January 28, 2011
Weekly Market Wrap: Stocks ended the week slightly lower as a rally was halted by middle east instability, surging commodity prices and riots in Egypt. The S&P 500 index ended the week down 0.5% to close at 1,276. Commodity prices ended the week flat after a huge rally on Friday. Oil closed at $89.34 per barrel down 0.2% and gold ended at $1,336 down 0.4%. The dollar closed flat on the week against other major world currencies at $78.15.
In 2011 the major indexes finished at: The S&P index +12.8%, The Dow Jones Index +11%, The NASDAQ + 16.9%, The Russell 2000 Small cap Index + 25.3%, EAFE International +4.9%. In the Bond market the 10 year treasury wrapped up the year yielding 3.29% and the 30 year yielding 4.33%
On Monday the market moved 7 points higher as Intel announced a new stock repurchase plan. On Tuesday the market move up a fraction as rising consumer confidence was offset by a decline in manufacturing indexes and home prices. Wednesday’s market moved higher once again as the index added 5 more points on announcements from the federal reserve meeting and an increase in new home sales. Thursday’s market moved 3 points higher to 2+ year highs on mixed news including lower than expected durable goods orders, better than expected jobless numbers and mixed earnings reports. Friday’s market was decidedly lower dropping 23 points as news of Egyptian protests sent oil and gold prices significantly higher and disappointing earnings from Ford and Amazon offset an increase in consumer sentiment and a higher 4Q GDP revision.
A good week ended on a disappointing and slightly fearful not as rioting and unrest in Egypt led to a sell-off in the US markets. This biggest fear at this point is if the protests are successful and they remove their 30 year leader, what type of government will take over? The current leader has been a friend to the US but has led the county and the majority of its people into an extremely distressed position. Based on that I would say it is time for him to go but who will then take over? If it is a militant group things could become much more difficult for the US and its allies in the middle east.
US economic news continues to be mixed with a slight bias towards the positive pushing the market higher for most of the week. Job’s are typically one of the last things to recover after a recession and it seems as though the job outlook is starting to slowly improve.
This will be an extremely interesting week to see how things develop in the Middle East and how the US markets are impacted by this uncertainty.
Mortgage rates held steady this week. The Schwab Bank 15-year rate is now at 4.23% and the 30-year rate is at 4.875%. These rates are as of 01/28/2011 and assume no points, no origination fee and a $250,000 mortgage.
The Week at AAM (to highlight what I do for clients and how I am different than most advisors):
Some of the highlights of my last two weeks include:
- I helped a client set up IRAs for a couple of his managers to reward them for their continued good work.
- As part of a local Financial Planning Association Lunch and Learn I learned more about what the Grand Rapids Community Foundation does to improve greater Grand Rapids as well as their local Heartside district. Visit www.grfoundation.org
- Met with a Troy Ginzer of TAG Accounting to prepare for the upcoming tax season.
- Attended a meeting to get started with the Grandville/Jenison Chamber Ambassador program to get the word out about the great job my chamber is doing in this community.
- Learned more about charitable giving strategies and did some networking at a meeting of the West Michigan Planned Giving Group.
- Met with a group of local NAPFA advisors to learn more about their business and do some networking with my peers.
- Checked out a Regus office in Troy and met with a client and a prospective new Investment Advisory Representative.
- Met with a number of clients to review and plan for their futures. Also, signed up a new planning client to help them towards their financial goals.
- Facilitated a compliance meeting to update my Advisory Representatives on what I have been doing to help my clients and what they need to do to help me stay compliant.
- Attended the Grandville/Jenison Chamber annual meeting.
I hope you had a great few weeks as well. Please let me know if there is ever anything I can do for you or if something has changed in your financial situation to warrant a meeting or a change of investment policy.
Ronald J. VanSurksum, CFP®