Weekly Update

Market Week: June 29, 2009

The Markets Investor indecision ruled as the major indexes gyrated but ended essentially flat for the week--except, of course, for the Dow, which slid more than 1% for the second week in a row. Trading volume continued to remain relatively restrained as the end of the quarter approached and investors wondered when signs of a slowing decline would turn into signs of an actual recovery. A large auction of U.S. Treasuries saw enough demand to push down bond yields. Market/Index 2008 Close Prior Week As of 6/26/09 Week Change YTD Change DJIA 8,776.39 8,539.73 8438.39 -1.19% -3.85% NASDAQ 1,577.03 1827.47 1838.22 +0.59% +16.56% S&P 500 903.25 921.23 918.9 -0.25% +1.73% Russell 2000 499.45 512.72 513.22 +0.1% +2.76% Global Dow 1,526.21 1,633.70 1633.36 -0.02% +7.02% Fed. Funds .25% .25% .25% 0 bps 0 bps 10-year Treasuries 2.24% 3.79% 3.51% -28 bps +127 bps Last Week's Headlines May saw the second straight month of increased sales of existing homes. The National Association of Realtors said sales were up 2.4% from April--no doubt helped by sales prices that averaged 16.8% less than last year. However, foreclosures and short sales represented only 33% of those sales (compared to almost half earlier in the year), and the percentage of first-time home buyers (29%) also was lower. New-home sales were more problematic; they were down slightly in May after increasing in April, though the median price rose to $221,600--the highest since November. Move along, nothing to see here: The Federal Reserve Open Market Committee forecast no changes to interest rates for "an extended period" and maintained its existing pace for purchases of Treasury and asset-backed securities. It also left deflation out of its discussion, and continued to see any potential inflation as "subdued for some time" because of ongoing slack in the economy. The next day the Fed extended some of its financial liquidity assistance programs (the ones with all the acronyms) into early 2010 but cut back on others, citing improvements in financial markets. Preliminary estimates of big-ticket orders were up in May for the third straight month, and by more than expected. Orders for durable goods such as computers, machinery, and business equipment rose 1.8% from the previous month, though they are still down 27% from last year. However, shipments of durable goods continued to decline. Gross Domestic Product (GDP) for Q1 declined by 5.5%, slightly less than the 6.1% of earlier estimates. Payroll tax credits and one-time Social Security stimulus checks in May boosted household income by 1.4%; without the stimulus, the figure would have been 0.2%. Spending also has risen 0.3% since April, the first increase in three months. However, Americans also continued to sock away a bigger portion of that income. The personal savings rate reached 6.9% of income in May--a level not seen since Clinton's first year in the White House. Private payrolls decreased by $12.4 billion in May, compared to April's $0.7 billion drop--doubtless one reason for the increased interest in saving. The International Monetary Fund forecast that global recovery would be slower than expected, and that the world economy would shrink by 1.3% this year rather than the 0.5% growth it forecast in January. Next year's projected 1.9% growth rate also would be two-thirds of its January estimate. Eye on the Week Ahead As the quarter comes to a close, last-minute transactions at large institutional investors could affect the equity markets, though many also may leave the trading floor behind early for a long holiday weekend. Thursday's monthly unemployment figures also will be of interest. Key data releases: Consumer confidence (6/30); construction spending, manufacturing (7/1); unemployment, factory orders (7/2). Data source: Includes data provided by Forefield, Inc. and 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.