Bartlett Market Week
Market Week: May 17, 2010
The Markets
The Dow gained back almost all of last week's losses in a 400-point rally on Monday after a European bailout package was announced. Despite giving back roughly half that gain at week's end, U.S. equities still managed to squeak back into positive territory for the year, led by the small caps. However, global equities continued to suffer from fears of default and the possibility that the austerity measures needed to fight budget deficits might hamper global recovery. As a result, gold surged to a record high and the dollar hit its highest level against the euro since fall 2008.
Note: Market indexes listed are unmanaged and are not available for direct investment.
Last Week's Headlines
- The Securities and Exchange Commission announced that exchanges had agreed to "a framework" for strengthening circuit breakers designed to prevent events such as last week's "flash crash." However, no formal explanation for the dramatic drop has been made public, though investigators are said to be looking at trading in S&P 500 futures contracts and some firms' decision to temporarily halt high-frequency trading systems during the chaos, thus preventing them from making a market.
- Broad-based gains in manufacturing drove up U.S. industrial production 0.8% in April, according to the Federal Reserve Board. The Department of Commerce said April was the U.S. manufacturing sector's best month since June 2004, expanding for the ninth straight month. Construction spending in March also was up by 0.2%, mostly on nonresidential public projects such as roads.
- The U.S. trade deficit reached its highest level since December 2008, expanding 2.5% in March, according to the Department of Commerce.
- Retail sales were up 0.4% in April from the month before, according to the Census Bureau, and up 8.8% from a year earlier.
- Productivity rose during the first three months of 2010, though the 3.6% productivity gain was less than the previous quarter's 6.3%. The productivity gain more than offset a 1.9% increase in hourly compensation, according to the Bureau of Labor Statistics. As a result, unit labor costs for nonfarm businesses--one indicator of whether inflation is heating up--declined 1.6%.
Eye on the Week Ahead
Wednesday's deadline for Greece to repay €8.5 billion in debt will dominate traders' attention, though any upward movement in inflation data also could have an impact.
Key data releases: Treasury international capital flows, housing market index (5/17); wholesale inflation, housing starts (5/18); consumer inflation, Greek debt repayment deadline (5/19).
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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