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MARKET WEEK: OCTOBER 10, 2011

October 11, 2011
The Markets

Domestic equities once again spent much of the week recuperating from damage done on Monday, hitting their lowest levels of the year before rebounding strongly. On Monday, the S&P closed below 1,100 for the first time this year; despite advancing the rest of the week, it couldn’t quite recapture the previous week’s 1,175 high. The Nasdaq and Russell 2000 saw the strongest moves upward, gaining 6.1% and 7.7% respectively between the closing bells on Monday and Friday. Bonds retreated in the face of equities’ advances.

Market/Index 2010 Close Prior Week As of 10/7 Week Change YTD Change
DJIA 11577.51 10913.38 11103.12 1.74% -4.10%
NASDAQ 2652.87 2415.40 2479.35 2.65% -6.54%
S&P 500 1257.64 1131.42 1155.46 2.12% -8.12%
Russell 2000 783.65 644.16 656.21 1.87% -16.26%
Global Dow 2087.44 1725.68 1756.93 1.81% -15.83%
Fed. Funds .25% .25% .25% 0 bps 0 bps
10-year Treasuries 3.30% 1.92% 2.10% 18 bps -120 bps

Last Week’s Headlines

  • Companies added 103,000 jobs to the nation’s payrolls in September, including those of 45,000 striking telecommunications workers who returned to work. The Bureau of Labor Statistics also revised upward its estimates for previous months. However, the increase wasn’t enough to budge the unemployment rate, which remained stuck at 9.1%. Professional and business services, health care, and construction saw gains, while government employment continued to fall.
  • The European Central Bank (ECB) said it will resume bond purchases through October, 2012 and took measures to help ensure liquidity for European banks. The International Monetary Fund called for a coordinated plan to recapitalize European banks if necessary; French and German leaders said they agreed on the need to do so and would announce details by the end of the month.
  • Eurozone finance ministers postponed a decision on whether to pay the next installment of financial assistance to Greece after the country announced it had not been able to meet the requisite deficit reduction targets. Meanwhile, Fitch Ratings downgraded both Italian and Spanish debt to A+ and AA- respectively, while Moody’s downgraded Italy to A2. Outgoing ECB president Jean-Claude Trichet said it would be inappropriate for the ECB to lend money to the European Financial Stability Fund set up to offer financial assistance to struggling countries such as Greece. The ECB also kept its key interest rate at 1.5%.
  • The U.S. services sector continued to grow in September, but somewhat more slowly; the Institute for Supply Management (ISM) said its index fell 0.3% to 53, though new orders rose 3.7%. Meanwhile, the ISM’s index of U.S. manufacturing rose at a slightly faster pace (1%) than the previous month, with 12 of 18 industries reporting growth. However, the Commerce Department said new factory orders were down 0.2% in August after jumping 2.1% the month before.
  • The average rate on a 30-year mortgage fell below 4% for the first time since Freddie Mac began keeping records.
  • “Death is very likely the single best invention of Life. It is Life’s change agent. It clears out the old to make way for the new.”–Steve Jobs, 1955-2011.

Eye on the Week Ahead

Investors will get something to react to this week besides Europe as Alcoa’s after-the-bell report on Tuesday marks the unofficial start of the Q3 earnings season. However, Greece and European debt problems, including Thursday’s Italian bond auction, will still be very much on the radar screen. Fed minutes could shed light on dissension in the ranks over how and whether monetary policy can and should provide further economic assistance, while retail sales will hint at the consumer mindset.

Key dates and data releases: Federal Open Markets Committee minutes (10/11); international trade, weekly new jobless claims (10/13); retail sales, import/export prices, business inventories, consumer sentiment (10/14).

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 Communication Investor, and does not necessarily represent the views of John Jastremski, Jeremy Keating, Erik J Larsen, Frank Esposito, Patrick Ray, Robert Welsch, Michael Reese, Philip Catalan, 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.

 

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