Market Week: February 27, 2012

The Markets The S&P 500 followed the Dow in hitting a year-long high. Meanwhile, the Dow crept over 13,000 repeatedly (though it could never quite manage to hold on to that level through the closing bell) and the Nasdaq saw its highest close since 2000. Concern over tensions with Iran helped send oil to $109 a barrel.

Last Week's Headlines The National Association of Realtors® said home resales in January saw a strong increase of 4.3%. That's the third increase in the past four months, and it put sales 0.7% ahead of the same time last year. However, the $154,700 median sales price was down 2% from last year's $157,900. Sales of new homes were down in January for the first time in five months. However, according to the Commerce Department, the 0.9% decline still left sales 3.5% higher than the year before, though the median price of $217,000 was down 9.6% from January 2011. President Obama proposed a menu of sweeping changes to the corporate tax code. Though any reform legislation would have to go through Congress, options outlined in the proposal include cutting the top corporate tax rate from 35% to 28% (a 25% effective tax rate for U.S. manufacturing companies), eliminating certain deductions and tax credits for the oil and gas industry and making clean-energy incentives permanent, simplifying tax filing for small businesses and expanding their ability to expense investments, taxing carried interest as ordinary income, instituting a minimum tax on overseas profits, revamping taxation of pass-through entities, and reducing the deductibility of corporate interest payments. Officials of the G-20 nations postponed until April a decision on committing additional resources to the International Monetary Fund, saying they want to gauge the progress of rescue efforts within the eurozone itself. The European Commission's economic arm predicted stagnating growth in the EU and a mild (-0.3%) recession for the eurozone this year. Eye on the Week Ahead Domestic economic data on gross domestic product, manufacturing, personal income, and housing will shed light on the likelihood of continued economic growth, while oil will be watched for its potential impact on gas prices and the recovery. Also, Germany's governing body is scheduled to vote on the country's participation in the new bailout, and eurozone leaders will meet at week's end to review whether to increase funding for the joint lending facilities set up to deal with the sovereign debt crisis. Key dates and data releases: pending home sales (2/27); durable goods orders, home prices, consumer confidence (2/28); second estimate of Q4 gross domestic product, Fed beige book release (2/29); auto sales, personal income/spending, U.S. manufacturing, construction spending (3/1). _________________________________________________ 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.

Market Week: February 21, 2012

The Markets Equities returned to their winning ways. The Dow hit a level it hasn't seen since May 2008, and the S&P 500 last saw its current 1361 in May of last year. A slight loss on Friday nudged the Nasdaq away from the year-long high it hit on Thursday, while the Russell 2000 had the best week of the group. Renewed hope for an agreement on a second bailout package helped lift the Global Dow. The 10-year Treasury yield rose slightly, while oil prices once again rose over $100 a barrel.

Last Week's Headlines

• Congress agreed to extend the reduction in payroll taxes, which had been scheduled to revert on March 1 to 6.2% (12.4% for the self-employed), through the end of 2012. The legislation also will extend long-term unemployment benefits for up to 99 weeks, but will gradually reduce the duration of benefits over the year to 73 weeks. The provisions will be offset in part by, among other things, requiring federal workers hired starting next year to increase contributions to their pension system, and auctioning broadcast spectrum bandwidth to permit expansion of broadband wireless services.
• After delaying a decision last week, eurozone finance ministers approved €130 billion in financial assistance for Greece, which the country needs in order to redeem €14.5 billion worth of bonds on March 20. Under the agreement, private bondholders will agree to swap their bonds for ones worth 53.5% less, which will help Greece reduce its debt from the current 164% of its gross domestic product to 120.5% by 2020. The International Monetary Fund will review the proposal in early March to determine its contribution to the bailout.
• Guilt by association: Moody's not only cut bond ratings for several European countries, but issued a negative outlook for Aaa-rated France, Britain, and Austria because of their exposure to potential fallout from other European countries. Moody's said it downgraded Spain's rating by two notches, putting it even with Italy at A3, because of skepticism that Spain would be able to meet its deficit reduction target. Italy, Portugal, and three much smaller countries were downgraded by one notch. Meanwhile, French and Belgian securities regulators lifted a ban imposed last August on short-selling of financial shares.
• Wholesale inflation rose 1% in January; the Bureau of Labor Statistics said the 4.1% year-over-year increase was the smallest since the previous January. The average cost of raw materials was up 1.5% for the month. Meanwhile, consumer inflation rose 0.2% during the month; the broad-based increase put the 12-month inflation rate at 2.9%.
• January's retail sales were up a modest 0.4% last month, according to the Commerce Department; that's 5.8% higher than last January. Unlike the previous month, general merchandise accounted for most of the increase, while auto sales, which had a big month in December, were down.
• U.S. manufacturing continued to improve in January. The Federal Reserve's Empire State manufacturing survey hit 19.5, its highest level in over a year, and the Philly Fed index was at its highest level (10.2) since October.
• The Conference Board's index of leading economic indicators rose for the fourth consecutive month. Improving financial and credit indicators and higher average workweek levels contributed to a 0.4% increase that pushed the index to 94.9.
• Housing starts were up 1.5% in January, and were 9.9% higher than last January. According to the Commerce Department, most of the activity was in multifamily building; single-family starts fell 1%. Residential building permits were 0.7% above December's level and a whopping 19% higher than the previous January. Meanwhile, the Mortgage Bankers Association said the rate of new delinquencies and foreclosure filings in 2011's last quarter fell to levels not seen in the last three years. According to the MBA, 7.6% of all mortgages were either delinquent or behind on at least one payment; that's lower than Q4 2010's 8.25%.
• Swiss police confiscated $6 trillion worth of counterfeit U.S. Treasury bonds from three Zurich safe-deposit boxes as part of an Italian police investigation. If real, they would represent roughly 40% of the total U.S. national debt.

Eye on the Week Ahead

Investors will get their first chance to assess the potential impact of the decision on the Greek bailout. German economic data also could receive attention, while housing data will dominate a week that's light on domestic economic news.

Key dates and data releases: home resales (2/22); new home sales, consumer sentiment (2/24).

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.

Treasury Eases Money Transfer From 401K to Annuity

From NPR's All things Considered

Market Week: February 13, 2012

The Markets Concerns about whether Greece would fulfill the conditions necessary to obtain a second bailout brought on the first down week of 2012 for the domestic equities indices (except for the Dow, which had a down week in late January). Meanwhile, 10-year Treasury yields remained relatively stable as investors continued to seek out bonds.

Last Week's Headlines

• Greece's coalition government reached an agreement on austerity measures needed to receive the second bailout from its peers, and at the insistence of the eurozone's finance ministers, the agreement was approved by the full Greek parliament. To protest the measures, Greece's unions called a 48-hour strike over the weekend and demonstrators took to the streets.
• Five major banks will pay $26 billion to settle a suit by 49 state attorneys general and federal officials over faulty foreclosure procedures, and nine other financial institutions are also in negotiations over the same issue. According to the agreement, $17 billion will be used over the next three years to assist homeowners, and 60% of that amount will help reduce principal on qualifying mortgages.
• According to the Commerce Department, higher imports of autos, auto parts, and industrial machinery helped push the U.S. trade deficit to $48.8 billion, the highest level since June. Imports rose 1.3% while exports were up 0.7%.

Eye on the Week Ahead

European economic growth data and Wednesday's meeting of eurozone finance ministers, when final approval of the newest Greek bailout is expected in the wake of last weekend's parliamentary vote, will be a focus of attention. Domestic data on inflation, manufacturing, and housing also will be watched.

Key dates and data releases: retail sales, business inventories (2/14); Empire State manufacturing survey, industrial production, Federal Open Market Committee minutes, international capital flows (2/15); housing starts, wholesale inflation, Philadelphia Fed survey (2/16); consumer inflation, index of leading economic indicators, options expiration (2/17).

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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.

Market Week: February 6, 2012

The Markets Bolstered by a strong rally in the wake of Friday's encouraging employment report, both the Nasdaq and the Dow ended the week above last year's highs, and the Nasdaq actually hit a closing level last seen in December 2000. The S&P 500 and Russell 2000 weren't far from their 2011 highs; the Russell has now risen more than 36% from its most recent low in October 2011.

*Equities data reflect price changes, not total return.

Last Week's Headlines

• The U.S. economy added 243,000 jobs in December, and according to the Bureau of Labor Statistics, retail jobs for the holidays weren't the major reason. Professional/business services, manufacturing, and leisure/hospitality saw the biggest job growth. The number of unemployed people also fell to a three-year low of 12.8 million. The gains brought the unemployment rate down to 8.3% and represented the fifth consecutive month of lower unemployment.
• The nonpartisan Congressional Budget Office predicted the nation's budget deficit for 2012 will be $1.1 trillion, down slightly from 2011's $1.3 trillion. The report said spending cuts and tax increases scheduled for the end of 2012 will increase the deficit by $3.1 trillion over the next 10 years, but that ending them would increase the deficit by more than $11 trillion in that time. The CBO also predicted that those tax and spending measures would cut GDP to 1.1% next year, as well as keep the unemployment rate above 8% for the next 2 years and above 7% until 2015.
• Home prices in the 20 cities tracked by the S&P/Case-Shiller index fell 1.3% in November, putting the year-over-year decline at 3.7%. According to the report, home prices have now fallen 32.9% on average since July 2006. The monthly decline was the third consecutive decrease.
• U.S. labor productivity rose 0.7% during Q4 2011; business output was up 3.6% while the number of hours worked rose 2.9%, according to the Bureau of Labor Statistics. Meanwhile, the Commerce Department said factory orders were up 1.1% in December. And the Institute for Supply Management's index of the manufacturing sector rose 1% to 54.1%, with 9 of 18 industries reporting growth, while the ISM's services index was up 0.6% to 52.6%.
• Construction spending rose 1.5% in December, putting it 4.3% above a year earlier, according to the Commerce Department. The bulk of December's growth--2.1%--was in the private sector, with nonresidential construction accounting for most of the increase.
• Status update: Facebook, founded in 2004, filed plans to go public later this year.
• Federal Reserve Chairman Ben Bernanke lectured Congress about the need to address unsustainable deficit levels to prevent the possibility of another financial shock. However, he also said that at the same time, lawmakers need to be careful not to choke off economic recovery, which he said was not incompatible with fiscal responsibility.

Eye on the Week Ahead

As earnings season continues, the elusive Greek debt deal will continue to be a source of speculation. The European Central Bank and Bank of England are expected to keep interest rates stable during a week that's light on economic data.

Key dates and data releases: international trade, consumer sentiment (2/10).

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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.