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Market Week: June 6, 2011

June 6, 2011

John Jastremski Presents:

 

Market Week: June 6, 2011

 

The Markets

June gloom: Disappointing economic data melted domestic equities for the fifth straight week. The holiday-shortened week’s decline left the S&P 500 at a level last seen in late March and back at the bottom of its recent 1300-1340 trading range. Meanwhile, the ten-year Treasury yield hit its lowest point since December.

Market/Index 2010 Close Prior Week As of 6/3 Week Change YTD Change
DJIA 11577.51 12441.58 12151.26 -2.33% 4.96%
NASDAQ 2652.87 2796.86 2732.78 -2.29% 3.01%
S&P 500 1257.64 1331.10 1300.16 -2.32% 3.38%
Russell 2000 783.65 836.26 808.13 -3.36% 3.12%
Global Dow 2087.44 2150.15 2121.55 -1.33% 1.63%
Fed. Funds .25% .25% .25% 0 bps 0 bps
10-year Treasuries 3.30% 3.07% 2.99% -8 bps -31 bps

Last Week’s Headlines

  • Return with us now to those not-so-thrilling days of yesteryear: Home prices in the 20 cities tracked by the Standard & Poor’s/Case-Shiller index fell back below the low of April 2009, confirming a double-dip downturn. Prices nationally fell an average of 4.2% during the first quarter and were down 5.1% from the same time last year, putting them at levels last seen in 2002.
  • The unemployment rate rose slightly to 9.1% in May, according to the Bureau of Labor Statistics. A gain of 54,000 new jobs was much lower than the 220,000 average increase during each of the previous three months.
  • Though April was the 22nd straight month of growth for U.S. manufacturers, the pace was much slower. The Institute for Supply Management said its index of manufacturing activity went from 60.4% in April to 53.5% in May, just above the 50% mark that represents expansion.
  • Construction spending was up 0.4% in April, the Commerce Department said, though it’s still 9.3% lower than it was in April 2010. A drop in public spending was largely offset by an increase in private spending, but the 1.4% gain initially reported for March was revised downward to 0.1%.
  • Business productivity increased 1.8% in the first quarter. A 2.5% increase in hourly compensation resulted in a net increase in labor costs of 0.7%. However, the Bureau of Labor Statistics said that the 5.3% annualized increase in consumer prices over the quarter meant that real hourly compensation declined 2.6%.
  • Moody’s once again downgraded Greece’s sovereign debt, lowering its rating from B1 to Caa1 (poor quality with a possibility of default) with a negative outlook. The rating agency put the odds of a default sometime in the next five years at 50-50.

Eye on the Week Ahead

European markets will assess a report that a second bailout needed for Greece could be larger than previously thought. Investors also will be trying to determine whether equities’ recent difficulties might be the start of a summer downturn.

Key dates and data releases: consumer credit (6/7); Federal Reserve “beige book” report (6/8); international trade (6/9); import/export prices, Treasury budget (6/10).

Data source: Includes data provided by Brounes & Associates. 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. Equities data reflect price change, not total return.

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 2000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indexes listed are unmanaged and are not available for direct investment.

This material was prepared by Broadridge Investor Communication Solutions, Inc., and does not necessarily represent the views of John Jastremski, Jeremy Keating, Erik J Larsen, Frank Esposito, Patrick Ray, Robert Welsch, Michael Reese, Brent Wolf, Andy Starostecki and The Retirement Group or FSC Financial Corp. This information should not be construed as investment advice. Neither the named Representatives nor Broker/Dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information or call 800-900-5867.

The Retirement Group is not affiliated with nor endorsed by fidelity.com, netbenefits.fidelity.com, hewitt.com, resources.hewitt.com,  access.att.com, ING Retirement, AT&T, Qwest, Chevron, Hughes, Northrop Grumman, Raytheon, ExxonMobil, Glaxosmithkline, Merck, Pfizer, Verizon, Bank of America, Alcatel-Lucent or by your employer. We are an independent financial advisory group that specializes in transition planning and lump sum distribution. Please call our office at 800-900-5867 if you have additional questions or need help in the retirement planning process.

John Jastremski is a Representative with FSC Securities and may be reached at http://www.theretirementgroup.com.

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