and soap--have dropped about 6 percent.[5] With banks reluctant to lend to consumers, and households pressured by soaring gasoline and food costs, investors shunned stocks of companies that sell products consumers can choose to skip during downturns--everything from cars to home-repair merchandise and furniture.[5]

Besides the effect of oil, stocks are still contending with losses at financial companies, the fallout of the housing slump and the credit crisis.[10] Harriman. Two-thirds of the 20 stocks to fall most from their 52-week highs are financials. "Every day, we are reminded there are more credit issues," he says.[25]

The stock market continues to be influenced by the financial sector (+0.1%).[32] I'm putting money into the stock market. You're going to look back on today and say this was a historic time to buy quality companies." How important were these comments by the mayor? Very, if you put stock in stock. Within a few hours, the Dow, which had been down at the time the mayor made his comments, had risen nearly 550 points.[6] Every drop has proven to be a buying opportunity. Many people have come to believe that baby boomers will pour their retirement money into stocks forever, propping up stock prices forever. Investing on this basis is a good way to spend your retirement living on Hamburger Helper and day-old buns. If investing were this easy, how come we haven't all made billions in the stock market? I remember the way people argued in the 1980s that it didn't matter what you paid for Japanese stocks, because so much money was chasing them that prices could only rise.[31] No one listened; stocks kept rising. On Thursday Greenspan dropped his bombshell into an otherwise boring speech at a black-tie dinner in Washington. "But how do we know," he asked, "when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions, as they have in Japan, over the past decade?" Translated from snorifying Fedspeak, that means: "Stock prices are too high." It woke up his dinner listeners, all right--not to mention foreign stock markets. "It was startling," said speech attendee Herbert Stein, former economic adviser to the late President Nixon, "a clear warning."[18]

Rising prices have pressured stock markets worldwide because of worries that inflation will force consumers and businesses to pare spending, which would hurt economic activity.[23]

I'm still bullish about stocks, but there is one spooky memory that perches in my mind like the canary in the coal mine. It relates to the U.S. stock market in 1987, and the October crash that shook the world.[27] I know there are still some write down problems, but even Greenspan is saying that we are at least 2/3 through it. Do you think the stock market will turn upward now? Or will the S&P500 go right through its resistance level of 1250? To me it looks like it might hold (at least temporarily).[29]

Although stocks overall fared better in the second quarter than the first, it didn't seem like it because the mood ended on such a sour note.[8] Commodities and transportation stocks led the list of biggest S&P 500 gainers in the first half.[14] The S&P 500 is a well-diversified portfolio of stocks, but it contains just one asset class: large-company stocks.[33]

The ratio is measured using full-year net income estimates and closing prices on June 30 for companies that make up the S&P 500 index.[34] Data from Aronson+Partners, a Philadelphia money-management firm, show that through June 30, 45 percent of the S&P stocks--224 of them--were up for the year, even though the index has sunk sharply.[21] The consumer price index, the government's gauge of inflation, rose 3.9 percent for the 12 months that ended in April.[33] Bond prices fell. The yield on the benchmark 10-year Treasury note, which tends to move opposite its price, rose to 3.98 percent from 3.97 percent late Friday.[4]

Expedia, which was also knocked by a price target cut from Citigroup, fell back 4 per cent to $18.38, while Jones Apparel lost 5.3 per cent to $13.75.[3] "The oil prices rise has been surprising to nearly every forecaster," Mr. Kotok said, noting that at $140 a barrel, crude imports will cost the United States about $700 million per day.[7] Rocketing oil prices, which Monday surged to a record $143.67 a barrel, have been reflective of a broader first-half rally in commodity prices driven by a combination of speculators and global demand.[14]

Share market falls were also recorded in the Euro exchanges, with high oil prices and local economic and credit crunch concerns slashing profits.[12] Gold traded near a 2-1/2 month high as geopolitical tension in the Middle East and rising oil prices spurred investor demand for bullion as a haven.[9] In January, investors knew there was potential for the price of oil, which was on the verge of $100 a barrel, to keep rising, but most didn't predict that crude would surpass $140 a barrel.[7]

"Wind energy was a $30 billion global industry in 2007 and is projected to continue growing in the years ahead," said Ron Pernick, Clean Edge Co-founder and Managing Director. "This benchmark enables investors to track the performance of pure-play and multinational companies that are key drivers of this rapidly expanding industry."[35] Many financial advisers are urging long-term investors not to throw in the towel. Scott Huish, a certified financial planner at Tribeca Financial in Mesa, feels that small investors are prone to optimism near peaks and pessimism near bottoms and that their investment performance suffers as a result. "Today's market has been fairly typical of any election year, where there are dramatic swings both up and down until November," Huish said, adding that pension funds, mutual funds and other institutional investors often take advantage of this by buying when small investors are selling.[8] Church said that July does not seem to be any better ass there has been an increase in fuel prices and the financial sector is still a cause for great concern to the investors.[15]

Strength in the telecommunications and healthcare sectors, which added 3 per cent and 1 per cent respectively, helped offset further weakness in financials.[3]

Financial stocks were pummeled during the second quarter as massive write-offs spread from major banks to regional ones that finance scores of local economies.[16] So-called consumer discretionary stocks fell 7 percent for the quarter and are down about 25 percent from the October peak.[5] "A recession is already priced into (stock prices)," said James Swanson, chief investment strategist at MFS Investment Management in Boston, who nevertheless doesn't think the economy will meet the technical definition of one: two straight quarters of negative economic growth.[8] Robert Doll, a chief investment officer at New York investment firm Blackrock Inc., feels the worst of the credit crunch has passed, even though he expects the economy to stay sluggish. "Consumers remain under pressure, and businesses are likely to stay defensive, but monetary and fiscal authorities are determined to keep policy stimulative and seek additional ways to ease the credit and housing crisis," he said.[8] Pricking pimples: There's method to Greenspan's seeming madness. It's clear that Greenspan wants to talk the market down without raising interest rates or doing anything to upset the economy, which may be weakening. "He wants to prick the pimple before it becomes a boil," said Fed watcher David Jones, chief economist at Aubrey G. Lanston & Co. in New York. "He thinks the market is too high, and he's worried that will limit his freedom to act if the economy weakens next year and he wants to lower interest rates."[18]

While that was bad news for consumers and many areas of the economy in the first half - it was good news for any company in fuel-related businesses.[14] UK's Pound Sterling hit the psychologically key $2 mark yesterday for the first time in over two months on expectations that inflationary pressures may check the Bank of England from cutting rates even as the economy slows.[9] The most recent and broadest gauge of the economy shows that a recession isn't yet in the offing; Gross Domestic Product grew 1 percent in the first quarter.[8]

The benign news helped temper some worries about the economy, but any relief was short lived amid the ongoing threat to growth from higher fuel prices and the credit market fallout.[11] The national average price for a gallon of regular gas reached a new all-time high of $4.087, according to AAA on Tuesday.[17]



InBev ( INBVF ) has made a plea to Anheuser ( BUD, Fortune 500 ) shareholders to challenge the company's decision to turn down the buyout. Last week, Anheuser announced a plan to boost its stock price and its profits in an effort to maintain its independence or extract a higher bid from the Belgian-Brazilian brewer. Other markets In global trade, stocks in Japan ended the session slightly lower. [17] "There's no question stocks are in a bear market, even if the (Dow's decline) is not the 20% people look for."[25] All they're really talking about is whether or not the Dow is down 20 percent from its closing high of 14,165 last Oct. 9, and whether or not the Dow is down 19.5 percent (not a bear market, say the pundits) or 20.1 percent (now that's a bear market, the pundits proclaim).[22]

The shock waves hit there like a tsunami. The Nikkei 225, Japan's version of the Dow, promptly posted its biggest one-day loss of the year, shedding about 3 percent of its total worth.[18] Will the Dow Jones industrial average soar like an eagle to 7000, or will it sink like a submarine to 4500? Is the play in big blue chips or little "small cap" stocks? There's no shortage of "experts" who, having failed to predict today's market, are eager to tell you what will happen tomorrow.[18]

Commodities, of course, were the big winner last month. The Dow Jones-AIG Commodity Index surged more than 9% in June and is now up 27% so far this year, based on the exchange traded note proxy cited in our numbers above.[29] The following Monday the full blast hit, and the decline cascaded into an epic crash, with the Dow falling 22.6 percent in one day. Today many hedge funds automatically sell into declines to make sure that they don't have to report major "drawdowns," which is just a fancy word for losses. Their fund-of-funds clients abhor draw-downs, as hedge funds are not supposed to lose money in down markets.[27]

What are ETFs? Well, exchange traded funds are essentially funds which act like stocks. You can buy and sell them throughout the day, or you can own them as long as you want.[22] It was lots of fun watching the fourth of July fireworks. Too bad that--except for brief sparklers like last Friday's rally--most of the fireworks in many stock portfolios this year have come from various holdings blowing up in our faces.[21]

Our last good growler started in 1974, when I still had hair and was writing about stocks for the first time.[31] Why was last week's drop different from all other drops this year? Because it was the first time since August that the market had dropped five days in a row.[31] You may not be able to get as much cash out of your home as you had planned -- or any at all. Most people who have owned their homes for 10 years or so still have plenty of equity, even though prices have fallen.[33]

The report also showed a big jump in the prices manufacturers pay for raw materials, reflecting the run up in oil prices and other inflationary pressures.[11] Oil prices and concerns about inflation are weighing on the markets and helped trigger last week's steep sell-off.[23] Now the retired chairman of the world's largest computer chip maker thinks the term applies to energy and transportation, where record-high gasoline and oil prices have spurred interest in alternative energy sources and next-generation vehicles.[36] If the ECB were to hold steady, that would help the dollar, which would in turn bring down oil prices - good for equities.[11] Sensex came down from above 20000 points to 13000 points level during the upheaval in oil prices, which moved northwards around 50% in the past six months. This phenomenon is not exclusive to India.[9]



Oil also remains an influence of market sentiment. Crude futures are currently trading at $142.50 per barrel, up 1.8% this session. [32] The front-month contract moved close to the all-time trading record of $143.67 per barrel hit Monday before trimming gains. ( Full story ).[11]



COMEX gold for August delivery rose $16.20 to settle at $944.50 an ounce. Manufacturing index improves: The Institute for Supply Management said its manufacturing index rose to 50.2 in June beating forecasts for a slide to 48.6, according to a consensus of economists surveyed by Briefing.com. [11] Economy A key manufacturing index and report on construction spending are due to be released.[17] Investors wondering how the markets will fare will likely devote unusual scrutiny to parsing reports on the economy and corporate earnings, which will arrive in force in the coming weeks.[1]

About 44 percent of all investor complaints received by state securities regulators come from seniors, up from 28 percent in 2005.[33] The market did have a spring recovery, which began in March, but it foundered in May as the combination of credit problems and higher oil rattled investors.[1]

The best-performing industries in the first half were coal (up 49%), trucking (up 46.5%), oil and gas (up 34.2%), gas utilities (up 26.1%) and railroads (up 25.3%). Other areas held up too, such as steel (up 23.1%), brewers (up 16.5%) and biotech (up 8.9%).[14] How much should you save? Experts say your first year's withdrawal from your retirement savings shouldn't exceed 4 percent or 5 percent of your total.[33] After 10 years of 3 percent inflation, your monthly $1,000 withdrawal would command the buying power of only $760 -- a 24 percent plunge.[33] If you'll need $40,000 a year to cover your expenses -- beyond Social Security and any pensions -- then you should start with $800,000 to $1 million. Most people set their initial goals too high, says Ray Ferrara, a financial planner in Tampa. "It's like starting an exercise program," Ferrara says.[33]



Five straight drops gives you ursine thoughts. For those of you lucky enough to have never seen one, a bear market is when stocks go down and down and down, interrupted by only the occasional rise. It starts to feel as if stocks will stay down forever. [31] Stocks were volatile throughout the session, turning positive in the late morning after a report showed a surprise pick up in manufacturing activity and then sliding again in the early afternoon as the bank sector slumped.[11] Oil-sensitive airline stocks are turning in some of the market's worst performances, extending a recent downward move by the sector.[30]



The NASDAQ OMX Clean Edge Global Wind Energy Index is a modified market-capitalization index and includes companies that are primarily manufacturers, developers, distributors, installers, and users of energy derived from wind sources. "Wind energy is one of the world's fastest growing energy industries and the launch of this index brings more focus and definition to this important source of clean energy," said NASDAQ OMX Executive Vice President John Jacobs. "This index is also a valuable addition to NASDAQ OMX's current offering of environmental sustainability indexes." [35] The longer asset classes endure selling, the more optimistic we become. That said, we never doubt the value of diversification across all the major asset classes. On that note, we're adding a new monthly update to our usual scorecard of asset class returns, the Capital Spectator Global Market Index. This benchmark, compiled and updated by your editor, owns all the major asset classes in their respective market-based weights. Returning to the issue of June's performance, it's clear that the CS Global Market Portfolio Index was only slightly bruised in last month's selling.[29] Building a real-world portfolio based on all the major asset classes via ETFs, ETNs and index mutual funds carries a low fee in terms of dollar-weighted expense ratios--something on the order of 50 basis points.[29]

The S&P 500 fared little better. Technical analysts had warned that if the index broke through its March lows, it could retest its 2002 depths, but the recent bottom held.[3]

REFERENCES

1. Washington Times - Stocks trade mixed as oil pulls off fresh high
2. ABC News: Stocks End Tough 1st Half With Quiet Session
3. FT.com / Companies / Financial services - Dismal month for S&P 500 despite modest rally
4. HeraldTribune.com - Business - Business news stories about Sarasota, Manatee and Charlotte counties in Florida. - HeraldTribune.com
5. blackenterprise.com - Chicago Tribune Gail MarksJarvis Column: Few Safe Havens to Shelter Investors
6. American Beat: How Now, Darn Dow | Newsweek Culture | Newsweek.com
7. Washington Times - Market worries intense
8. Wall St. still seeks bottom at midyear
9. End of Oil-Sensex love affair
10. Washington Times - Stocks mostly lower as oil pulls off fresh high
11. CNNMoney.com Market Report - Jul. 1, 2008
12. Energy stocks weather share market storms
13. Washington Times - Stocks turn higher as oil prices pull off high
14. First-half winners - we swear, there were some - Jul. 1, 2008
15. Stock market faces the heat in June
16. Can Wall Street steer clear of the bear? -- Newsday.com
17. CNNMoney.com Pre-Market Report - Jul. 1, 2008
18. What Goes Up Must Come Down | Newsweek Business | Newsweek.com
19. Deep-Sixing Doubloons | Newsweek Business | Newsweek.com
20. Who Came To The Market's Rescue? | Newsweek.com
21. Some Sparklers Amid The Gloom | Newsweek Business | Newsweek.com
22. Stocks. Where to Invest Now? - U.S. - CBN News
23. Washington Times - Stocks trade mixed after oil tops $143
24. Standard & Poor's launches Gulf investable index
25. Dow Jones dodges the claws of a bear market - USATODAY.com
26. RTTNews - Latest Earnings,Upcoming Earnings, Pos Pre Announcements, Pos Pre Announcements , Positive Surprises, Negative Surprises, Hot Stocks, Stock Split Calendar, Stock Buybacks, Dividends, Negative, Positive PreAnnouncements,Surprises .
27. Barton Biggs: Echoing the Crash of '87 | Newsweek International | Newsweek.com
28. RTTNews - Latest Earnings,Upcoming Earnings, Pos Pre Announcements, Pos Pre Announcements , Positive Surprises, Negative Surprises, Hot Stocks, Stock Split Calendar, Stock Buybacks, Dividends, Negative, Positive PreAnnouncements,Surprises .
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