Vioxx Payouts to Start

Merck & Co., makers of Vioxx, will begin issuing settlement checks in August. The settlements will total $4.85 billion stemming from 50,000 lawsuits. Vioxx was taken off the market after the drug's side effects were linked to deaths. In the four years since the recall $6.8 billion has been spent on the trials.

Settlements will range from a few thousand into the millions. The amount a person receives depends on a calculation that measures how much Vioxx was ingested, the severity of the injury and other risk factors associated with the person. Many potential class-action suits are still being negotiated. Merck & Co. (MRK) ended the week at $37.68.

Safeway Profits Rise

Safeway, Inc.'s second-quarter earnings are higher despite the economic downturn. Profit reached $234.3 million, a 7% increase when compared to last year. The rise is being credited to measures that cut costs and improved retail strategy. Safeway is the second-largest grocery store operator in the U.S.

The outlook for the year has stayed at $2.25 to $2.35 a share, higher than most analyst estimates. Same-store sales outlooks have been lowered to a gain of 1% to 2% instead of the 2% to 2.3%. Safeway, Inc. (SWY) closed the week at $25.62.

EBay Forecast Reduced

Ebay, Inc. released a forecast showing reductions greater than analysts expected. While second-quarter earnings increased by 22%, the company is only expecting $2.1 billion to $2.15 billion in revenue. Gross merchandise volume growth was 8% compared to 12% one year ago. The drop is being considered a loss in marketshare to other online retailers.

Shares of eBay stock reacted to this news by falling to the lowest point since 2006. The stock is expected to rebound as its PayPal and Skype businesses continue to grow. Ebay, Inc. (EBAY) closed the week at 23.98.

The Dow started the week at 11,100 and closed at 11,496. The NASDAQ began the week at 2,239 and finished at 2,282. The S&P 500 started at 1,239 and ended at 1,260.

Treasurys Fall as Stocks Rise

Treasurys reacted negatively to the increase in the stock market and new employment data. Unemployment claims rose by 18,000, a smaller than expected increase. Fannie Mae and Freddie Mac also experienced a jump in shares, helping to relieve some investor tensions on the health of these mortgage agencies.

Analysts are now predicting that the Fed will increase rates as early as September. Estimates show a quarter point increase in the near future or a 2.5% increase by October.

The 10-year Treasury note began the week at 3.94% and finished at 4.08%. The 30-year Treasury bond began at 4.52% and finished at 4.66%.

Rates Continue to Fall

Freddie Mac's Primary Mortgage Market Survey showed that the 30-year fixed-rate mortgage (FRM) averaged 6.26% for the week ending July 3, 2008, down from last week when it averaged 6.37%. The 15-year FRM this week averaged 5.78% down from last week when it averaged 5.91%. The five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 5.80% this week, down from last week when it averaged 5.82%.

"Mortgage rates fell this week amid market speculation that the Federal Reserve (Fed) may not raise the overnight bank-lending rate this year after all," said Frank Nothaft, Freddie Mac Vice President and Chief Economist. "Some of the factors motivating the change in market perceptions this week included retail sales for June rising at the slowest pace since February and consumer sentiment in July holding at low levels not seen since 1980."