NEW YORK—U.S. stocks eked out a gain last week, halting their weekly losses at six weeks by posting the first weekly gain since April.
Both the Dow Jones Industrial Average and the S&P 500 were higher, despite continued uncertainty in the sovereign debt of Greece, and doubts regarding the speed of U.S. economic growth.
The blue-chip Dow was higher by 43 points last Friday, putting its weekly gain at 53 points. The S&P 500 was 4 points higher, up a mere 0.5 points since Monday. The only loser was the technology-laden Nasdaq Composite, which closed down Friday and for the week; it’s down 1 percent.
Among the biggest winners were The Home Depot Inc. and McDonald’s Corp., both Dow components.
Another big winner was JC Penney Co., the department store chain, which saw its shares jump almost 15 percent after it announced that it had hired top Apple Inc. retail store executive Ron Johnson to run the company and lead its retail expansion.
BlackBerry maker Research In Motion Ltd. (RIM) weighed on Nasdaq as the Canadian company saw its stock drop 24 percent as it announced that its full-year earnings would come short of expectations. Also, RIM said that some of its upcoming new releases would be delayed.
In Asia, the Hang Seng Index was down 1.2 percent last Friday, while the Shanghai Composite is looking more bearish by the day—technical indicators say that it has moved past the “death cross,” when the 50-day moving average crosses below its 200-day moving average. According to the Wall Street Journal, the last time such an event happened, the Chinese stock market was down 25 percent over a period of three months in 2010.
Jobless claims were another positive signal on the U.S. economy. Initial joblessness claims totaled 414,000 last week, a decline and a lower figure than what many economists had forecasted.
Oil Prices Decline
Crude oil futures declined sharply last Friday, with futures settling in July lower by 2 percent to $93.01 per barrel on the New York Mercantile Exchange. That brings its losses for the week at more than 6 percent.
Last week’s decline was the biggest in more than six weeks.
“Those fundamentals are still tightening, with sharp reductions in the prospects for non-OPEC supply and resilient global demand indicating the likelihood of an increased supply gap in the third quarter, in a world with a declining cover of inventories and spare capacity,” said a research note from Barclays Capital.
Brent crude, which is the benchmark in Europe, was also down for the day.
Sovereign Debt in Focus
Amidst uncertainty over Greece’s sovereign debt, another eurozone member is feeling the heat: Italy.
Moody’s Investors Service, one of the biggest credit ratings agencies, said it has put Italy’s Aa2 local and foreign currency bonds up for review and a possible downgrade, citing growth concerns.
“The fragile market sentiment that continues to surround European sovereigns with high levels of debt poses additional risks for Italy,” Moody’s said in a statement.
“The Italian economy faces growth challenges in an environment characterized by long-term structural impediments to growth.”
According to Moody’s, Italy has a debt to GDP ratio of almost 120 percent, and holds roughly 1.8 trillion euros (US$2.6 trillion) in debt.
Commodities Retreating
Amidst growth concerns in emerging markets, commodities are feeling the pinch.
The S&P GSCI Index of 24 different commodities fell 4.1 percent last week, in its first weekly drop since May. The drop was compounded by a gain in the Dollar Index, which gained 1.1 percent last week. The index serves to measure the strength of the U.S. dollar against a basket of six currencies.
While the stock market remains weak, a strong dollar and limited near-term growth in emerging markets such as China and India could dampen demand for commodities such as gold, silver, and copper.
Oaktree IPO
One of the biggest distressed debt investors, Oaktree Capital Group, filed for an initial public offering (IPO) last week.
The Los Angeles-based Oaktree, which holds $80 billion in debt instruments, will raise roughly $100 million. It follows another financial firm, Apollo Global Management LLC, which began trading earlier in the year.
Another private equity firm, Washington-based Carlyle Group, is planning an IPO.
