Weekly Market Commentary:

Friday marked the last day of first quarter trading, and on the week, stocks ended lower across the board. The Dow Jones 30 (-1.0%) closed at 12,354, while the S+P 500 (1,421) Nasdaq Composite (2,422) and Russell 2000 (801) all surrendered 1.1%. For the quarter, the Russell (+1.66%) led, followed by the Nasdaq (+0.26%) and the S&P 500 (+0.18%). Only the Dow (-0.87%) finished the first quarter lower.

As market professionals bid prices up to close the quarter, there's good reason to suspect they might off load a few in the days ahead, especially now that the quarter has ended. With seventeen straight interest rate hikes the Fed finally shifted into neutral and the pressure on the stock market eased. However, the big risk lately appears to be an economy that's showing signs of slowing combined with persistent inflationary signals. The good news for investors, it appears, is that the Fed is now content enough to at least sit on the fence to see how the tight money thing plays out.

Higher rates have certainly not been beneficial to all those poor souls who bought real estate at the top of that market three years ago with all those exotic sub-prime loans that were marketed around. Consumer spending has been a big stock market driver these past several years, and it's no surprise that the threat of a loss of "liability" liquidity could seriously exasperate problems in real estate, and spill cold water all over stocks. Wall Street pros still believe the Fed will come to the rescue this year with a "downshift" in interest rates, but the fear they won't could be enough to cause stocks to retest recent lows at least one more time.

The Fed trots St. Louis President William Poole to New York on Monday to speak to the Big Apple's Association for Business on the obvious topic: "Understanding Inflation," while Nike splits their shares 2 for 1. Tuesday brings the domestic auto sales report for March. Lehman says these numbers should be little changed from the past three months and show an annual pace of 12.7 million vehicles (can you say "thank you" for 0% financing?) Rupert Murdoch (News Corp) and John Malone (Liberty Media) are expected to bury the hatchet Tuesday and complete a two year feud, culminated by an $11 billion asset swap between their two companies.

Wednesday, several big box retailers (Best Buy and Circuit City) announce earnings with results expected to be good (Best Buy) and bad (Circuit City). Thursday, Harrah's Entertainment shareholders hold a special meeting to vote on a merger with venture capital behemoths Texas Pacific and Apollo Management. Friday brings the March employment report (140,000 new jobs projected to be created), but any impact from that number waits until the following Monday, as U. S. financial markets are closed for the Easter holiday.

More soon!