The Markets
The equity markets ended a remarkable July on a high note. Though the sharp increases of the previous two weeks leveled off a bit, the direction was still positive, helped along by some key economic and housing statistics. The Dow saw its best month since October 2002, and the S&P 500 racked up its fifth straight month of gains. The Nasdaq continued to add to its year-to-date lead over other markets.
Market/Index | 2008 Close | Prior Week | As of 7/31/09 | Week Change | YTD Change |
DJIA | 8776.39 | 9093.24 | 9171.61 | 0.86% | 4.50% |
NASDAQ | 1577.03 | 1965.96 | 1978.50 | 0.64% | 25.46% |
S&P 500 | 903.25 | 979.26 | 987.48 | 0.84% | 9.33% |
Russell 2000 | 499.45 | 548.46 | 556.71 | 1.50% | 11.46% |
Global Dow | 1526.21 | 1747.64 | 1773.69 | 1.49% | 16.22% |
Fed. Funds | .25% | .25% | .25% | 0 bps | 0 bps |
10-year Treasuries | 2.24% | 3.67% | 3.50% | -17 bps | +126 bps |
- The nation's plunging gross domestic product (GDP), a measure of economic health, slowed its descent in the second quarter. The initial estimate fell at an annualized rate of 1%. Though that's still a decline, it's a dramatic improvement from prior months--especially considering that estimates for Q1 GDP were revised to -6.4% instead of the earlier -5.5%. Slower declines in exports and business spending accounted for much of the improvement. However, core PCE (personal consumption expenditures not counting food and energy, which the Federal Reserve monitors as an inflation gauge) rose 2%.
- The 11% jump in June sales of new homes was the biggest monthly increase in eight years, though it was still 21.3% below last year's figure. At the current sales rate, it would take 8.8 months to sell all the new homes currently on the market. (That's better than last June, when the new-home inventory would have taken 10.7 months to sell out and sales fell 0.6% from the month before.)
- In other relatively good housing-related news, May home prices in 20 major cities were up by 0.5% from April--the first monthly gain in the Case-Shiller index since July 2006. The index was still down 17.1% from May 2008, though that decline is the best year-over-year comparison in the last nine months.
- Hampered by auto factory shutdowns and lower defense spending, June orders for durable goods fell 2.5%--the first decline in three months for the notoriously volatile figure. However, not counting autos and airplanes, the number actually rose by 1.1% from May.
- Consumer confidence was down from the previous month; the Conference Board's measure dropped from 49.3 to 46.6.
- New York Attorney General Andrew Cuomo's report on the $33 billion in bonuses paid last year by financial companies that received TARP funds raised some eyebrows--not to mention questions about the extent to which taxpayer money helped support that compensation.
Unemployment figures for July will be watched to see whether they follow through on last month's disappointing numbers or improve on them. Also, investors will keep an eye on the S&P 500 to see whether it can capture and hang on to the nice round 1,000 level, which it last saw on Oct. 6.
Key data releases: ISM manufacturing, construction spending, auto sales (8/3); personal income/spending, pending home sales (8/4); factory orders, oil inventories, ISM services (8/5); unemployment, consumer credit (8/7).
Data source: Includes data provided by Brounes & Associates. All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results.
The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indexes listed are unmanaged and are not available for direct investment.
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