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| Weekly Wrap Up |
Stocks took a heavy hit this week as the weakening housing industry and mortgage woes reared their ugly heads yet again. The Dow Jones Industrial Average tumbled more than 585 points compared to last week as investors retreated in response to a series of disappointing announcements. Not only were housing and credit weighing on the minds of investors, rising oil prices also contributed to the market’s downward trend. The largest losses were seen on Thursday when the DIJA sunk 311.50 points and Nasdaq fell nearly 50 points because of fears that companies would not be able to continue their recent M&A activity as liquidity begins to dry up. There was some positive news this week, though it was not enough to motivate investors. Friday the Commerce Department reported that the U.S. gross domestic economy rose at a better-than-expected rate in the second quarter. The market has been able to recover from the past few declines so all eyes will be on Wall Street next week for signs of a rebound. More Market News
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| Economic News |
The economy snapped out of a lethargic spell and grew at a 3.4 percent pace in the second quarter, the strongest showing in more than a year. A revival in business spending was a main force behind the energized performance. The new reading on gross domestic product, released by the Commerce Department on Friday, marked a big improvement from the first three months of this year, when economic growth skidded to a near halt at just a 0.6 percent pace, the slowest in more than four years. Stronger spending by businesses and government powered the rebound in the April-to-June quarter. Individuals, however, tightened their belts as they coped with high gasoline prices and the ill effects of the housing slump. The sour housing market continued to weigh on national economic activity in the spring but not nearly as much as it had in previous quarters. (Source: Forbes.com) Full Story
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Oil prices closed over $77 a barrel, near an all-time high on Friday on technical buying and news of faster-than-expected economic growth. At the pump, meanwhile, gas prices fell to their lowest level since late May. The Commerce Department said Friday the economy as measured by the gross domestic product expanded at an annual rate of 3.4 percent in the second quarter, removing some of the concerns about economic growth that sent oil prices down Thursday in sympathy with Wall Street's plunge. (Source: Yahoo! Finance) Full Story
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The latest round of housing statistics -- sales, starts, homebuilders' outlook surveys and earnings reports -- offered little hope that residential real estate would be back on its feet anytime soon. ``Housing is bust, and wishful thinking cannot unbust it anytime soon,'' says Ian Shepherdson, chief U.S. economist at High Frequency Economics in Valhalla, New York. Just to recap what we learned this week: New home sales plunged 6.6 percent in June to 834,000, just above the seven- year low set in March. Sales are down 22 percent from a year earlier, even with builders throwing in the kitchen sink to sweeten incentives and lighten the load (inventories). (Source: Bloomberg) Full Story
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| Business News |
Financial engineering has come to offshore drilling. On Monday, Transocean (RIG: Charts, News, Offers) and GlobalSantaFe (GSF: Charts, News, Offers) agreed to merge, creating a $53 billion empire. Under the deal, shareholders will not get a premium but they will get a partial stake in the new company and $15 billion in cash. With global demand for oil and gas surging, the services industry has been under pressure to consolidate. By piggy-backing on one another, larger companies will be able to take advantage of economies of scale and enhance their purchasing power. The Transocean-GlobalSantaFe merger may be the first major domino to fall in a long line of similar aglomertins. (Source: Forbes) Full Story
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Heavy cost-cutting at New York Times (NYT: Charts, News, Offers) helped the newspaper publisher beat Wall Street's expectations and buy some time with its frustrated investor base. The Gray Lady reported second-quarter net income of $118.4 million, or 82 cents a share, up from $59.6 million, or 41 cents a share, a year earlier. Those results included a gain totaling $94.3 million from the sale of its broadcast business, as well as several other one-time items. (Source: The Street) Full Story
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India's Tata Motors Ltd., famous for developing a cheaper car for the masses, may be making a drive for the luxury end of the market with a possible offer for Ford Motor Co.'s (F: Charts, News, Offers) Jaguar and Land Rover. Tata Motors (TTM: Charts, News, Offers), India's top vehicle maker, and local foe Mahindra & Mahindra Ltd. are expected to launch rival bids for the two famous brands, which are expected to fetch roughly $1.5 billion, several media reports have said. Both declined comment on reports that they are in talks with investment banks and private equity firms to craft bids. A successful deal would catapult the winner into the ranks of global car makers and continue a spate of high-profile overseas acquisitions by Indian companies. (Source: Reuters) Full Story
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| Technology Focus |
Google Inc. (GOOG: Charts, News, Offers) has made its biggest move yet on the U.S. mobile Web market by signing a deal with Sprint Nextel Corp. (S: Charts, News, Offers) that positions the Internet company to build services to run on Sprint's planned WiMAX high-speed wireless network. The two companies said Thursday that Google will provide its Internet search service for a Web portal that Sprint is developing for the new WiMAX network. The gateway to various Web services will be ready in April 2008. The deal is Google's closest alliance with a major U.S. mobile service provider. (Source: CNN Money) Full Story
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When Pfizer (PFE: Charts, News, Offers) introduced Exubera, the first ever inhalable insulin product for people with diabetes, the New York-based drug giant estimated it would be a $2 billion-a-year blockbuster. On July 18, a full year after launching Exubera, Pfizer disclosed the product's quarterly sales for the first time: An anemic $4 million. Now the company has debuted a massive ad campaign that some on Wall Street are calling a Hail Mary pass to jump-start Exubera sales. It's a long shot, at best. Exubera was initially conceived as an alternative for people who need insulin to control their blood sugar, but are afraid of jabbing themselves with needles. Yet patients and doctors have greeted the product with disinterest, and in some cases, outright disdain. That's because the inhaler is unwieldy and not very discreet. What's worse, it can cause lung problems. (Source: BusinessWeek) Full Story
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WPP Group, Ogilvy & Mather, and ... Microsoft? (MSFT: Charts, News, Offers) Among the biggest names in advertising, you may eventually be able to add the Redmond, Wash. software giant to the list.
At its annual analyst day, the company announced Thursday it had acquired tiny startup AdECN, yet another piece of the digital advertising empire that Microsoft is building.
AdECN, an ad exchange network founded in 2003, has 37 network members. Kevin Johnnson, president of Microsoft's Platforms and Services division, characterized AdECN as comparable to the Nasdaq in its neutrality as a locus for advertisers and publishers to agree on price. (Source: TheStreet) Full Story
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| Your Money |
Corn prices have taken a tumble over the last month, but that doesn't mean that the cost of milk, beef and other food products will drop as quickly as they rose. After a wild surge over the past 18 months or so due mostly to ethanol demand, corn futures have cooled, settling Wednesday at $3.25 a bushel, about a dollar below their mid-June peak. Economists cited record corn plantings this year coupled with recent much-needed rainfall in the Midwest. (Source: CNN Money) Full Story
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After a long swoon, the dollar looks ready to bounce. Wall Street has spent July sweating the implosion of subprime debt-backed securities and fretting a steep decline in the value of the dollar. A resilient stock market has mostly shrugged off those worries, as big U.S. multinationals have bolstered their earnings by turning dollar weakness into overseas sales strength. But a turnaround in the dollar could be at hand. Currency investors -- even those who are bearish about the dollar's long-term prospects against other currencies, given hefty U.S. fiscal and trade deficits -- say the buck may bounce because of factors including heavy short interest and technical issues. (Source: TheStreet) Full Story
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