AAM Weekly Market Wrap – March 7 – 2011

March 7, 2011

Weekly Market Wrap:  Stocks managed to generate a small gain this week as continued turmoil in Libya put more pressure on oil prices.  The S&P 500 index ended the week at 1,321 up about 0.1%.  Oil continued to surge gaining 6.68% to $104.42 per barrel.  Gold also continued its climb adding 1.5% to $1,428.55 per oz.  The dollar was down on the week against other major world currencies dropping 1% to $76.39.

Year-To-Date the major indexes are at: The S&P index +5.05%, The Dow Jones Index +5.12%, The NASDAQ + 4.97%, The Russell 2000 Small cap Index + 5.28%, EAFE International +5.27%.  In the Bond market the 10 year treasury is currently yielding 3.49% and the 30 year yielding 4.60%

Monday the markets gained 7 as Oil prices stabilized, manufacturing and personal income numbers were up, pending home sales were down and spending was flat. 

Tuesday’s market slumped almost 21 points despite positive comments from Bernanke and the US ISM Manufacturing index nearing a 7-year high as oil prices surged.

On Wednesday the market gained 2 points back as Bernanke continued his comments and suggested that growth could accelerate in 2011.  The Fed’s Beige Book showed expansion across every sector of the US economy and private sector payrolls were higher than expected.  On the negative side mortgage applications fell.

On Thursday the market surged nearly 23 points as an unexpected drop in jobless claims and improvements in service sector activity and 4Q productivity were better than expected.

Friday’s market dropped 10 points oil moved up another 2% and the labor report was less than raised expectations.  On the positive side factory orders were better than expected.

Volatility is back thanks to oil prices and the Mideast tensions.  The market saw a couple of moves this week in the 2% range, one moving the market lower and the second moving the market higher.  Expect this to continue as long as Oil and the Mideast are making the headlines.

If the Mideast situation proves to be a short-term event this could be a great buying opportunity as the US economy continues to slowly repair itself and is now starting to add jobs at a clip that may actually make a difference.

On the other side, if the Mideast problems linger on and continue to push oil prices higher it could take money out of consumer’s pockets and cripple corporate profits to point of unraveling the gains we have made. 

Mortgage rates were flat 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 03/04/2011 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:

  • Attended a funeral of a client who passed too young.  Len, rest in peace.
  • Helped clients prepare for the completion of their tax returns by gathering information and getting it to their tax preparer.
  • Worked on a new SIMPLE retirement plan for a client to help him and his sons start saving for their futures on a pre-tax basis.
  • Met with clients, planned for their goals and funded some IRAs .
  • Met with a new prospect to discuss mostly debt concerns.  Suggested that she read some of Dave Ramsay’s books and follow his “baby steps” to work their way out of debt.
  • Took a client to an attorney to discuss doing a private mortgage with one of her kids.  This can be a great way to help out the kids and increase returns on fairly safe assets as well.
  • Helped a client plan for the purchase of a cottage upgrade.

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

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Advanced Asset Management
4555 Wilson Ave SW, Suite 2
Grandville, MI 49418

Phone: (616) 531-5220