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Big Oil and Cautious Trading for the Week

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by Holly Holmquest Thompson, of Thompson Wealth Management

U.S. stocks finished up a little higher on Friday after two days in the red. The Dow and S&P 500 felt their first weekly loss in a month, as investors’ concern grew regarding Iraq. Oil prices rose to new highs on Friday as concerns persisted that an insurgency in Iraq could disrupt oil exports from the second-largest OPEC producer. “There is concern that a spike in oil prices already at elevated levels could choke off consumer spending,” said Mark Luschini, chief investment strategist at Janney Montgomery Scott.

Consumer sentiment reports showed a decline to the lowest level in three months, missing analysts’ estimates. This led to gloomier expectations for the economy, according to data released Friday. Individual stock for OpenTable (OPEN) climbed after Priceline Group (PCLN) said it would acquire the online restaurant reservation service for $2.6 billion and Intel (INTC) picked up after the semiconductor maker hiked its second-quarter revenue outlook.

The week looking forward has a lot of questions to be answered. We will be tuned in to Janet Yellen’s press conference on Wednesday after The Federal Reserve’s Open Markets Committee meets for two days. Most investors expect rates to rise in 2015. An increase before that could rattle markets or even stunt economic growth, but waiting too long to raise rates could cause bubbles.

The big names in earnings this week are shipping giant FedEx (FDX), gun maker Smith & Wesson (SWHC), tech giant Oracle (ORCL) and BlackBerry (BBRY). Since shipping plays a role in many industries, FedEx’s earnings are seen as an indicator of the rest of the economy. Analysts are forecasting increased sales and profits for them and Oracle. Although gun sales are hot, analysts think Smith & Wesson’s will fare well but not as stellar as last year and Blackberry is expected more severe losses.

Every sector, with the exception of telecom services, is trading at a premium. Cautious investors are waiting for a stronger pullback in order to maximize profits.

profit&earning ratios table


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About The Author

Holly Holmquest Thompson is the President & CEO of MONEY-fax.com. She has been a financial analyst and wealth manager for over 25 years. Holly answers your financial questions in her regular column, found here.

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