Bartlett Market Week

Market Week: July 30, 2012

The Markets

Encouraging words from the president of the European Central Bank helped send the Dow industrials back above 13,000 for the first time since May. The other domestic equity indices also rebounded strongly, largely wiping out last week’s declines, and the Global Dow managed to return to positive territory for the year. Investors felt comfortable enough to lighten up on Treasury bonds a bit, and the euro briefly strengthened to $1.21.

Note: Market indexes listed are unmanaged and are not available for direct investment.

Last Week’s Headlines

The U.S. economy grew more slowly during the second quarter. The Bureau of Economic Analysis’s initial estimate of gross domestic product was 1.5% compared to Q1′s 2%. While personal consumption, exports, and business investments in equipment and inventory were up, they were partly offset by higher imports and cuts in state and local government spending.
After a strong showing in May, sales of new single-family homes dropped 8.4% in June, according to the Commerce Department. Also, the National Association of Realtors®’ gauge of pending home sales fell below the 100 level considered healthy, though it was 9.5% higher than a year ago. Meanwhile, mortgage buyer Freddie Mac said the average rate on a 30-year mortgage last week fell below 3.5% for the first time since record-keeping began roughly 60 years ago. The 30-year fixed rate was 3.49%, while the 15-year fixed mortgage hit 2.8%, also a new record low.
Durable goods orders were up 1.6% in June, but that was largely due to orders for aircraft, according to the Commerce Department. Excluding transportation, orders for goods designed to last at least three years were down 1.1%.
European Central Bank President Mario Draghi said the ECB will take whatever steps are necessary to preserve the euro, and suggested those might include joining forces with the eurozone’s bailout fund to buy Spanish and Italian sovereign bonds.

Eye on the Week Ahead

Investors will look to the Fed on Wednesday hoping for new economic support. Friday’s unemployment data is expected to show little change. Manufacturing and services data also will suggest the state of the U.S. economy. The European Central Bank meets on Thursday.

Key dates and data releases: personal income/spending, home prices (7/31); Federal Open Market Committee announcement, U.S. manufacturing (8/1); weekly unemployment data, factory orders (8/2); unemployment/payrolls, U.S. services sector (8/3).

Data sources: 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.

The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indexes listed are unmanaged and are not available for direct investment.

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The information contained herein has been prepared from sources believed reliable but is not guaranteed by us and is not a complete summary or statement of all available data.