Weekly Market Wrap: Stocks dropped once again on mostly
Euro-concerns as the dollar rose and commodities fell sharply. The S&P 500 index lost 2.83% to close at
1,219.66. Oil lost 5.72% to close at
$93.89. Gold dropped 6.64% to finish the
week at $1,597.46. The dollar rose this
week against other major world currencies adding nearly 2% to $80.18.
Year-To-Date for the major indexes: The S&P index
-3.02%, The Dow Jones Index +2.50, The NASDAQ -3.68%, The Russell 2000 Small cap
Index -7.86, EAFE International -17.34%.
The 10 year treasury is currently yielding 1.85% and the 30 year is
yielding 2.86%. Yields are lower for the
week and lower for the year.
On Monday the S&P 500 index lost 19 points on moderate volume
as Euro-zone concerns strengthened pushing the Euro currency and Gold lower and
the dollar higher. There were no major
Tuesday the index dropped another 11 points on moderate volume
as the Fed help steady and did not indicate any additional stimulus citing
moderate growth for the US. Retail sales
came in lower than expected but small business optimism rose to a 9-month high.
Wednesday the index lost 14 points on moderate volume as continued
Euro concerns pushed the Euro-currency lower and the dollar higher once
again. Gold and Oil plunged, mortgage
applications increased and import prices lowered.
Thursday the market stabilized and added 4 points on
moderate volume as weekly jobless claims dropped another $19k to $366k,
regional manufacturing data was positive, industrial production declined, inflation
was tame last month and Spain held a positive debt auction.
Friday the market added 4 points on heavy volume as CPI
results were mixed and a quite day in Europe with a vote of confidence for the
Italian Prime Minister held markets steady.
Friday was a quadruple witching day when options expire and trading is
typically very heavy.
Europe was once again the main driver for
the US markets and lingering concerns over whether or not they can clean up the
debt issues drove down the Euro currency and pushed the US currency
higher. Treasuries rallied as investors
looked for safety pushing bond yields lower.
Commodities prices tumbled in the US as the dollar strengthened. The dollar broke through $80 this week, a
level it has not seen since January.
In the US the job market
appears to be healing somewhat as initial jobless claims moved to a 3-year
low. Much of this may be due to holiday
hires so it will be interesting to see if this trend continues into 2012. Overall inflation was tamed thanks in part to
lowering oil prices. A rise in small
business optimism could bode well for the US economy in 2012 as well.
Unless we get a significant
rally the last two weeks of 2011 it appears as though it will be a slightly
negative to flat year in the markets.
Given everything that happened in 2011, that may not be such a bad
thing. I am looking forward to seeing
what 2012 has in store for us.
Mortgage rates were mixed this week. The Schwab Bank 15-year rate is now at 3.34%
and the 30-year rate is at 3.98%. These rates are as of 12/16/2011 and assume
no points, no origination fee and a $250,000 conforming rate mortgage.
What to watch for on the economic calendar next week:
Monday – Housing Market Index
Tuesday – Housing Starts
Wednesday – Existing Home Sales
Thursday – Weekly Jobless Claims / GDP 3Q Final / Consumer Sentiment
Friday – Durable Goods Orders / Personal Income & Spending / New Home Sales
Ronald J. VanSurksum,
Advanced Asset Management, LLC
December 19, 2011