Steve Schaefer,
With only ten trading days remaining in the calendar year, there will be plenty of investors and fund managers looking to make big gains to pretty up their portfolio before turning the calendar to 2008.
This week spelled trouble, as economic indicators painted an ugly inflation picture that sparked widespread losses.
November's Producer Price Index (PPI) and Consumer Price Index (CPI) came in higher than expected, as the Federal Reserve's actions over recent months have sent inflation ticking higher. Having cut rates 3 times since September in an effort to stave off a recession, the central bank accepted the inflation risk, which appears to be coming back to bite them. (See: "Pricey November For Consumers")
Bond prices, commodities, and equities all tumbled on Friday, as concerns over an economic downturn pressured markets.
The benchmark 10-year note slipped 7/32, to 100 4/32, upping the yield 3 basis points, to 4.23%.
Crude fell 98 cents, to settle at $91.27 a barrel on the New York Mercantile Exchange.
Meanwhile, the Dow Jones industrial average dropped 178 points, or 1.3%, to 13,340, the Standard & Poor's 500 slid 20 points, or 1.4%, to 1,468, and the Nasdaq fell 33 points, or 1.3%, to 2,636.
Among Dow components, only the Walt Disney Company (nyse: DIS - news - people ) And Microsoft (nasdaq: MSFT - news - people ) finished in the black, neither gaining more than 1%.
On a day when Citigroup (nyse: C - news - people ) announced it will bring nearly $50 billion in assets from structured investment vehicles (SIVs) onto its balance sheet--(See: "Citigroup Goes It Alone To Rescue SIVs")--investors began looking ahead to earnings from the major brokerages next week.
After Lehman Brothers (nyse: LEH - news - people ) kicked things off Thursday by beating analysts fourth-quarter profit expectations, Goldman Sachs (nyse: GS - news - people ), Morgan Stanley (nyse: MS - news - people ), and Bear Stearns (nyse: BSC - news - people ) were due to report results next week.
Lehman Brothers closed up $87 cents, or 1.4%, to $62.24. Goldman, with earnings due Tuesday, gained $2.19, or 1.1%, to $210.67; Morgan Stanley, scheduled to report Wednesday, added 10 cents, or 0.2%, to $50.30; and Bear Stearns, set to announce fourth-quarter results on Thursday, slid $3.10, or 3.2%, to $95.29.
Next week will be light on the economic news, with only some data on home building and the weekly energy report due until Thursday, when the final GDP for the third-quarter will be reported.
Expect continued volatility, as investors hunt for gains that will enable them to ring in 2008 on a positive note, after many have suffered catastrophic losses over the past several months.
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