TradeTheNews.com: Weekly Wrap-up

 

- Equities spent the first half of the week on an even keel, making solid gains as investors took heart from positive quarterly results out of home improvement retailers Lowe's and Home Depot and reports that several leading banks would be allowed to repay TARP funds soon. In another milestone on the road to healthier markets, the VIX volatility index dropped below 30 on Tuesday for the first time since Lehman's failure, while the DJIA had risen nearly 450 points to a weekly high around 8590 by Wednesday morning. However Q1 National Association of Realtors report that forecasted commercial real estate activity would remain weak for six to nine months and the release of the April 29th FOMC minutes helped slam on the breaks. The FOMC minutes forecasted a deeper recession in 2009 and a slower rebound in 2010, and revealed that the Fed is open to expanded quantitative easing, reminding market participants about the precarious state of the economy and ballooning US government debt. Then on Thursday afternoon S&P cut its outlook on the UK's AAA sovereign rating to negative from stable, a move that cast a shadow on the AAA ratings of the United States. This led to renewed weakness in the greenback against other major currencies, which in turn helped keep crude futures above $60/barrel. For the week, the S&P 500 rose 0.4%, while the DJIA and the Nasdaq Composite each gained 0.7%.