Worst Thanksgiving week for the markets since 1932
It was another brutal week for stocks as fears related to Europe’s debt situation dominated headlines. According to CNBC, the S&P 500 logged its worst Thanksgiving week since 1932. Ouch! For the week, the S&P 500 fell 4.7%, giving back almost two-thirds of its October gains.
Another factor that contributed to the poor performance is that trading volume was exceptionally light for the week as investors pulled away from their computers to enjoy some holiday relaxation. The day after Thanksgiving is typically one of the lightest volume days of the year, and true to form, only 3 billion shares (less than half the daily average) changed hands on major exchanges as the stock market closed early at 1 pm.
Even though the U.S. economic picture keeps improving, investors continue looking to Europe for signals. And unfortunately, the signals coming out of Europe are a mixed bag at best. Despite hopes that new leadership can pull the region out of crisis, more countries continue to struggle. Hungary’s credit rating was downgraded to junk status by Moody’s last week. Belgium, which has struggled to implement spending cuts after 18 months without a government, was downgraded on Friday to AA from AA+ by Standard & Poor's. Italy paid a record 6.5% to borrow money over six months on Friday, and its longer-term funding costs soared far above levels seen as sustainable for public finances. High debt yields from major economies such as Spain, France, and Germany suggest investing in the region is perceived as being more risky. And last week’s poor auction of German bonds raised concerns that the debt crisis is spreading to Europe's core. This rash of negative news is really disturbing investors.
To quote Brian Lazorishak, portfolio manager at Chase Investment Counsel "This market is going to continue to be driven by what's happening in Europe. If things seem to be falling apart, nothing else will matter. If it looks like there's a way out – a light at the end of the tunnel in Europe – that could spark a decent rally from where we are now.”
ECONOMIC CALENDAR:
Monday – New Home Sales
Tuesday – S&P Case Shiller, HPI, Consumer Confidence
Wednesday – ADP Employment Report, Productivity and Costs, Chicago PMI, Pending Home Sales Index, EIA Petroleum Status Report, Beige Book
Thursday – Motor Vehicle Sales, Jobless Claims, ISM Manufacturing Index, Construction Spending
Friday – Monster Employment Index, Employment Situation Report
HEADLINES:
Black Friday sales increased 6.6% to the largest amount ever as U.S. consumers shrugged off 9 percent unemployment and went shopping. Consumers spent $11.4 billion, ShopperTrak said in a statement yesterday. Foot traffic rose 5.1% on Black Friday, according to the Chicago-based research firm.
Did you skip the lines on Black Friday? There's still Cyber Monday -- and analysts are expecting an abundance of deals to bring in record online sales this year. Andrew Lipsman, an industry analyst at data tracking firm ComScore, said sales for the one-day shopping event are projected to hit a record $1.2 billion this year.
Last week, Congress's special 12-member deficit-cutting committee failed to agree on measures to address U.S.'s fiscal woes. It marked the third year in a row that taxpayers headed into December with major tax-code issues unaddressed. Lawmakers have a lengthy to-do list. The 2% Social Security payroll-tax cut for employees expires at the end of 2011. So do a host of other provisions, including a fix to keep the alternative minimum tax from expanding to millions more taxpayers in 2012, and an extension of the popular IRA charitable contribution for people older than 70½.
Oil prices rose towards $108 on Thursday, helped by bigger-than-expected stock draws in the United States and tensions around Iran.
QUOTE OF THE WEEK:
Doing what you love is the cornerstone of having abundance in your life. Dr. Wayne Dyer
Share the Wealth of Knowledge!
Please share this market update with family, friends, or colleagues. If you would like us to add them to our list, simply click on the "Forward email" link below. We love being introduced!
If you would like to opt-out of future emails, please reply to this email with UNSUBSCRIBE in the subject line.
Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.
The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.
The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the Nasdaq. The DJIA was invented by Charles Dow back in 1896.
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.
Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
Past performance does not guarantee future results.
You cannot invest directly in an index.
Consult your financial professional before making any investment decision.
Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors.
By clicking on these links, you will leave our server as they are located on another server. We have not independently verified the information available through this link. The link is provided to you as a matter of interest. Please click on the links below to leave and proceed to the selected site.
