7.13.07

7.13.07

          Stocks closed higher Monday as investors were greeted with everything from pullbacks in bond yields and oil prices to more M&A activity, upbeat corporate news and positive analyst commentary. Intraday, the Dow got within six points of its all-time close while the S&P 500 ended the day less than eight points away from its record finish in early June. Stocks snapped a five day winning streak on Tuesday due in part to a possible spillover of the sub-prime fallout. The Financial sector (-2.2%) currently remains the only thorn in the broader market's side. It is now down 3.1% on the year and the absence of its leadership limits the upside potential of the S&P 500.  After posting their worst performance in three weeks, stocks bounced back Wednesday as investors digested some more deal making and got some relief regarding the very (sub-prime) concerns that rattled equities a day earlier. The bounce back in equities after a big down day was enough proof that this market still has underlying strength and we removed the PPP that had been in effect since May 31^st. On Thursday the Dow logged its first gain of more than 200-points since July 19, 2006 and its best one-day performance since March 2003 in route to its latest record finish. The S&P 500 also closed at a new all-time high while the Nasdaq hit its best levels in 6 1/2 years. Friday was another up day due to a good same store sales report from retailers. Readers should be aware, however, that June is a promotional month as retailers clear the way for back-to-school merchandise.  The sales gains for many retailers in June then often come at a price on the profit margin line.  That is why we haven't heard a lot of upward revisions to earnings guidance at this juncture despite what seems to be a fair number of positive same-store sales surprises. July will be a more telling month with respect to same-store sales activity and the consumer's willingness to spend. We know consumers are always willing to spend.  The question is, will they be willing to spend without being enticed by heavy promotional activity? 

Till next week

The MTA Staff