Bartlett Market Week
Market Week: July 6, 2010
The Markets
Wilting in the heat: Tuesday's roughly 3% drop kicked off a dismal final week of the second quarter for domestic equities, shoving them further into negative territory. Wall Street's grim mood even dragged the small-cap Russell 2000 underwater for the year; its 19.3% decline since the late April high puts it uncomfortably close to an official bear market. Investors continued to seek refuge in bonds, favoring short-term Treasuries over longer-term debt; at one point that pushed the yield on the 2-year to a record intraday low.
Note: Market indexes listed are unmanaged and are not available for direct investment.
Last Week's Headlines
- Unemployment fell to 9.5% in June. However, the news wasn't really cause for celebration; the decline was largely the result of 652,000 people leaving the pool of potential workers, according to the Bureau of Labor Statistics. In a separate survey, the loss of 225,000 temporary census jobs led to the first drop in nonfarm payrolls this year.
- Consumer spending rose 0.2% in May, and personal incomes, considered a potential indicator of future spending, were up even more (0.4%). According to the Bureau of Economic Analysis, the percentage of income saved rather than spent also rose slightly to 4%.
- April home prices in the 20 cities measured by the S&P/Case-Shiller Home Price Index were 3.8% higher than they were last year. All but two of those cities--Miami and New York--also saw increases between March and April as the index rose 0.8% after falling for six consecutive months. However, almost half of those 20 cities also have seen new lows since the first of the year. And according to the National Association of Realtors®, the April 30 deadline for signing a contract to qualify for the federal first-time homebuyer tax credit served as a cutoff for pending home sales, which fell 30% in May.
- U.S. manufacturing continued to expand in June for the 11th month in a row, but at a slower pace than during the previous three months. Thirteen of the eighteen industries included in the Institute for Supply Management's index showed growth.
Eye on the Week Ahead
A holiday-shortened trading week offers little economic data to help investors assess just how tentative the recovery might be, and what that means for stock prices in the second half of the year.
Key data releases: Services sector data (7/6); consumer credit (7/8).
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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