This was an interesting week on many fronts. Silver led a 5% drop for commodities as a whole while losing almost a quarter of its value. Interest rates also continued to drop across the board as investors sought the safety of U.S. Treasury bonds. The European Central Bank chose not to raise interest rates, which allowed the U.S. dollar to retake some recently lost ground. Employment data was mixed with initial jobless claims jumping, but U.S. companies hired more employees than analysts expected. The Institute for Supply Management Manufacturing and Service Indices showed the economy was growing, just not as fast as the first quarter.
Institute for Supply Management Indices
- The ISM Manufacturing Index fell less than anticipated to 60.4 down eight-tenths of a point.
- This is the second monthly decline, but it has remained above 60 for the past four months, and the manufacturing is still growing.
- There were indications of potential gains for later this quarter.
- Manufacturing has been up in the United States in the past few years.
- The United States is poised to begin manufacturing industrial products used within our country;
- Cost of labor has increased in China, and
- Dollar is weak, but that increases our exports.
- ISM Services Index
- The index was down 4.5 points to 52.8, but
- The economy is still expanding as the reading is still above 50.
Employment
- ADP Jobs Report
- According to the report, 179,000 workers were added in April, and
- A 198,000 worker increase was expected and was beaten with a 244,000 increase.
- Department of Labor Jobless Claims
- Nonfarm payrolls rose by 244,000 in April, and
- Initial claims are up to 474,000 and the unemployment rate jumped up to 9.0%.
Commodities
- Commodities have fallen more than 5% in the past week despite a weaker dollar.
- Speculators have been driven from the market, and
- Silver lead the way, down 24.5% since Friday, April 29.
Mergers & Acquisitions Activity
- Teva Pharmaceutical Industries Ltd. (NASDAQ: TEVA) announced the acquisition of Cephalon, Inc. (NASDAQ:CEPH) for $6.8 billion.
- The deal will give Teva a line of biotech drugs aimed at cancer and other conditions, and
- The combined company would have a portfolio of branded drugs with $7 billion in annual sales and more than 30 potential products in late-stage development.
- NASDAQ and IntercontinentalExchange (NYSE: ICE) are competing with the Deutsche Borse bid for the New York Stock Exchange.
- They will go hostile with an $11 billion takeover offer for the NYSE.
- ConAgra Foods Inc. (NYSE: CAG) made an offer of $4.9 billion for Ralcorp Holdings Inc. (NYSE: RAH) that would allow ConAgra to nearly quadruple its sales of store-brand foods, but the offer was turned down.
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