Weekly Wrap

Today's market wrap is being brought to you by Chick Cheryl. I got a frantic call from our Head Hen not long ago, trying to catch her breath between Book signings. Apparently, the Queen of Multi-tasking can't handle summarizing the entire weeks happenings and typing them into her laptop while signing fifty-two Chick books in a Barnes & Noble! Go figure. What the hey, I only have five toddlers (only two of which are mine), running around my house at the moment, but given the beautiful market week we had, I'm happy to oblige!

Obviously, there are naysayers that will insist this week's rally was a mere blip in the downward spiral... only time will prove them right or wrong. I, for one, am wearing my party hat! We actors make a habit of celebrating even the smallest successes (eg. being an extra in an Alpo commercial), in an effort to combat the constant rejections we encounter. I look at the market the same way. If this rally does turn out to be short-lived, why not enjoy it while it lasts? Sheez, we've been sitting under this dark, profit-warning cloud for too long!

Would you believe that this bear market, as measured by the S&P 500 index and the Nasdaq composite, was one year old last month? That's already longer in duration than most other significant declines since the post-World War II era. The only exception being the years 1973-74, when that big old ugly bear decided to sit his furry asset-crusher down on the market for 21 months! I'd say we're due for a turnaround... and guess what? So did Alan Greenspan and his gang of Federal Reserve market watchers. Unlike me, he can do something about it... and did! The Fed decided to shock our dying market patient back to life by injecting a nice rate cut of a half-percentage point. For further explanation of the Fed and interest rates, you can read my article KISS-ing with the Fed. Apparently, this came as a big surprise to the market, which, they say, is when their moves seem to be the most effective.

Some say the Fed only decided to act after our beloved Chick holding, Cisco, announced early in the week that third quarter-sales would fall as much as 30% from the second quarter and that it was taking one-time charges of $3.7 billion, partly due to write-offs of excess inventory. Following a similar announcement from Hewlett-Packard, some say it looked like this economic slowdown might be spreading quickly to Europe and Asia, thus the Fed felt forced to take immediate action. What's interesting to note is that the market seemed to shrug off Cisco's announcement with only a fractional sell off. The next day computer chip maker Intel reported better than expected earnings along with a rosy forecast for its future, as did IBM. By the time, the Fed made its announcement on Wednesday, the market was ready to bolt.  In addition to tech stocks, banks, brokerages and homebuilder stocks surged as well. 3M and Caterpillar also enjoyed strong gains.

Chick holding, AOL Time Warner, provided another nice surprise for the market - a strong earnings report (can I let out a little Woo Hoo, here?). The report was fueled by double digit growth at its Internet and cable businesses, allaying fears that this media conglomerate wouldn't be able to reach its financial goals amid the advertising slowdown. Hmm, Yahoo? Taking notes? Actually, I think they were. Chick holding, Yahoo! announced the hiring of their new CEO and Chairman, Terry S. Semel, formerly of the global entertainment company, Warner Bros. To see more of my editorial comments about Terry, please see my post on our Chicks Message Board.

By now, I guess you've figured out its earnings season! Chick holding EMC met their previously slashed expectations, you can check out Chick Susie's report. And as Chick Kristen tells us, Coca-Cola's earnings seem to match their new ad campaign, fostering feelings of optimism and brightness.

Chick Cheryl

Closing Market Numbers