Briefing.com's Weekly Wrap

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Week ending 27-Aug-10The major indices closed the week with only modest declines after Fed Chairman Bernanke fueled a large rally on Friday, helping to offset some of the growing concerns regarding the pace of the economic recovery.

The S&P 500 fell to a loss of as much as 2.3% this week before recovering to just a 0.7% decline. Only three of the 10 sectors gained, led by utilities (+2.0%). On the downside, the tech sector was the main laggard with a loss of 2.1%.
Stocks rallied 1.7% Friday after Fed Chairman Bernanke said that he expects a pickup in growth in 2011, adding that the Fed is ready to use "unconventional measures if it proves necessary, especially if the outlook were to deteriorate significantly." The news sparked a selloff in Treasuries.

Economic data acted as a focal point. The housing industry remains in tough shape, with the latest data pointing to a double dip in housing.

Existing home sales plummeted 27.2% to a 3.83 mln seasonally adjusted annual rate (consensus 4.72 mln) in July - marking the lowest level since records began in 1999. July is typically one of the strongest months for home sales but the tax credits pulled sales into April. It is possible that new historical sales lows will be broken each month through the remainder of the year.

Meanwhile, new home sales in July declined to 276,000 (consensus 334,000), which is the lowest level since records began in 1963.

In other economic news, the latest revision to second quarter GDP was revised lower to 1.6% from the prior reading of 2.4%. The rate, however, was better than expected as the Briefing.com consensus stood at 1.4%.

Though the market was focused on economic data, there were some corporate items of note. Dell (DELL) and Hewlett-Packard (HPQ) started a bidding war for data storage company 3Par (PAR). Though 3Par had already agreed to a takeover offer from Dell, Dell was forced to hike its bid to $24.30 and then $27 per share in order to fend off offers from HP. HP has since raised its offer for 3Par to $30 per share.

In other M&A news, U.K.-based BHP Billiton (BHP) offered to buy Canadian-based Potash (POT) for $130 per share. Potash refused the offer and is reportedly seeking other suitors.

Intel (INTC) came under pressure after the chip giant lowered its Q3 revenue guidance below expectations. The company now expects revenue of between $10.8 bln and $11.2 bln compared to its previous forecast of $11.2 bln $12.0 bln and the $11.52 bln Thomson Reuters consensus.

Index        Started Week        Ended Week        Change        % Change        YTD %
DJIA         10213.62                10150.65                -62.97        -0.6                -2.7
Nasdaq        2179.76                2153.63                -26.13        -1.2                -5.1
S&P 500        1071.69                1064.59                -7.10         -0.7                -4.5
Russell 2K        610.78                616.76                 5.98                 1.0                -1.4

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