Bartlett Market Week
Market Week: December 21, 2009
The Markets
Investors seemed to abandon their recent preference for the Dow in favor of small caps as well as the Nasdaq, which hit a new year-to-date high. Meanwhile, the S&P 500 continued to hug the 1100 mark. The dollar once again rallied, which didn't help foreign stocks, commodities, or gold. The greenback ended the week at $1.44 to the euro, its best level in more than three months.
Note: Market indexes listed are unmanaged and are not available for direct investment.
Last Week's Headlines
- Inflation at the wholesale level heated up in November. Higher energy costs helped push the Producer Price Index up 1.8% from the month before. That's dramatically higher than October's 0.3% increase or September's 0.6% decrease. Prices for crude goods--raw materials that require further processing--jumped 5.7%.
- Energy costs also were the culprit in higher consumer inflation, which rose 0.4% in November. The 12-month inflation rate now stands at 1.8%; that's the first annualized increase since February. However, not including food and energy, prices were flat.
- Citigroup and Wells Fargo became the last of the major banks to announce plans to repay their TARP loans. That would bring to $161 billion the amount repaid so far from the $245 billion loaned to roughly 700 financial institutions. The U.S. Treasury then postponed plans to sell part of its 34% share of Citigroup; the new issuance coupled with a large government sale would have meant taking a loss on the government's shares.
- Standard and Poor's became the second credit ratings agency to downgrade the government bonds of Greece, whose debt is estimated to be roughly 12% of its gross domestic product. The resulting anxiety about Eurozone bonds in general gave additional support to a strengthening dollar.
- New home construction was up almost 9% in November from the previous month. That's quite a change from October's nearly 10% drop in the face of the scheduled expiration of the first-time homebuyer's tax credit, which was subsequently extended.
- It's status quo at the Federal Reserve Board. The Senate Banking Committee gave Chairman Ben Bernanke the okay for a new term. And even though the Fed acknowledged some encouraging economic signals, interest rates will continue to remain low for "an extended period."
Eye on the Week Ahead
Heading into the holidays, investors will keep an eye on the dollar, which in recent months has tended to behave inversely from stocks. They'll also be watching to see if stocks can break out of their recent trading range. Meanwhile, institutional investors will be tweaking their portfolios over the next two weeks in anticipation of year's end.
Key data releases: Q3 final GDP, home resales (12/22); personal income/spending, new home sales (12/23); durable goods orders (12/24).
Data source: 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.
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