recovery will be "lackluster" and is "unlikely to be driven by the consumer," says Ben Halliburton, chief investment officer of Tradition Capital Management. But he expects oil's recent retreat to hold, given increased Saudi production and the recent signs of demand destruction.
Last week's stock-market pullback might have been more severe if it weren't for Friday's bounce, which came after Ben Bernanke suggested that moderating inflation may allow the Federal Reserve to hold off raising interest rates. The looming prospect of a Lehman Brothers (LEH) takeover also lifted the stock and steadied the sector.
The Dow Jones Industrial Average ended the week down 32, or 0.3%, to 11628, its eighth decline in 10 weeks. The Standard & Poor's 500 gave up 6, or 0.5%, to 1292 and is 17% off its October peak. The Nasdaq Composite Index ended its five-week winning streak and fell 38, or 1.5%, to 2415, while the Russell 2000 halted its six-week run and surrendered 16, or 2.1%, to 738.
RADIOSHACK SHARES (RSH) have surged 57% in just six weeks, but what really has changed?
A sharp slide in oil prices might boost discretionary spending, but when was the last time you saw a good crowd at RadioShack? A 6.9% rebound in same-store sales surprised analysts and helped beat second-quarter estimates, but it remains to be seen if the knack for moving digital converter boxes at the height of tax-rebate season will translate into sustainable long-term growth.
A recent plan to buy back $200 million of shares prompted some short covering that helped nudge the stock higher. Speculation and high hopes that the Fort Worth company might begin selling Apple 's (AAPL) 3G iPhones were doused only so slightly after Best Buy (BBY) was recently given first crack at carrying the popular devices outside Apple and AT&T (T) stores. Its respected CEO, Julian Day, has cut costs, and the wireless business has improved. But it could still be a while before the turnaround turns RadioShack into a destination, if at all.
At almost 19, shares fetch 10.7 times 2008 profits, a justified discount to the 13.4 times for electronic retailers. Like the two parts of its throwback name, RadioShack is good for a little nostalgia, a reminder of what consumer electronic retailing once looked like. But unless cash-strapped, credit-deprived Americans begin buying up computers and stereos and batteries in droves -- and doing so at RadioShack! -- the only thing to marvel at in time might be the height of this dead cat bounce.
EXCHANGE STOCKS HAVE been hammered this year as investors brace for an extended spell of financial deleveraging, risk aversion and mousier trading.