Week in Review

NYSE  Well this past week was quite eventful if not downright historic. You can take your pick:

  • Scotland voted by a sizeable margin to stay in the 307-year-old United Kingdom, lifting the British pound and removing a threat to UK’s economy.
  • U.S. producer prices were flat and housing starts plunged to 956,000 in August, pointing to muted inflation pressures and less-than-robust growth that should see the Federal Reserve in no hurry to raise interest rates.
  • Chinese e-commerce giant Alibaba Group made its long-awaited IPO debut raising $28 billion and, when all was over, valuing the company at $225 billion, larger than the likes of Procter & Gamble, Coca-Cola and JPMorgan Chase.
  • The Dow Jones Industrial Average notched three record highs, reaching 17,279.74 on continued belief that interest rates will not rise anytime soon. And  . . .
  • Legendary Oracle founder Larry Ellison is stepping out of his CEO role to become chairman and chief technology officer, handing the reins over to Safra Catz and Mark Hurd.

Also noteworthy, merger and acquisition talks have heated up with Anheuser-Bush InBev, SABMiller and Heineken all in the mix for more beer power; Dresser Rand may be tying up Germany’s Siemens or Switzerland’s Sulzer; bidding is not over between Family Dollar Stores, Dollar General and Dollar Tree; TRW Automotive will be taken over by Germany’s ZF Friedrichshafen AG; and conservative portfolio choice Danaher pulled the plug on buying Nobel Biocare. For the week, all major sectors were higher, led by telecommunications, healthcare and basic materials. The Dow closed up 1.72%, while the S&P 500 managed a 1.25%, gain followed by the NASDAQ’s 0.27% advance. Small cap stocks and the Russell 2000 in particular, however, were on the losing side. There appears to be a fairly significant disconnect between large cap stocks and the small and mid-cap’s and the number of equities advancing vs. declining has been trending negative. So not all good news on a pure technical basis.

In company news, conservative choice Oracle Corp. missed Wall Street’s revenue target and earnings fell short by two cents and – along with the Ellison news – the shares dropped 4.2% on Friday. And activist investor Nelson Peltz, with a 3% stake in income candidate DuPont & Co. is urging management to split the company in two, sending the shares up 10% or $6.47 on the week to $71.25, an all-time high for DD.  Looking ahead, we will need to keep an eye on the ongoing turmoil in the Middle East and a number of Fed bankers will be holding speeches on their views of the economy and interest rates, so things could get dicey.

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