Bartlett Market Week
Market Week: May 3, 2010
The Markets
Standard & Poor's downgrade of various European countries' sovereign debt (see below) rivaled Goldman Sachs' Senate testimony for center stage Tuesday, sending the euro tumbling to a 12-month low against the dollar. Though a string of positive earnings reports prompted a midweek rebound that helped the Dow hang onto the 11,000 level by week's end, the S&P lost its grip on 1,200. Meanwhile, nervous investors sent 10-year Treasury prices up and yields down.
Note: Market indexes listed are unmanaged and are not available for direct investment.
Last Week's Headlines
- Greece was the word after Standard & Poor's downgraded Greek government bonds to junk status. S&P also planted Portugal and Spain on a slippery slope by downgrading sovereign debt there, though their bonds are still investment grade.
- The nation's economy grew at an annual rate of 3.2% in the first three months of 2010, according to the Bureau of Economic Analysis. That's slower than the 5.6% gross domestic product (GDP) of the previous quarter, but still faster than any quarter since fall 2007. Consumer spending on durable goods and business purchases of equipment and software saw the biggest increases.
- Goldman Sachs executives and senators investigating the causes of the financial crisis seemed to be speaking two different languages during last week's acrimonious hearings. News reports that federal prosecutors are looking at whether criminal securities fraud charges are justified against Goldman contributed to Friday's drop in stock prices.
- Same old same old: The Fed reiterated its belief that low interest rates will be warranted for an extended period.
- What a difference a year makes: Even though February home prices were 0.9% lower than in January, they were still 0.6% higher than a year earlier. It's the first time since 2006 that the S&P/Case-Shiller price index's year-over-year figure has been positive. And even a 0.6% increase is welcome compared to the same time last year, when prices were 24% lower than February 2008.
Eye on the Week Ahead
Prospects for financial reform legislation and a Greek bailout in advance of the May 19 deadline for massive debt repayment will continue to capture traders' attention, though unemployment data on Friday will also be key.
Key data releases: Personal income/spending, manufacturing, construction spending (5/3); auto sales, pending home sales (5/4); productivity (5/6); unemployment/payrolls (5/7).
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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