Weekly Update

Market Week: September 28, 2009

The Markets The rally took a breather (or possibly a last gasp?) this week. The Dow backed away from the tantalizingly close 10,000 level with a 177-point intraday swing on Wednesday after the Federal Reserve's discussion of its future bond-buying plans. It was largely downhill from there as the major indexes took back much of last week's gains. Market/Index 2008 Close Prior Week As of 9/25/09 Week Change YTD Change DJIA 8776.39 9820.20 9665.19 -1.58% 10.13% NASDAQ 1577.03 2132.86 2090.92 -1.97% 32.59% S&P 500 903.25 1068.30 1044.38 -2.24% 15.62% Russell 2000 499.45 617.88 598.94 -3.07% 19.92% Global Dow 1526.21 1926.12 1884.05 -2.18% 23.45% Fed. Funds .25% .25% .25% 0 bps 0 bps 10-year Treasuries 2.24% 3.47% 3.33% -14 bps 109 bps Last Week's Headlines After four straight months of increases, existing home sales fell 2.7% in August--a sharp drop from July's 7.2% increase. However, the total backlog of unsold homes was down to an 8.5-month inventory. Sales of new homes were essentially flat after four months of increases, and inventories of unsold new homes fell by 3%. As expected, the Fed kept interest rates steady but will extend its purchases of mortgage-backed securities, gradually winding down the program by the end of Q1 2010. However, Fed buying of Treasury bonds, which has helped support that market, will stop at the end of October as previously announced. Leading economic indicators tracked by the Conference Board were up for the fifth month in a row. The major factors in the 0.6% August increase were supplier deliveries, the interest rate spread between 10-year Treasuries and the fed funds rate, and higher stock prices. Only three indicators--real money supply, weekly jobless claims, and new orders for nondefense capital goods--were negative. Five IPOs that began trading on a single day this week and increased filings for more at the SEC gave another indication of renewed appetite for increased risk. Orders for durable goods fell 2.4% in August after a 4.8% increase the month before. A dramatic drop in commercial aircraft orders was responsible for much of the decline. However, even non-transportation-related goods were down slightly after having increased 0.9% in July, and defense-related spending provided much of the support for that figure. Gold had its first weekly loss in six weeks, and well-stocked inventories pushed oil down roughly 8%, the biggest weekly loss since July. The G20 leaders agreed to promote more domestic consumption by export-dominated China and Japan, a lower U.S. budget deficit, increased International Monetary Fund ownership by developing nations, and reforms in bank compensation policies and capital requirements. However, skeptics noted that the so-called global framework for growth lacks any enforcement mechanism. Eye on the Week Ahead Potential window-dressing on the part of large institutional investors could mean volatility in advance of the end of the quarter on Wednesday. Friday's unemployment claims stats are expected to continue to show job losses. Key data releases: Home prices, consumer confidence (9/29); revised Q2 gross domestic product (9/30); auto sales, personal income and spending, manufacturing (10/1); unemployment, nonfarm payrolls (10/2). Data source: Includes data provided by Forefield, Inc. & 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.