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This Week's Market Review

It was a big week on Wall Street as positive economic data along with a drop in oil prices and a decline in the yield on the 10-year note spurred a rally. The core PPI released on Tuesday showed a 0.3% decrease while the core CPI on Wednesday showed a 0.2% increase after three consecutive months of a 0.3% increase. A pullback in the dollar resulted in bond prices rallying with the yield on the 10-year note hitting four month lows. Along with the positive economic data came a drop in oil prices as the cease fire in the Middle East and OPEC cutting its oil demand for 2006 resulted in crude closing the week just over $71 per barrel. We also saw positive company specific news as Hewlett Packard reported better than expected earnings and Microsoft announcing another $16.2 billion to be added to its $20 billion stock repurchase plan. Going forward the market must be aware of inflationary pressures as the year-over-year increase in the core CPI still stands above the acceptable level for the Fed. Along with this is capacity utilization picking up, and most importantly, unit labor costs picking up to a point that will create inflation pressures. While the Fed may not raise rates at its next meeting in September, we must be aware that rate hikes are still a possibility in the future.

The DOW closed the week up, gaining 293.14 points to close at 11381.47 The S&P rose 2.8%, climbing 35.56 points, ending the week at 1302.30. The NASDAQ jumped 5.2%, adding 106.24 points, ending the week at 2163.95.