Bulls and Bears continue to batlle in 2010 with no clear winner by Ken Mahoney
U.S. stocks finished a lackluster trading session marginally higher on Friday as relief over Congressional legislation boosted the financial sector but economic worries remained. For the week, the Dow Jones Industrial Average slumped 2.9% while the broad S&P and the Nasdaq both fell 3.7% to mark the first down week in three.
The Dow's drop was led by its consumer component as investors showed their concern over the government’s cut in its estimate for first-quarter economic growth, citing weaker consumer spending. Helping temper the losses, gains in the financial sector can be largely credited to closure surrounding the landmark package of financial regulations U.S. House and Senate lawmakers reached agreement on early Friday. After months of uncertainty about what the new rules would contain, the agreement offers the clearest picture to date about how financial institutions and government will interact. While large financial entities are likely to face tighter restrictions, critics applaud most of the measures as reasonable. The bill is expected to have sufficient support to be passed into law.
In other news last week, China's decision to remove its currency peg rippled through global markets, giving a boost to assets perceived as riskier, including stocks, commodities and growth-linked currencies. China has come under increasing international pressure to allow the Yuan to appreciate, with the U.S. in particular arguing that its comparative weakness gives Chinese exporters an unfair advantage. At the G20 meeting, Obama expressed his wishes that China would allow the Yuan to rise during the next few months.
This week marks the last one of the month, the quarter, and the first half of the year. Amidst the ongoing uncertainty, investors are sure to be focused on the glut of economic data scheduled for release in the days ahead for clues as to what the second half of the year will bring.
Key things to watch this week:
Monday – Personal Income and Outlays
Tuesday – S&P Case-Shiller HPI, Consumer Confidence
Wednesday – Chicago PMI, ADP Employment Report
Thursday – Motor Vehicle Sales, Jobless Claims, ISM Manufacturing Index, Construction Spending, Pending Home Sales,
Friday – Employment Situation, Factory Orders
Data as of 06/25/2010 1-Week Y-T-D 1-Year 5-Year 10-Year
Standard & Poor's 500 -3.65 -3.44 17.2 -1.92 -2.53
Dow -2.94 -2.73 20.2 -0.30 -0.25
NASDAQ -3.74 -2.01 21.0 1.65 -4.21
MSCI EAFE -2.61 -12.6 7.28 -1.32 -1.85
10-year Treasury Note (Yield Only) 3.30 N/A 3.54 4.10 6.02
Notes: All index returns exclude reinvested dividends, and the 5-year and 10-year returns are annualized. Sources: Yahoo! Finance, Google Finance, Barron’s, djindexes.com, MSCI Barra. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not available.
HEADLINES:
Statistics from the Labor Department show the employment outlook is improving for workers in the 25 to 54 year-old age group, but the nationwide unemployment rate for older workers (55 and up) has barely moved. There's also evidence that more older Americans are withdrawing funds from already depleted retirement accounts in order to make ends meet, sometimes suffering tax penalties when they do so.
Oil prices dropped slightly to near $78 a barrel in Asia as traders kept a close eye on damage a possible hurricane could cause rigs in the Gulf of Mexico this week. Benchmark crude for August delivery was down 25 cents to $78.61 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract added $2.35 to settle at $78.86 on Friday.
World leaders, shaken by the European debt crisis but wary of ending stimulus programs, pledged to slash government deficits in the most industrialized nations in half by 2013, with flexibility to meet the goal. At the meeting that ended Sunday, they generally sided with cutting spending and raising taxes, despite warnings from U.S. President Barack Obama and others that too much austerity too quickly could choke off the global recovery.
BP may be able to plug its leaking Gulf of Mexico oil well sooner than expected according to a Sunday Times report citing engineering experts. The newspaper says engineer sources in Houston, Texas, say the company could be finished in mid-July ahead of the public target of early August. Citing sources with knowledge of the operation, the newspaper says the first well has progressed faster than expected, with less than 1,000 feet of rock left to drill before reaching its target.
QUOTE OF THE WEEK:
“You are never too old to set another goal or to dream a new dream.” - C.S. Lewis
The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) that serves as a benchmark of the performance in major international equity markets as represented by 21 major MSCI indexes from Europe, Australia and Southeast Asia.
The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
Google Finance is the source for any reference to the performance of an index between two specific periods.
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Past performance does not guarantee future results.
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