April 24, 2011

Weekly Market Wrap:  Stocks moved slightly higher this week as earnings season gave the market a lift despite rising commodity prices.  For the week the S&P 500 index finished 1.3% higher to 1,337.  Gold and Oil both ended the week higher as well.  Oil was up 2.65% to $112.29 per barrel and Gold was up 1.25% to $1,505.65 per oz, pushing through the $1,500 per oz level.  The dollar continued is decent ending down another 1.00% against other major world currencies to $74.09.

Year-To-Date the major indexes are at: The S&P index 6.34%, The Dow Jones Index +8.02%, The NASDAQ +6.31%, The Russell 2000 Small cap Index +7.91%, EAFE International +5.92%.  Bond yields were flat on the week.  The 10 year treasury is currently yielding 3.40% and the 30 year is yielding 4.48%.

On Monday the market dropped 14 points as Standard and Poor’s downgraded the outlook of the US and its credit (more on this later).  Other news included China increased its bank reserve requirement, home builder sentiment dropped and Gold neared $1,500 per oz.

Tuesday the markets bounced back adding 7 points.  Earnings season provided a life as well as better than expected housing data.

On Wednesday the markets rose another 18 points as more positive earnings announcements and a rise in existing home sales and mortgage applications gave the markets another lift.

Thursday’s market added an additional 7 points despite a lower than expected Philly Manufacturing index and a less than expected decline in jobless claims.  Earnings season continued to provide a boost for the markets.

On Monday Standard and Poor’s announced their downgrade for the outlook for the US Treasury and future economic outlook.  On one hand this was a surprise and sent some shockwaves through the market.  On the hand it was no surprise since I think we all know that we cannot go on running the country on fiscal deficits forever.  I am hoping this is a wake-up call to our president and members of congress to start moving the countries fiscal policies back in order.  If we do get things “fixed” this will be a non-issue.  If we do not turn this thing around the markets indicated that there will be problems ahead for the US and the markets.

The markets bounced back quickly as positive earnings and the improving economy took back the stage. 

Mortgage rates moved lower again this week.  The Schwab Bank 15-year rate is now at 4.10% and the 30-year rate is at 4.85%. These rates are as of 04/22/2011 and assume no points, no origination fee and a $250,000 conforming rate mortgage.

Ronald J. VanSurksum, CFP®
Advanced Asset Management, LLC

• New Home Sales: New home sales took another stiff hit in February — sales fell to their lowest level since the data started being collected in 1963 despite a drop in new home prices. Some market experts have speculated that's because the drop in new home prices hasn't gone far enough to lower the premium on a new home compared to an existing one and to attract buyers. March data come out Monday at 10 a.m.
• Consumer Confidence: Higher oil and gas prices at the pump outweighed recent gains in employment and took a toll on the consumer sentiment index in March. With gas prices already exceeding $4 a gallon in some areas and further increases expected, compounded by recent news that the S&P is lowering the U.S.'s debt outlook to negative, consumer sentiment will likely continue to decline. April data are due out Tuesday at 10 a.m.
• Fed Watch: With two months to go until the end of the Federal Reserve's QE2 policy, the question on everyone's mind these days is, when will the FOMC announce a rate hike. Up to this point, Fed officials have been reluctant to raise interest rates and abandon their monetary policy, arguing that keeping rates low will boost a sustainable recovery. Watch for a rate announcement on Wednesday at 2:15 p.m. which will feature Chairman Bernanke's first-ever post-meeting briefing with reporters.
• GDP: U.S. Q1 2011 GDP data is due out the day after the FOMC rate decision. It could provide a reality check for those people who weren't upset by the S&P's decision last week to lower the U.S. credit outlook to "negative." Watch for Q1 2011 numbers on Thursday at 8:30 a.m.
• Personal Income and Spending: Personal spending in February had its strongest increase since October 2010. Personal disposable income also increased. Any spike in inflation could mitigate much of the increase in spending. Data for March come out Friday at 8:30 a.m.

from www.moneynews.com

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