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Morningstar Indexes: Weekly Market Report

Week ending Aug. 25:  Signs of weakness in housing market raises concerns.

Morningstar Indexes, 08/29/2006

Broad signs of weakness in the housing market raised concerns that the Federal Reserve may have gone too far in tightening interest rates. Fears that a persistent downturn in housing will have a negative impact on consumer spending sent the Morningstar US Market Index down 0.73% for the week ending Aug. 25.

The Morningstar Market Barometer reflected this anxiety as investors flocked to more defensive large-value stocks. The Morningstar Large Value Index was the best performer among the nine Morningstar style indexes, posting a gain of 0.23% for the week, while the Morningstar Small Growth Index was the worst, losing 2.11%.
Value-oriented energy stocks pushed ahead on a jump in oil prices triggered by the start of hurricane season in the Gulf of Mexico. ExxonMobil XOM rose 1.93% and Marathon Oil MRO jumped 5.64%. Government-backed mortgage behemoth Fannie Mae FNM saw its stock gain 3.73% after announcing an end to an SEC investigation with no charges pending.

Small-growth stocks took a beating last week. Reinforcing concerns over weakness in consumer spending, clothing retailers Dress Barn DBRN and Christopher & Banks CBK plummeted by 14.2% and 11.63%, respectively. Shares in ESCO Technologies ESE, a manufacturer of communications systems for utilities, ended the week down 9.36% after a key customer delayed a major project.

For a more in-depth look into market performance, view the PDF report U.S. Market Overview.


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