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MARKET WEEK: JULY 11, 2011

July 12, 2011

John Jastremski Presents:

 

MARKET WEEK: JULY 11, 2011
The MarketsFriday’s disappointing employment numbers took the edge off equities’ earlier gains, but the domestic indices managed to remain in the plus column for the week. The small-cap Russell 2000 and the NASDAQ had the strongest showing. Meanwhile, Treasury bonds benefitted from the anxiety caused by the bad jobs report; the 10-year yield reversed much of its 34-basis-point jump of the previous week.
Market/Index 2010 Close Prior Week As of 7/8 Week Change YTD Change
DJIA 11577.51 12582.77 12657.20 .59% 9.33%
NASDAQ 2652.87 2816.03 2857.60 1.55% 7.80%
S&P 500 1257.64 1339.67 1343.81 .31% 6.85%
Russell 2000 783.65 840.04 852.57 1.49% 8.79%
Global Dow 2087.44 2156.11 2148.99 -.33% 2.95%
Fed. Funds .25% .25% .25% 0 bps 0 bps
10-year Treasuries 3.30% 3.22% 3.03% -19 bps -27 bps

Last Week’s Headlines

  • After two months in which the jobless count remained relatively static, the unemployment rate rose slightly in June to 9.2%. According to the Bureau of Labor Statistics, only 18,000 new jobs were added to the nation’s payrolls. That’s dramatically lower than both the average 215,000 jobs added monthly between February and April and gains seen in a report on private-sector payrolls earlier in the week. Long-term unemployed workers (those without a job for 27 weeks or more) represented 44.4% of the total, and including underemployed workers would push the unemployment rate to 16.2%. Most private-sector industries saw little change, while government employment continued to trend down.
  • It was Portugal’s turn to be the focus of euroangst. Moody’s downgraded the country’s sovereign debt to Ba2 (non-investment grade) with a negative outlook, indicating further downgrades are likely. The downgrade also helped push up borrowing costs for other troubled eurozone countries, including Italy. Meanwhile, Standard & Poor’s warned that a restructuring of Greek debt would be considered a “selective default.”
  • The European Central Bank raised a variety of interest rates for the second time this year, increasing its benchmark rate to 1.5% to try to combat inflation that is running at roughly 2.7%. The Bank of China raised its primary rate from 6.31% to 6.56%; a 5.5% inflation rate there brought on the third increase this year. By contrast, the Bank of England kept its key rate stable at 0.5%.
  • Discussions continued between the White House and congressional leaders on how to tackle deficit disputes–at least temporarily–and pass legislation raising the nation’s borrowing limit before the Treasury’s August 2 deadline.
  • Though the U.S. services sector declined 1.3% in June from the previous month, the Institute for Supply Management’s index still remained above 50, indicating expansion for the 19th consecutive month.

Eye on the Week Ahead

Alcoa’s Monday announcement represents the unofficial kickoff of the second-quarter earnings season. Minutes of the Fed’s last meeting could provide additional insight into members’ post-QE2 outlook, and inflation data will be watched for signs of acceleration. Finally, as the debt deadline nears, it could have an effect on investors’ psyches.

Key dates and data releases: Federal Reserve Open Market Committee (FOMC) minutes, international trade (7/12); wholesale inflation, retail sales (7/14); consumer inflation, industrial production (7/15).

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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