MARKET WEEK: MAY 27, 2014

The Markets

After spending weeks bouncing around just under 1,900, the S&P 500 finally managed to top it on Friday, setting a new record closing high in the process. And after a lot of back and forth at the beginning of the week, the Nasdaq and the Russell 2000 small caps rebounded strongly from their travails of recent weeks, though the small caps are still down for the year.

Market/Index

2013 Close

Prior Week

As of 5/23

Weekly Change

YTD Change

DJIA

16576.66

16491.31

16606.27

.70%

.18%

Nasdaq

4176.59

4090.59

4185.81

2.33%

.22%

S&P 500

1848.36

1877.86

1900.53

1.21%

2.82%

Russell 2000

1163.64

1102.91

1126.19

2.11%

-3.22%

Global Dow

2484.10

2533.44

2550.46

.67%

2.67%

Fed. Funds

.25%

.25%

.25%

0 bps

0 bps

10-year Treasuries

3.04%

2.52%

2.54%

2 bps

-50 bps

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Headlines

  • Discussion among members of the Federal Reserve’s monetary policy committee has begun to turn to how best to manage the impact of the end of supportive economic measures, whenever that seems appropriate. According to minutes of the committee’s most recent meeting, the state of the labor market was a major point of debate and will continue to play a major role in Fed policy.
  • As more homeowners put their houses on the market in April, sales of existing homes rose 1.3% over the course of the month. It was the first monthly increase this year, but the National Association of Realtors® said that still left home resales 6.8% lower than the previous April.
  • New home sales also jumped in April; the Commerce Department said they were up 6.4% for the month, though that was 4.2% below April 2013.
  • Parties campaigning on anti-European Union themes gained ground in the EU’s parliamentary elections over the weekend. However, a majority of seats are still held by mainstream parties, so financial assistance programs for weaker members shouldn’t see any immediate disruption.
  • Credit Suisse agreed to pay $2.5 billion to settle federal charges that for decades it had helped Americans avoid taxes by concealing assets in undeclared bank accounts. The Swiss bank also pleaded guilty to a criminal charge of conspiracy.
  • China’s manufacturing sector was on the brink of expansion in May, according to the Markit Purchasing Managers Index. The reading on the monthly survey hit a four-month high of 49.7% (a reading of 50% indicates expansion). China also gave Russia some relief from Western economic sanctions by signing a $400 billion agreement to purchase gas from Russia’s leading supplier.
  • A Pennsylvania federal grand jury charged five members of a Chinese military unit with stealing industrial secrets by hacking computers at six U.S. enterprises in the nuclear, solar, and metals industries. The indictment is said to be the first involving a governmental body rather than an individual corporation.

Eye on the Week Ahead

During the holiday-shortened week, investors will assess the results of the EU elections. They also will get a second look at Q1 economic growth and a smattering of manufacturing, housing, and consumer data.

Data sources: Economic: Based on data from U.S. Bureau of Labor Statistics (unemployment, inflation); U.S. Department of Commerce (GDP, corporate profits, retail sales, housing); S&P/Case-Shiller 20-City Composite Index (home prices); Institute for Supply Management (manufacturing/services). Performance: Based on data reported in WSJ Market Data Center (indexes); U.S. Treasury (Treasury yields); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK); http://www.goldprice.org (spot gold/silver); Oanda/FX Street (currency exchange rates). All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results.

The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indices listed are unmanaged and are not available for direct investment.

 

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MARKET WEEK: MAY 19, 2014

The Markets

Equities were very much a mixed bag last week. After the Dow and S&P 500 set fresh all-time closing records early in the week, a strong downdraft on Thursday flattened out the S&P for the week and took the Dow back into negative territory year-to-date. The Nasdaq, which has suffered in recent months, saw a positive week, while the small-cap Russell 2000 ended the week down almost 9% from its March high. The pain in domestic equities left the Global Dow the year-to-date leader. Meanwhile, a rally in the 10-year Treasury sent the yield to its lowest level since last October.

Market/Index

2013 Close

Prior Week

As of 5/16

Weekly Change

YTD Change

DJIA

16576.66

16583.34

16491.31

-.55%

-.51%

Nasdaq

4176.59

4071.87

4090.59

.46%

-2.06%

S&P 500

1848.36

1878.48

1877.86

-.03%

1.60%

Russell 2000

1163.64

1107.22

1102.91

-.39%

-5.22%

Global Dow

2484.10

2520.55

2533.44

.51%

1.99%

Fed. Funds

.25%

.25%

.25%

0 bps

0 bps

10-year Treasuries

3.04%

2.62%

2.52%

-10 bps

-52 bps

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Headlines

  • After a strong surge in March, retail sales flattened out in April, rising just 0.1%. The Commerce Department said online sales, sales of electronics/appliances, and those at restaurants and bars all declined, while clothing, auto, and department store sales saw gains.
  • Wholesale prices saw a sharp increase last month, rising at their fastest pace since September 2012. The Bureau of Labor Statistics said April’s 0.6% increase followed a 0.5% jump in March, and was evenly distributed between goods and services. April’s increase put wholesale inflation for the last 12 months at 2.1%.
  • Consumer prices also increased in April at a rapid pace; the 0.3% increase was the biggest monthly jump since last June. A 2.3% increase in the cost of gas and a 0.4% increase in food (beef alone was 2.9% higher) were key. April’s increase put the consumer inflation rate for the last 12 months at 2%, which is the level the Federal Reserve has informally targeted as appropriate.
  • The Federal Reserve’s manufacturing indexes were both positive in May. The reading on the Empire State index rebounded 18 points from a weak March, while the Philly Fed reading declined slightly but had its third consecutive positive month.
  • U.S. industrial production fell 0.6% in April after a 1% gain in both February and March. The Federal Reserve said milder weather cut the need for heat, which led to a 5.3% decline in utilities output, while mining production rose 1.4%. Use of total capacity at the nation’s factories slid 0.7% and was 1.5% below its average over the last 40 years.
  • Housing starts rose strongly in April, with a nearly 43% increase in apartment construction responsible for most of the gain. The Commerce Department said new starts were up 13.2% for the month, and were more than 26% higher than in April 2013. Building permits–an indicator of future activity–were up 8% from March and were almost 4% higher than a year earlier.
  • The eurozone economy grew 0.2% during Q1, roughly the same pace as the previous quarter, while the 0.3% growth in the 28-member European Union was slightly less than the 0.4% of Q4 2013. The strongest growth was in Germany, Hungary, Poland, and the United Kingdom. The Q1 figure meant that the eurozone grew 0.9% (1.4% for the EU) compared to the same quarter a year earlier. Meanwhile, the official EU statistical office said the inflation rate rose slightly in both areas, to 0.7% in the eurozone and 0.8% for the EU. Though both inflation rates were an improvement, they were still far below those of the previous year, and the annualized rate for seven countries was negative.

Eye on the Week Ahead

In a week that’s light on economic data, minutes of the most recent Fed meeting, a report on Chinese manufacturing, and housing market statistics could receive more-than-usual interest.

Data sources: Economic: Based on data from U.S. Bureau of Labor Statistics (unemployment, inflation); U.S. Department of Commerce (GDP, corporate profits, retail sales, housing); S&P/Case-Shiller 20-City Composite Index (home prices); Institute for Supply Management (manufacturing/services). Performance: Based on data reported in WSJ Market Data Center (indexes); U.S. Treasury (Treasury yields); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK); http://www.goldprice.org (spot gold/silver); Oanda/FX Street (currency exchange rates). All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results.

The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indices listed are unmanaged and are not available for direct investment.

 

MARKET WEEK: MAY 12, 2014

The Markets

A fresh closing high on the Dow on Friday finally enabled it to edge back into positive territory for the year, while the S&P 500 ended the week basically flat. However, after the prior week’s respite from selling pressure, the Nasdaq and the small caps of the Russell 2000 returned to their recent losing ways.

Market/Index

2013 Close

Prior Week

As of 5/9

Weekly Change

YTD Change

DJIA

16576.66

16512.83

16583.34

.43%

.04%

Nasdaq

4176.59

4123.90

4071.87

-1.26%

-2.51%

S&P 500

1848.36

1881.14

1878.48

-.14%

1.63%

Russell 2000

1163.64

1128.80

1107.22

-1.91%

-4.85%

Global Dow

2484.10

2523.17

2520.55

-.10%

1.47%

Fed. Funds

.25%

.25%

.25%

0 bps

0 bps

10-year Treasuries

3.04%

2.60%

2.62%

2 bps

-42 bps

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Headlines

  • Growth in the U.S. services sector accelerated in April. The Institute for Supply Management’s gauge rose 2.1% to 55.2%. It was the 51st straight month of growth.
  • Greater demand overseas for U.S. exports of natural gas and oil as well as aircraft helped cut the U.S. trade deficit by 3.6% in March, according to the Commerce Department. Exports were up 2.2%, while imports also rose 1.7% to their highest level in two years.
  • Federal Reserve Chair Janet Yellen told a congressional committee that the Fed sees a rebound in the economy from winter’s weather-induced slump, but that low inflation and slack in the housing and labor markets will most likely continue to permit interest rates to remain near zero for some time.
  • Yet another data point from the Federal Reserve confirmed winter’s impact on the economy during Q1. Business productivity slumped at an annualized rate of 1.7%, a far cry from the previous quarter’s 2.3% increase. However, productivity was 1.4% ahead of Q1 2013. Even though workers put in more hours during the quarter, reduced output helped push unit labor costs up 4.2% for the quarter.
  • The European Central Bank once again left its key interest rate unchanged at 0.25% and said that ongoing low inflation might lead to stimulus measures next month, especially if the situation in Ukraine worsens.

Eye on the Week Ahead

With the bulk of Q1 earnings reports now in the rear-view mirror, investors will have to look to manufacturing and retail reports in both the United States and China for guidance. Inflation at both the consumer and wholesale levels is expected to remain subdued, while housing starts could show whether the housing market is emerging from its winter doldrums.

Data sources: Economic: Based on data from U.S. Bureau of Labor Statistics (unemployment, inflation); U.S. Department of Commerce (GDP, corporate profits, retail sales, housing); S&P/Case-Shiller 20-City Composite Index (home prices); Institute for Supply Management (manufacturing/services). Performance: Based on data reported in WSJ Market Data Center (indexes); U.S. Treasury (Treasury yields); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK); http://www.goldprice.org (spot gold/silver); Oanda/FX Street (currency exchange rates). All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results.

The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indices listed are unmanaged and are not available for direct investment.

 

MARKET WEEK: May 5, 2014

The Markets

Generally encouraging data that suggested winter’s economic deep freeze might be thawing led to broad-based gains for equities despite some slippage at week’s end. The Dow finally managed to surpass briefly the record closing high it hadn’t seen since New Year’s Eve. However, of the four domestic indices in the table below, the S&P 500 remained the only one still in positive territory year-to-date. Meanwhile, the Fed’s steady-as-she-goes approach to tapering helped boost demand for the benchmark 10-year Treasury, whose yield fell to its lowest level so far this year.

Market/Index 2013 Close Prior Week As of 5/2 Weekly Change YTD Change
DJIA 16576.66 16361.46 16512.83 .93% -.38%
Nasdaq 4176.59 4075.56 4123.90 1.19% -1.26%
S&P 500 1848.36 1863.40 1881.14 .95% 1.77%
Russell 2000 1163.64 1123.03 1128.80 .51% -2.99%
Global Dow 2484.10 2496.82 2523.17 1.06% 1.57%
Fed. Funds .25% .25% .25% 0 bps 0 bps
10-year Treasuries 3.04% 2.68% 2.60% -8 bps -44 bps

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Headlines

  • As expected, economic growth stalled during the first quarter, falling from 2.9% in Q4 2013 to the current 0.1% (though that figure will be subject to two revisions over the next two months). The Bureau of Economic Analysis said lower exports, less spending by businesses on fixed investments and inventory, and reduced spending by local and state governments were key to the decline.
  • The unemployment rate saw its biggest drop since December 2010, falling from 6.7% to 6.3% in April; that’s the lowest it’s been since September 2008. Also, the Bureau of Labor Statistics said the number of new jobs created–288,000–was far greater than the last 12 months’ 190,000 monthly average and represented the strongest job creation in more than two years. Gains were broadly distributed, led by employment in business and professional services, retail, restaurants/bars, and construction. However, the report wasn’t all good news; the drop in the unemployment rate resulted partly from 806,000 people leaving the labor force.
  • Consumer spending rebounded from the previous two months’ deep freeze, rising an inflation-adjusted 0.7% in March. Even better, the Commerce Department said the spending was widespread, with the biggest gains in durable goods, which rose 2.7% (about half of which was purchases of cars and car parts). The bad news? Spending on durable goods was down 2.2% from the previous March, and one reason for March’s higher sales was a 0.5% jump in the cost of food. Nondurable goods were up 0.9% for the month, while spending on services rose 0.4% and personal income was up 0.5%.
  • Business for U.S. manufacturers also accelerated coming out of the frigid winter. The April reading on the most recent Institute for Supply Management survey rose to 54.9%, its highest level since December, and all but one of the 18 industries reporting saw gains. In addition, the Commerce Department said orders at U.S. factories were up 1.1% in March; a 3.5% jump in business spending on capital equipment (not including the volatile aircraft sector) was the biggest increase in that figure since January 2013.
  • Home prices in the cities tracked by the S&P/Case-Shiller 20-City Composite Index were relatively flat for the month, rising only 0.2% as 13 of the 20 cities showed declines. Also, the 12.9% year-over-year gain was slightly lower than the previous 12 months’ 13.2% increase.
  • As expected, the Federal Reserve’s monetary policy committee once again cut its monthly bond purchases by $10 billion, leaving them at $45 billion a month. The committee also reiterated its belief that its target interest rate will remain at its current level well after bond purchases end.

Eye on the Week Ahead

With few economic reports on tap this week, investors’ focus could be overseas. Heightened tensions over Ukraine could counterbalance any data-induced optimism, as they did last Friday. Also, the European Central Bank will meet Thursday, when additional economic stimulus measures could be on the table.

Data sources: Economic: Based on data from U.S. Bureau of Labor Statistics (unemployment, inflation); U.S. Department of Commerce (GDP, corporate profits, retail sales, housing); S&P/Case-Shiller 20-City Composite Index (home prices); Institute for Supply Management (manufacturing/services). Performance: Based on data reported in WSJ Market Data Center (indexes); U.S. Treasury (Treasury yields); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK); http://www.goldprices.org (spot gold/silver); Oanda/FX Street (currency exchange rates). All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results.

The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indices listed are unmanaged and are not available for direct investment.

 

MARKET WEEK: APRIL 28, 2014

The Markets

After a mostly positive week, investors went into Friday seemingly determined to take some money off the table over a weekend when the Ukrainian conflict seemed to promise fresh sanctions against Russia. The small caps of the Russell 2000 took the brunt of the selling with a 1.9% loss on Friday alone, while the S&P 500 was left essentially flat.

Market/Index

2013 Close

Prior Week

As of 4/25

Weekly Change

YTD Change

DJIA

16576.66

16408.54

16361.46

-.29%

-1.30%

Nasdaq

4176.59

4095.52

4075.56

-.49%

-2.42%

S&P 500

1848.36

1864.85

1863.40

-.08%

.81%

Russell 2000

1163.64

1137.90

1123.03

-1.31%

-3.49%

Global Dow

2484.10

2504.44

2496.82

-.30%

.51%

Fed. Funds

.25%

.25%

.25%

0 bps

0 bps

10-year Treasuries

3.04%

2.73%

2.68%

-5 bps

-36 bps

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Headlines

  • New home sales plummeted 14.5% in March; according to the Commerce Department, that’s the lowest level since July and more than 13% below March 2013. It’s the first time since September 2011 that year-over-year sales have dropped. The figures raised questions about how much of the recent slump was attributable to winter weather. However, the $290,000 median sales price was 12.6% higher than a year earlier.
  • Sales of existing homes also slipped in March, but by only 0.2%, according to the National Association of Realtors®. That left them 7.5% below March 2013. Tight inventories continued to help push prices up; the NAR said the $198,500 median sales price was nearly 8% higher than in March 2013.
  • Orders for big-ticket items such as aircraft and electronics surged 2.6% in March, following a 2.1% increase in February. The Commerce Department said the volatile transportation sector was up 4%, while non-transportation items also rose 2%, led by a 5.7% jump in computers and electronics and a nearly 8% increase in orders for communications equipment. Business orders for capital goods rose more than 7%.
  • In the wake of an appeals court ruling that struck down so-called “net neutrality” regulations, the Federal Communications Commission proposed new rules that would allow broadband Internet service providers to charge content providers higher fees for speedier Internet connections as long as they did so in a “commercially reasonable” manner. The rules will be subject to public comment before going before the full commission for a vote, possibly later in the year.

Eye on the Week Ahead

Markets will have no shortage of potential influences next week. In addition to tension over Ukraine, the Federal Reserve will meet, though little change in its current tapering is expected. April unemployment figures and the first estimate of Q1 gross domestic product will be released, as will consumer spending and manufacturing data.

Data sources: All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. News items are based on reports from multiple commonly available international news sources (i.e., wire services) and are independently verified when necessary with secondary sources such as government agencies, corporate press releases, or trade organizations. Market data: U.S. Treasury (Treasury yields); WSJ Market Data Center (equities); Federal Reserve Board (Fed Funds target rate); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK); http://www.goldprice.org (spot gold, NY close); Oanda/FX Street (currency exchange rates). Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results. All investing involves risk, including the potential loss of principal, and there can be no guarantee that any investing strategy will be successful.

The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indices listed are unmanaged and are not available for direct investment.

 

Market Week: April 21, 2014

The Markets

Despite the holiday-shortened trading week, domestic equities managed to recapture virtually all of the ground lost the week before–and more important, the gains were across the board. Even the tech and biotech sectors that have suffered recently showed signs of stabilization, while the S&P 500 managed to return to positive territory for the year.

Market/Index

2013 Close

Prior Week

As of 4/18

Weekly Change

YTD Change

DJIA

16576.66

16026.75

16408.54

2.38%

-1.01%

Nasdaq

4176.59

3999.73

4095.52

2.39%

-1.94%

S&P 500

1848.36

1815.69

1864.85

2.71%

.89%

Russell 2000

1163.64

1111.44

1137.90

2.38%

-2.21%

Global Dow

2484.10

2470.01

2504.44

1.39%

.82%

Fed. Funds

.25%

.25%

.25%

0 bps

0 bps

10-year Treasuries

3.04%

2.63%

2.73%

10 bps

-31 bps

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Headlines

  • Springtime for retail: Shoppers emerged from hibernation and returned to stores again in March, according to the Commerce Department. Retail sales rose 1.1% from February, and were 3.8% higher than in March 2013. Auto sales were up 3.4% for the month and up 9.5% from March 2013. The figures were hailed as confirmation that frigid winter weather was a major factor in previous months’ sluggish sales.
  • China’s economy grew 7.4% over the last year, according to the country’s National Bureau of Statistics. That represents a slowing from the previous quarter’s annualized 7.7% rate, and is slightly below the targeted 7.5% growth for all of 2014. It also represents the nation’s slowest quarterly growth in 18 months. Chinese officials said weaker winter demand from the United States for exports and a sluggish housing market were major factors in the decline.
  • Consumer prices rose 0.2% in March, helping to cut the inflation rate for the last 12 months slightly to 1.5%. The Bureau of Labor Statistics said the biggest increases were seen in the costs of food and shelter. Grocery prices overall were up .5% for the month and 1.7% for the year, while restaurant prices are up 2.3% since March 2013. The 2.7% increase in the cost of shelter since last March in part reflects rising home prices. Meanwhile, energy costs declined 0.1% in March, led by a 1.7% drop in gas prices.
  • Housing starts improved in March, rising 2.8%, but were nevertheless almost 6% lower than March 2013. The Commerce Department said building permits–an indicator of future activity–fell 2.4% for the month but were more than 11% higher than the previous March.
  • U.S. industrial production grew 0.7% in March, driven largely by mining and the utilities sector. Also, the Federal Reserve revised February’s 0.7% gain upward to 1.2%; it was the highest monthly growth rate in almost four years. The increases represent an annualized 4.4% growth rate in Q1. Meanwhile, the Fed’s April Empire State manufacturing survey slipped 4 points to 1.3, but the Philly Fed’s survey for the month rose from 9.0 to 16.6, its highest reading since last September and the second consecutive month of gains.
  • The nonpartisan Congressional Budget Office said the federal government’s cost of expanding health-care coverage under the Affordable Care Act (primarily from providing insurance premium subsidies) will be $36 billion in 2014–roughly 12% less than the amount predicted in February–and almost 7% ($100 billion) less than the $1,487 billion previously estimated for the next 10 years.
  • The weekly earnings of full-time American workers during the first quarter were 3% higher than a year earlier; according to the Bureau of Labor Statistics, that’s the fastest annual growth since 2008 and was more than double the 1.4% increase in the Consumer Price Index over the last 12 months. The report said the increase put inflation-adjusted median weekly earnings at $796, their highest level since Q2 2012.

Eye on the Week Ahead

Data on home sales and manufacturing could suggest whether a spring rebound is in store. Many of the major Nasdaq tech companies will release Q1 earnings, which could influence whether last week’s rally shows some ongoing strength.

Data sources: All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. News items are based on reports from multiple commonly available international news sources (i.e., wire services) and are independently verified when necessary with secondary sources such as government agencies, corporate press releases, or trade organizations. Market data: U.S. Treasury (Treasury yields); WSJ Market Data Center (equities); Federal Reserve Board (Fed Funds target rate); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK); http://www.goldprice.org (spot gold, NY close); Oanda/FX Street (currency exchange rates). Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results. All investing involves risk, including the potential loss of principal, and there can be no guarantee that any investing strategy will be successful.

The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indices listed are unmanaged and are not available for direct investment.

 

Market Week: April 14, 2014

The Markets

The wave of tech and biotech selling that has taken the Nasdaq down more than 8% in just over a month spread to the large caps of the Dow and S&P 500 last week. However, the S&P is still only 4% away from the record close it hit less than two weeks ago. Meanwhile, the profit-taking in stocks sent the benchmark 10-year Treasury yield down as demand pushed prices up.

Market/Index

2013 Close

Prior Week

As of 4/11

Weekly Change

YTD Change

DJIA

16576.66

16412.71

16026.75

-2.35%

-3.32%

Nasdaq

4176.59

4127.73

3999.73

-3.10%

-4.23%

S&P 500

1848.36

1865.09

1815.69

-2.65%

-1.77%

Russell 2000

1163.64

1153.38

1111.44

-3.64%

-4.49%

Global Dow

2484.10

2517.83

2470.01

-1.90%

-.57%

Fed. Funds

.25%

.25%

.25%

0 bps

0 bps

10-year Treasuries

3.04%

2.74%

2.63%

-11 bps

-41 bps

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Headlines

  • Minutes of the Federal Reserve’s most recent monetary policy meeting showed most committee members favor expanding the amount of detailed guidance about interest rates after rates begin to rise. The minutes also showed a general consensus that an increase isn’t likely for some time.
  • Exports from China were down 6.6% in March from a year earlier and imports were down more than 11% over the same time, raising concerns about the implications for the global economy. The customs data followed reports that the World Bank’s forecast for Chinese growth this year had been cut slightly to 7.6%, while Chinese Premier Li Keqiang said the economy might not reach its official targeted 7.5% growth rate.
  • The International Monetary Fund’s semiannual report on its world economic outlook said global recovery is becoming stronger and broader. However, continuing problems in some emerging markets, notably Brazil and Russia, caused the IMF to cut its global growth rate forecast slightly to 3.6% for 2014 and 3.9% for next year. The 2.8% growth rate the IMF projects for the United States this year was unchanged from its January forecast.
  • Wholesale prices jumped 0.5% in March; the Bureau of Labor Statistics said the increase could be attributed largely to the cost of services, which rose 0.7%.

Eye on the Week Ahead

As Q1 earnings season gets under way, forward guidance is likely to be just as significant as assessments of how earnings were affected by the weather; as economic data begin to reflect spring, a general failure to show improvement from winter’s numbers could be badly received by investors. Also, Wednesday will see the release of China’s Q1 GDP figures, which will be closely watched in light of last week’s signs of slowing trade.

Data sources: All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. News items are based on reports from multiple commonly available international news sources (i.e., wire services) and are independently verified when necessary with secondary sources such as government agencies, corporate press releases, or trade organizations. Market data: U.S. Treasury (Treasury yields); WSJ Market Data Center (equities); Federal Reserve Board (Fed Funds target rate); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK); http://www.goldprice.org (spot gold, NY close); Oanda/FX Street (currency exchange rates). Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results. All investing involves risk, including the potential loss of principal, and there can be no guarantee that any investing strategy will be successful.

The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indices listed are unmanaged and are not available for direct investment.