Market Week: April 22, 2013

The Markets

It was a tumultuous week, though the volatility of financial markets paled in comparison to the tragedies in Boston and at a Texas fertilizer plant. Domestic equities made an attempt to recover from Monday’s 266-point collapse in the Dow industrials, but quickly reversed any progress, giving the Dow its worst week in almost a year. Gold followed up on the previous Friday’s fiasco by plunging $140 an ounce on Monday; the more than 9% loss cut the spot price to $1,360, which hasn’t been seen since early 2011. Weak inflation data contributed to a weak auction of five-year Treasury Inflation Protected Securities (TIPS), which in turn helped spur selling of TIPS generally. Finally, oil prices hit a four-month low of $88 on reduced demand.

Market/Index 2012 Close Prior Week As of 4/19 Week Change YTD Change
DJIA

13104.1

14865.1

14547.5

-2.14%

11.01%

Nasdaq

3019.51

3294.95

3206.06

-2.70%

6.18%

S&P 500

1426.19

1588.85

1555.25

-2.11%

9.05%

Russell 2000

849.35

942.85

912.5

-3.22%

7.44%

Global Dow

1995.96

2146.27

2097.42

-2.28%

5.08%

Fed. Funds

0.25%

0.25%

0.25%

0 bps 0 bps
10-year Treasuries

1.78%

1.75%

1.73%

-2 bps -5 bps

 

Equities data reflect price changes, not total return.

Last Week’s Headlines

  • U.S. industrial production increased 0.4% in March, according to the Federal Reserve. As a result, output for the first quarter rose at an annual rate of 5%, its biggest gain in a year. Usage of the nation’s manufacturing capacity also rose to 78.5%–1.2% higher than a year earlier, but still below its long-term average. However, both the Empire State and Philly Fed regional manufacturing surveys fell slightly in April.
  • Housing starts hit their highest level since 2008 in March, fueled mostly by multi-unit construction. The Commerce Department said the 7% monthly increase helped push new residential construction almost 47% higher than last March. Building permits, an indicator of future activity, dropped almost 4%, but were still more than 17% higher than a year ago.
  • Lower gas prices in March continued to lower the consumer inflation rate. The Consumer Price Index fell 0.2%, largely because of a 2.6% decline in energy costs. The Bureau of Labor Statistics said that put inflation for the last 12 months at 1.5%.
  • The Chinese economy showed weaker-than-expected growth during the first quarter. According to China’s National Bureau of Statistics, gross domestic product fell to 7.7% from 7.9% the quarter before.

Eye on the Week Ahead

The first peek at Q1 economic growth data could suggest whether a “sell in May, go away” mentality will challenge equities’ strong year-to-date performance. Housing data also is on tap.

Key dates and data releases: home resales (4/22); new home sales (4/23); durable goods orders (4/24); initial estimate of Q1 GDP (4/26).

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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