Bartlett Market Week
Market Week: February 01, 2010
The Markets
Even generally encouraging earnings reports and a positive GDP report on Friday weren't enough to overcome the investor hesitation that dominated the equities markets during the week. The Nasdaq, which had the best performance of the major domestic indexes last year, suffered the most, followed closely by foreign stocks. The week's decline helped make January the worst month for the S&P 500 in almost a year.
Note: Market indexes listed are unmanaged and are not available for direct investment.
Last Week's Headlines
- According to initial estimates for 2009's final quarter, the U.S. economy grew for the second straight quarter, and at the fastest pace in six years. Gross Domestic Product (GDP) shot up 5.7%, though the figure is likely to be revised over the next two months. Much of that growth came from higher exports and the need to replenish depleted inventories. However, even with those numbers, 2009 GDP still shrank by 2.4%--the worst annual decline since GDP shrank by 10.9% in 1946 as World War II production efforts were winding down.
- Though December home resales were up 15% from last year, they plunged by a record 16.7% between November and December. That's the worst decline recorded by the National Association of Realtors, which said buyers likely pushed up purchases earlier in the fall to qualify for the initial homebuyer tax credit deadline. Sales of new single-family homes also fell in December by 7.6%; for all of 2009, new-home sales were down 22.9% from the previous year.
- As expected, the Federal Reserve once again kept the target interest rate at its current level. And despite efforts to derail Ben Bernanke's confirmation for another term as chairman, the Senate voted 70-30 to retain him, saying that to do otherwise would cause concern in the financial markets.
- According to the S&P/Case-Shiller index, home prices continue to fall at a much slower rate than last year. Prices fell 0.2% in November compared to October. It was the third straight month of single-digit price declines (the 20 previous months saw double-digit declines). The decline from a year earlier was 5.3%, leaving prices roughly where they were in late 2003.
- Orders for durable goods such as capital equipment and machinery rose 0.3% in December, held back by a sharp decrease in aircraft orders. The 20.2% drop in durable goods orders for all of 2009 was the steepest year-over-year decline since recordkeeping began in 1992.
- Wages and benefits were up a half-percent in 2009's third quarter and up 1.5 percent for the entire year--substantially lower than 2008's 2.6 percent increase.
Eye on the Week Ahead
As usual during the first week of a month, Friday's unemployment figure will be watched to see if it remains stuck at 10% for a third straight month. Earnings reports continue as investors try to figure out whether good news is already factored into stock prices.
Key data releases: Consumer income and spending, manufacturing data, construction spending (2/1); auto sales, pending home sales (2/2); productivity and labor costs (2/4); unemployment and payrolls (2/5).
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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