February 28, 2011
Weekly Market Wrap: Stocks gave back some gains this week as tensions in the Middle East and Libya escalated driving up oil prices. The S&P 500 index dropped 1.7% on the week closing at 1,319.88. Oil surged 9% on Middle East supply concerns topping off the week at $97.88 per barrel. Gold also pushed higher up 1.5% to $1,407.93 per oz. The dollar moved slightly lower against other major world currencies off ½% to $77.24.
Year-To-Date the major indexes are at: The S&P index +4.95%, The Dow Jones Index +4.78%, The NASDAQ + 4.83%, The Russell 2000 Small cap Index + 4.89%, EAFE International +4.42%. In the Bond market the 10 year treasury is currently yielding 3.43% and the 30 year yielding 4.52%
Monday the markets were closed for the Presidents day holiday. On Tuesday the market plummeted 28 points as Middle East and Libya unrest rattled the stock markets and the oil markets. In economic news home prices continued to fall but consumer confidence reached a 3-year high and the Richland manufacturing numbers came in better than expected. On Tuesday the market carried through with an 8 point drop as oil prices touched $100 per barrel and despite an increase in existing home sales and mortgage applications. Thursday’s market settled down to a 1 point loss as oil prices eased some, a mixed durable goods number, a drop in new home sales and a better than expected drop in initial jobless claims. On Friday the market found its land legs and made some group back adding 13 points. 4th Quarter GDP was revised lower and consumer confidence was at its best since January of 2008.
The markets gave back some gains as tensions increased in the Middle East and especially Libya pushing Oil prices significantly higher to nearly $100 per barrel. This could turn into an excellent buying opportunity if things settle down overseas or could pose a significant drag on the markets if they don’t and oil prices continue to rise. Only time will tell.
The US economy continues to show mixed results with a bias towards slow improvements. Consumers are becoming more confident in the recovery. I think that will hold up as long as gas prices do not reach $4 per gallon. Initial jobless claims were down and existing home sales up – both good signs.
I remain fairly confident that the economy will continue to improve at a gradual pace and 2011 will bring more jobs to the US economy.
Mortgage rates eased slightly this week. The Schwab Bank 15-year rate is now at 4.33% and the 30-year rate is at 5.00%. These rates are as of 02/25/2011 and assume no points, no origination fee and a $250,000 conforming rate 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:
- Mailed out tax information and an annual letter to my clients.
- Helped clients prepare for the completion of their tax returns by gathering information and getting it to their tax preparer.
- Helped a client with the purchase of a new home – another goal achieved!
- Met with potential referral partners who work with business owners to help them transition out of their business and get the most value for what they have built.
- Helped a client prepare for a major surgery by reviewing beneficiary designations.
- Volunteered at the Knights of Columbus 7487 Wild Game Dinner and helped them raise money for all the good works that they do.
- Took a few days off with the family and extended family. I had a great time!
- Had a great Valentine’s Day and wished my wife a happy birthday.
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®
Advanced Asset Management, LLC