A couple of pleasing economic reports last week brought about broad-based buying in both the U.S. and global markets. Stocks in the past week continued a five-week surge taking the Dow to a 3.5-year high, and the Nasdaq to its highest level since 2000.
Returns to 2/03/12
One Week
YTD
One Year
Three Year
Five Year
Dow Jones Industrial
1.62
5.46
9.53
20.14
3.11
NASDAQ Composite
3.16
11.54
5.51
24.21
3.25
Standard & Poor's 500
2.22
7.11
5.09
19.62
0.68
MSCI EAFE (Internl.)
2.27
8.36
-8.45
14.54
-3.58
Source: Morningstar.com. * Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. 3 and 5-year returns are annualized.
ARE YOU CONCERNED ABOUT THE MARKETS AND YOUR MONEY? We have witnessed some of the worst global market volatility in history. When fear takes over a market, thoughtful investors should review the facts. We are long-term investors and even though this market has seen historical volatility and recession, it is the long-term fundamentals that will emerge and win out in the long run. Remember, "In uncertain times, stay informed and diversified." If you are concerned! You should contact us to schedule a review of your portfolio related to your own situation.
U.S. Economic News
Nonfarm Payrolls rose by 243,000 in January, much higher job growth than the 125,000 gain expected by economists. Those jobs included a 257,000 gain in the private sector which countered losses in the public sector, the U.S. Department of Labor reported. The unemployment rate fell to 8.3% in January from 8.5% in December.
Institute for Supply Management said its services index in January reached 56.8% -- the highest reading since February -- up from 53.0% in December. Economists polled by MarketWatch had expected a 53.5% reading. The new orders index jumped 4.8 points, and the employment index rocketed 7.6 points to 57.4%. Readings over 50% indicate expansion.
Factory Orders were up 1.1% in December according to the Commerce Department. Shipments were up 0.7% in the month, the seventh consecutive monthly increase. Excluding aircraft and defense spending, orders were up 3.0%.
Consumer Confidence in the U.S. erased some of the gains generated during the last couple of months. The January confidence index fell to 61.1 from an upwardly revised December reading of 64.5. Economists had expected an index increase to 68.0. The present situation and consumer expectations for economic activity subindexes each fell, while data regarding employment also indicated negative sentiment.
U.S. Home Prices fell again in November, according to the Standard & Poor's Case-Shiller home-price indexes, which reported Tuesday that the majority of metropolitan markets covered by its indices suffered declining home prices. For November, the Case-Shiller index of 10 major metropolitan areas and the 20-city index both fell 1.3% from the previous month. The composite indexes showed year-over-year tallies of negative 3.6% and negative 3.7%.
Retail Same-Store Sales came in ahead of expectations. Thomson Reuters reported that the 20 retailers it follows posted a 4.2% gain in same-store sales, above the 2% expected by economists.
Other Interesting Info and Events
Fed Chairman Bernanke offered up testimony on the economy to the House of Representatives Budget Committee, but his statement caused little stir. Few were surprised by his analysis that the sluggish expansion of the economy has left it vulnerable to shocks. Bernanke did indicate, though, that concerns about the domestic outlook and developments in Europe are abating, even as Greece continues to grapple with creditors over its lending terms.
Global News
Spain’s gross domestic product fell 0.3% in the fourth quarter from the third, the first decline in its GDP since climbing out of recession two years ago. The country’s jobless claims rose 4% in January from December, and only 7.3% of new contracts signed in January were for permanent work, indicating that further job losses are likely.
Japanese industrial production rose 4% in December, according to the country’s Ministry of Economy, Trade, and Industry, benefiting from a recovery from the flooding in Thailand. Japan’s output of cars, mobile phones, and semiconductor manufacturing equipment all made gains.
Eurozone posted a record high jobless rate of 10.4% in December, though the reading was at the expected level and unchanged from a November revision. The rate of unemployment in the 17 countries that use the euro remained at over a 13-year high in December.
Eurozone Manufacturing, the Markit manufacturing purchasing managers' index increased to 48.8 in January from 56.9 in December. The reading is indicative of a contractionary environment in the region, but the increase signals that economic activity could be improving.
What's Happening This Week?
The surprisingly strong U.S. jobs data, and the growing momentum of a 10-week stock market rally could act as a magnet for buyers, with little in the way of new economic reports in the coming week. Europe, however, remains a wild card. Greece continues to work over the weekend with creditors and is expected to be the topic of European finance ministers meeting Wednesday.
Remember, "In uncertain times, stay focused and diversified."
In any market environment, I strongly believe that investors should stay diversified across a variety of asset classes, which helps reduce risk. By working closely with your Bankers & Investors Financial Advisor, you can help ensure that your portfolio is properly diversified and that your financial plan supports your long-term goals, time horizon, and tolerance for risk. Diversification does not guarantee a profit or protect against loss. If you don't currently have an advisor or would like a second opinion, give us a call we would love to work with you.
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