Monday, May 25, 2009

US Stocks: Weekly Round Up (May 18-22)

. Monday, May 25, 2009

By stockOzone team

US stock indices finished with mild weekly gains after Standard & Poor's cut its outlook on Britain to negative from stable fueling fears that the United States too is at risk of losing its AAA credit rating.. For the week, Dow was up 8.68 points or 0.1%. S&P clmbed 4.12 points or 0.47%, while Nasdaq Composite settled with a weekly gain of 11.87 points or 0.70%.

Ratings agency Standard & Poor's cut its outlook on Britain to negative on Thursday, citing massive government debt and political uncertainty about the policy response amid looming elections. However, the agency affirmed Britain's 'AAA' long-term and 'A-1+' short-term sovereign credit ratings. Meanwhile, in an interview with CNBC, Bill Gross, co-founder of Pacific Investment Management Co, warned that U.S.’s top AAA credit rating will be “eventually” lost.However, Moody's Investors Service said that there are longer-term pressures on the rating.

On the economic front, a release by Department of Labor on Thursday showed number of Americans filing first- time claims for unemployment benefits fell 12,000 to 631,00 in the week ending May 16. According to the Conference Board, the index of leading economic indicators climbed 1% in April - the first increase in seven months.The National Association of Home Builders/Wells Fargo Housing Market Index climbed to 16 from 14 in April, matching expectations. The NAHB report added that its measure of housing affordability surged 10 points to a record 72.5 in the first quarter of this year.The housing industry remains in shambles, with both housing starts and building permits falling to record laws. Starts fell -12.8% from March to an annualized rate of 458,000 units compared to average analyst estimates of 520,000 while permits dropped -3.3% to an annualized rate of 494,000 compared to consensus 530,000.

Meaanwhile, the Fed now expects the gross domestic product to shrink between 1.3% and 2% in 2009. It had earlier expected only a 0.5% to 1.3% decline. The central bank now expects the unemployment rate to increase to between 9.2% and 9.6% this year. In January it had forecast that the jobless rate would be in a range of 8.5% to 8.8%. Few fed officials also suggested that they were open to increasing its purchases of Treasury notes and mortgage securities in order to boost lending.

Early on Friday, retailer Sears Holdings Corp. (NASDAQ: SHLD) announced surprise quarterly earnings. The company said that it swung to a profit of $26 million or 21 cents a share compared to a loss of $56 million, or 43 cents a share, in the comparable quarter in 2008. On an adjusted basis, the company earned $47 million, or 38 cents a share, for the quarter that ended May 3. Revenue slipped 9% to $10.06 billion from $11.07 billion.

Target Corp. (NYSE: TGT) announced that its first-quarter profit slipped to $522 million, or 69 cents a share, from $602 million, or 74 cents, in the corresponding quarter last year.

Disclosure: Author does not own any of the stocks discussed here.

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