The second quarter came to a volatile close. As noted above, the Dow saw an intraday swing of over 200 points today. After early strength, we saw a bout of profit taking, the squaring off of positions for the second quarter 'score card' for institutional players, a bomb scare in London ahead of a holiday-shortened week, more worries about subprime mortgage issues, and to top it all off - crude oil prices surging to a 10-month high (closing above $70 a barrel).

The session had started off well however, on the heels of the day's economic data releases, which were predominantly bullish. The core-PCE deflator - an inflation gauge the Fed factors into their interest rate decisions - was up only 0.1% in May. Year-over-year, this translates into a 1.9% rate of inflation, now roughly within the Fed's comfort zone, which spans 1.0% to 2.0%. The Chicago PMI offered evidence of positive manufacturing conditions and at the same time indicated a decrease in the prices-paid component (thus showing easing inflation). The University of Michigan consumer sentiment index declined in June, but by a smaller amount than economist had been expecting.

Among technology issues, we saw significant activity in the mobile phone sector. Tonight, Apple Inc. will release its incredibly strongly promoted (some would say over-hyped) iPhone to the public. Market observers have noted that other smart phone makers may suffer, should this phone become a hit with the public. This may perhaps be true for Palm, which reported lower earnings on Thursday. However, it currently does not appear to be a problem for Research in Motion, whose stock catapulted more than 20% higher today to an all-time close at almost $200. Yesterday, the company reported stellar earnings (sporting a 73% rise in first-quarter profits) and announced a 3-for-1 stock split.

Key economic data for the week starting July 2, 2007. Numbers shown are consensus estimates (market anticipates this value) and prior value.

Monday:
	10:00 ISM Manufacturing Index June: 55.0 / 55.0

Tuesday:
	10:00 Factory Orders May: -1.0% / 0.3%

Wednesday:
	Markets Closed for Independence Day Holiday

Thursday:
	8:15 ADP Survey June: 95K / 97K 10:00 ISM Non-Manufacturing Index June: 57.5 / 59.7

Friday:
	8:30 Non-Farm Payrolls June: 120K / 157K Unemployment Rate: 4.5% / 4.5% Average Hourly Earnings: 0.3% / 3.8%

© HGH Associated Press

News Archive (from 4/1/2007 until 6/30/2007)