A Week in the Rearview - week ending 2/8/2008
In the headlines
A look at some of the market movers over the past week:
- Google (Nasdaq: GOOG) came out definitively against the Yahoo! (Nasdaq: YHOO) / Microsoft (Nasdaq: MSFT) tie-up
- Private equity backed off from the bond insurers, though the extent of the overall fall-out was questioned
- Job cuts grew in January, but factory orders have been strong and worker productivity was a positive
- Consumer confidence continued to dive and most Americans now think that we’re already in a recession
- The service sector hasn’t been so hot either Disney (NYSE: DIS) surprised many investors by beating estimates
- Toll Brothers (NYSE: TOL) reminded us that the housing slowdown isn’t done yet
- The Fed reiterates its focus on inflation fighting, but not all Fed governors have a bleak outlook
- Poor guidance from Cisco (Nasdaq: CSCO) didn’t help the market’s mood much
- Airline merger chatter has been heating up
- Macy’s (NYSE: M) and other major retailers delivered weak numbers
- Congress said “yes” to President Bush’s economic stimulus plan.
Commentary
After a brisk week last week when the S&P 500 gained 4.9%, the markets got back to being gloomy this week. By the end of the week, the S&P had given up all of the prior week’s gains, losing 4.6% overall. There was no real focal point to the week, as we had last week with the Federal Reserve meeting. Instead, the market was moved bit by bit by earnings reports and economic news releases that hit the wires throughout the week. The majority of the news was dour — though December earnings seemed to hold up for many companies, the outlook that many business leaders gave confirmed the slowdown that many investors have been expecting. Economic reports painted a similar picture, with the big drop in consumer confidence sounding a particularly worrisome note.
Looking Ahead
Meanwhile, the major interest rate cuts that the Federal Reserve put into place recently will continue to slowly work their way through the system. Credit markets are still sluggish right now, but the hope is that the lower Federal Funds Rate will provide some support to liquefy that market again.
The situation for investors saving for retirement hasn’t been changing much. If anything, the now widespread talk about excessive consumer debt in our economy should encourage retirement savers to redouble their efforts and make sure they are ready for the big day. For those that still have five or more years before retirement, the down markets continue to present a great opportunity to continue to add funds and do what most investors say, but few actually do — buy low.
