The Markets

After suffering its first triple-digit loss of the year on Monday, the Dow fought to hang on to the prior week’s 14,000 level but in the end just couldn’t manage to do so. The other domestic indices managed minimal gains, and the S&P 500 hit its highest level since November 2007. Meanwhile, the Global Dow was hampered by anxiety about rising Spanish and Italian bond yields.

Market/Index 2012 Close Prior Week As of 2/8 Week Change YTD Change
DJIA 13104.14 14009.79 13992.97 -.12% 6.78%
Nasdaq 3019.51 3179.10 3193.87 .46% 5.77%
S&P 500 1426.19 1513.17 1517.93 .31% 6.43%
Russell 2000 849.35 911.20 913.67 .27% 7.57%
Global Dow 1995.96 2124.94 2110.62 -.68% 5.73%
Fed. Funds .25% .25% .25% 0 bps 0 bps
10-year Treasuries 1.78% 2.04% 1.99% -5 bps 21 bps

Equities data reflect price changes, not total return.

 

Last Week’s Headlines

  • The nonpartisan Congressional Budget Office said the annual U.S. budget deficit as a percentage of the economy will shrink in 2013 for the fourth year in a row. The estimated $845 billion deficit would be less than $1 trillion for the first time in five years, and represent only 5.3% of GDP–roughly half the ratio of 2009. The bad news? Without tax and spending changes, the CBO said that the total national debt will be at 77% of GDP in 10 years and growing, largely because of rising health-care costs for an aging population and interest payments on federal debt.
  • The U.S. trade deficit shrank to its lowest point in almost three years as a result of record oil exports. According to the Commerce Department, the trade deficit fell more than 20% to $38.5 billion.
  • The U.S. Treasury said it will launch its first new investment product in 15 years when it auctions floating-rate notes sometime in 2013. The Treasury also said it plans to increase issuance of Treasury Inflation-Protected Securities (TIPS) this year.
  • New factory orders were up 1.8% in December, with an 11.7% jump in transportation-related orders leading the way, according to the Commerce Department. It’s the third increase in factory orders in the last four months.
  • The U.S. services sector grew at a slightly slower pace in January. The Institute for Supply Management’s index registered 55.2% for the month. That’s slightly lower than December’s 55.7%, but any figure above 50% represents growth, and it’s better than the 53.1% of the ISM’s manufacturing index.
  • The U.S. Justice Department filed suit against Standard & Poor’s, charging that during the three years prior to October 2007, the ratings service deliberately inflated its ratings of certain mortgage-backed bonds because of its own business concerns.
  • Bond yields for Spanish and Italian sovereign debt rose to 5.4% and 4.5% respectively after Spanish Prime Minister Mariano Rajoy’s political party was accused of taking kickbacks and as polls showed new strength by former Prime Minister Silvio Berlusconi as Italy’s February 24-25 elections get closer.

 

Eye on the Week Ahead

As earnings season winds down, the approaching March 1 deadline for implementation of the sequestered federal budget cuts may begin to get renewed investor attention. Retail sales may give insight into the consumer mindset.

Key dates and data releases: retail sales, business inventories (2/13); industrial production, options expiration (2/15).

Data sources: 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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