Market Week: August 26, 2013

The Markets

Equities didn’t seem to suffer any ill effects after a technical glitch brought trading of Nasdaq-listed securities to a standstill for more than three hours on Thursday. In fact, the Nasaq actually posted the week’s strongest gains. The S&P 500 and small-cap Russell 2000 also were positive, but the Dow had its third straight negative week, though it edged back above the 15,000 mark. The 10-year Treasury yield continued to rise until Friday, when a weak housing report helped reverse the week’s increases.

Market/Index 2012 Close Prior Week As of 8/23 Week Change YTD Change
DJIA 13104.14 15081.47 15010.36 -.47% 14.55%
Nasdaq 3019.51 3602.78 3657.79 1.53% 21.14%
S&P 500 1426.19 1655.83 1663.47 .46% 16.64%
Russell 2000 849.35 1024.30 1038.24 1.36% 22.24%
Global Dow 1995.96 2251.86 2240.44 -.51% 12.25%
Fed. Funds .25% .25% .25% 0 bps 0 bps
10-year Treasuries 1.78% 2.84% 2.82% -2 bps 104 bps

Equities data reflect price changes, not total return.

Last Week’s Headlines

  • Members of the Federal Open Market Committee seem as unsure as everyone else about precisely how soon quantitative easing will begin to wind down. Minutes of the FOMC’s July meeting showed that some members favor starting to cut bond purchases “in the near future” (meaning as early as September) while others advocate a delay until later in the year. However, they generally expressed support for the overall tentative timetable laid out in June, which suggested purchases might end entirely by mid-2014.
  • Existing home sales were up 6.5% in July. The National Association of RealtorsĀ® said an increase in mortgage rates helped motivate buyers to try to close before rates rose further. That pushed resales to their highest level since buyers were racing to qualify for the homebuyer tax credit deadline in late 2009.
  • Sales of new homes didn’t fare as well. The Commerce Department said they fell 13.4% in July to the lowest level since October, though they were still 6.8% higher than last July and followed several months of strong gains.
  • The Nasdaq literally flatlined for more than three hours on Thursday after trading in Nasdaq-listed securities came to an abrupt halt because of what was described as a technical problem with connectivity at the exchange. At week’s end, no specific cause for the outage had been publicly identified, though Nasdaq OMX Group said there was no evidence that hacking was involved.
  • Longtime Microsoft CEO Steve Ballmer said he will retire within the next year once the board of directors names a successor.

Eye on the Week Ahead

Any traders still at their desks instead of on vacation are likely to view economic data, including revisions to the Q2 GDP estimate, through the prism of its potential impact on the FOMC’s September meeting.

Key dates and data releases: durable goods orders (8/26); home prices (8/27); 2nd estimate of Q2 GDP (8/29); personal income/spending (8/30).

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.