A Bruising for Stocks and a Black Friday Bounce

A Bruising for Stocks and a Black Friday Bounce

The Dow's dip below 13,000 drew groans, as investors sold first and asked questions later for much of the holiday-shortened week. Credit concerns and the mortgage market continued to be the main culprits. Freddie Mac piled on the pessimism with its report of $2 billion in losses for the third quarter, as well as plans to slash its dividend and seek capital-raising assistance from Goldman Sachs (GS | Quote | Chart | News | PowerRating) and Lehman Brothers (LEH | Quote | Chart | News | PowerRating). Freddie Mac's woes only grew as Moody's Investor Service suggested that Freddie's losses were likely to be much greater than initially reported.

Freddie Mac says it is sticking by its forecast. But the question is whether or not investors will stick with Freddie. Bonds soared. Hewlett-Packward (HPQ | Quote | Chart | News | PowerRating) and upscale retailers continued to impress. And Airbus retreated from earlier comments about fearing a "death by weak dollar." The week ended with buyers in both the stock market and the market for holiday gifts opening their wallets, capping off a bruising week with a bullish Black Friday.

OPEC, Oil and the Dollar

An interesting spectacle at the OPEC conference as a microphone accidentally revealed to the world just how controversial the U.S. dollar's decline is in the minds of America's most consistent critics. Both Iran and Venezuela lobbied hard for governments to sever their national currency's pegs to the dollar. Saudi Arabia, for its part, argued against even discussing the dollar and repeated to reporters that the country had no intention of severing the relationship between the riyal and the American dollar.

That said, Saudi officials admitted to being open to revaluing the riyal as an alternative measure. Oil flirted with the $100 all week, but was unable to close above that level. Meanwhile, the dollar continued to struggle against the Euro, although it did continue to make modest gains against resource currencies such as the Canadian and Australian dollars.

About Those Buybacks …

For some stock jockeys, share repurchase programs, or stock buybacks, were like the Good Housekeeping Seal of Approval when looking for one more reason to buy a given name. However, the Wall Street Journal reported earlier this week that it appears that at least some of the companies with the most voracious appetites for their own stock have begun to suffer from a touch of glutton's remorse.

Stock buyback programs, very popular in recent years, have been credited (or blamed, depending on your perspective) for playing a role in the dwindling number of shares available to investors, increasing demand for stocks and helping support higher stock prices. However, in the wake of some of the financial meltdowns in the past few weeks, a number of observers are wondering whether or not some of that cash that companies spent buying back their own stock might have been better put to use. Held up as particular examples are companies like Freddie Mac (FRE | Quote | Chart | News | PowerRating) and Countrywide Financial (CFC | Quote | Chart | News | PowerRating), both of which spent billions on share repurchase programs, only to find themselves scrambling for cash as news of their exposure to subprime loans punished the companies' stock this week.

Stocks in the News

While news of Freddie Mac's sizable losses dominated the news, positive earnings outlooks from companies like Hewlett-Packard and Nordstrom provided a little balance to the picture for stocks. And how about a little love for Xerox for its first dividend since 2001?

Freddie Mac (FRE | Quote | Chart | News | PowerRating). PowerRatings (for Investors) rating: 3. Moody's reported at the end of the week that Freddie Mac may have underestimated the extent of its losses when the mortgage company reported earnings on Tuesday.

Hewlett-Packard (HPQ | Quote | Chart | News | PowerRating). PowerRatings (for Investors) rating: 6. Tech powerhouse reports 11^th straight earnings beat on the back of strong sales in notebook computers and printer ink.

Nordstrom (JWN | Quote | Chart | News | PowerRating). PowerRatings (for Investors) rating: 5. High-end retailer proves F. Scott Fitzgerald right about the spending habits of "the rich." Strong earnings growth and a 22% jump in profits helped buoy the stock early in the week.

DR Horton (DHI | Quote | Chart | News | PowerRating). PowerRatings (for Investors) rating: 4. Homebuilder loses $50 million in fourth quarter, while promising investors that the company has cut back on new construction.

Goldman Sachs (GS | Quote | Chart | News | PowerRating). PowerRatings (for Investors) rating: 5. Late in the week, Goldman announced plans to raise capital for a new $4-6 billion hedge fund. Goldman's reputation as savvy traders took a hit when the company's "flagship" hedge fund suffered serious losses in 2006 and tumbled more than 30% in August of this year.

Xerox (XRX | Quote | Chart | News | PowerRating). PowerRatings (for Investors) rating: 7. An improved balance sheet and enthusiasm for new products has Xerox announcing its first quarterly cash dividend in six years. A dividend of $4.25 per share will be paid on January 31 to shareholders of record as of December 31.

Celgene (CELG | Quote | Chart | News | PowerRating). PowerRatings (for Investors) rating: 6. Traders and investors alike cheered Celgene's $2.9 billion acquisition of drugmaker Pharmion. The two companies had teamed up to market the drug thalidomide as an effective treatment for cancer.

Lowe's (LOW | Quote | Chart | News | PowerRating). PowerRatings (for Investors) rating: 5. The weakness of the housing sector continued to take its toll on home improvement shops like Lowe's as the company reported weaker than expected sales and revised its earnings outlook downward.

Saks (SKS | Quote | Chart | News | PowerRating). PowerRatings (for Investors) rating: 5. While many medium and low-end retailers continue to struggle, high-end retailer Saks rode new store openings and increased international tourist traffic to an excellent third quarter. Net income at the company rose to 14 cents per share from 5 cents per share one year ago.

What to Look for Next Week (calendar)

Tuesday, November 27: Chain Store and Retail Sales / Consumer Confidence / Richmand, Dallas Fed Manufacturing, Production Index

Wednesday, November 28: Durable Goods / Existing Home Sales

Thursday, November 29: Initial Jobless Claims / New Home Sales / Preliminary Q3 GDP

Friday, November 30: Personal Income, Spending / November Chicago PMI

Best Performing Stocks (PR 8-10) of last five days

Here are some of the best performing, high PowerRatings (for Investors) rated stocks of the past five days. This week, all of the listed stocks have PowerRatings (for Investors) ratings of 9 or 10.

Google (GOOG | Quote | Chart | News | PowerRating). PowerRatings (for Investors) rating: 9.

Deutsche Telekom (DT | Quote | Chart | News | PowerRating). PowerRatings (for Investors) rating: 9.

Pepsico (PEP | Quote | Chart | News | PowerRating). PowerRatings (for Investors) rating: 9.

Consolidated Edison (ED | Quote | Chart | News | PowerRating). PowerRatings (for Investors) rating: 9.

Charles Rivers Laboratories International (CRL | Quote | Chart | News | PowerRating). PowerRatings (for Investors) rating: 10.

Worst Performing Stocks (PR 1-3) of last five days

Here are some of the worst performing, low PowerRatings (for Investors) rated stocks of the past five days. This week, all of the listed stocks have PowerRatings (for Investors) ratings of 1 or 2.

Trina Solar Limited (TSL | Quote | Chart | News | PowerRating). PowerRatings (for Investors) rating: 1.

ETrade (ETFC | Quote | Chart | News | PowerRating). PowerRatings (for Investors) rating: 2.

Beazer Homes (BZH | Quote | Chart | News | PowerRating). PowerRatings (for Investors) rating: 1.

FirstFed Financial (FED | Quote | Chart | News | PowerRating). PowerRatings (for Investors) rating: 2.

Aluminum Corporation of China (ACH | Quote | Chart | News | PowerRating). PowerRatings (for Investors) rating: 2.