Here is the weekly wrap from Briefing.com:
Investors' anxiety levels remained high in the past week, as the indices finished only slightly higher despite falling bond yields. Ongoing concerns about the potential spillover effect of a struggling subprime mortgage market and a lack of concerted leadership were the main limiting factors.
Problems at two hedge funds managed by Bear Stearns (BSC), which suffered substantial losses from their exposure to the sub-prime mortgage market, provided the fuel that fed the subprime concerns.
Disappointing new and existing home sales data, and a decline in durable goods orders, which were reported on Wednesday, also kept investors on edge ahead of the Federal Reserve's policy statement onThursday.
Crude oil prices rose, climbing above $70/bbl, after a government report showed an unexpected drop in distillate and gasoline stockpiles. The report exacerbated supply concerns during the peak summer driving season, and contributed to ongoing inflationary pressures.
As expected, the FOMC left the fed funds rate at 5.25% for an eighth straight meeting, despite lingering concerns about weakness in the economy as problems in subprime lending have weighed on a housing recovery and have created unease in the financial markets.
The accompanying policy statement was little changed, except for a mention that core rates of inflation have eased in recent months but that a sustained moderation in inflation pressures has yet to be convincingly demonstrated. The central bank retained the statement that the predominant policy concern is inflation.
Accordingly, there was nothing in the statement to suggest that the Fed is inclined to change the fed funds rate anytime soon - either up or down.
Stocks ended little changed on Thursday following the decision.
On Friday the Commerce Department reported that consumer spending rose 0.5% in May, with the core PCE deflator up just 0.1%. The year/year increase of 1.9% in the core rate is below the Fed's 2007 forecast of 2.00% to 2.25%.
The core-PCE number provided some initial support, but separate reports that car bombs had been discovered (and defused) in London added to current geo-polical risks and contributed to a reversal in stocks that had been precipitated by a pullback in the financial sector.
Merger activity continued in the past week, but true to recent form, there weren't any blockbuster deals to get the broader market running.
In other developments, Apple (AAPL) launched its highly-anticipated iPhone Friday. That launch gave Apple's stock a modest boost, but it did little for the overall market other than to serve as a major talking point going into the weekend.