The Weekly Market Snapshot from Frazier Allen for the week of October 30th, 2012

By Frazier Allen | October 30, 2012 |

Market Commentary by Scott J. Brown, Ph.D., Chief Economist

The economic data reports were mixed. Real GDP rose at a 2.0% annual rate in 3Q12 (+2.3% y/y), boosted partly by an increase in government spending (the first since 2Q10). The report showed a moderate pace of consumer spending and weakness in business fixed investment. Durable goods rose 9.9%, reflecting a rebound in aircraft orders. However, orders and shipments of nondefense capital goods weakened and unfilled orders (ex-transportation) continued to weaken.

The Federal Open Market Committee left short-term interest rates unchanged, did not alter its forward guidance (on the federal funds target rate), and kept its Large-Scale Asset Purchase program (QE3) in place. At the December 12-13 FOMC meeting, officials are likely to decide whether to extend Operation Twist or up its asset purchase plans.

The stock market was preoccupied with earnings results, which were generally disappointing.

Next week, the economic data calendar heats up, although earnings reports are expected to be the key driver for the stock market. The focus is expected to be on the October Employment Report, which should show moderate job growth and a flat or slightly higher unemployment rate. Note that ADP has revamped is methodology and should produce more accurate estimates of private-sector job growth.

Indices

Consumer Money Rates

Currencies

Commodities

Bond Rates

Treasury Yield Curve – 10/26/2012

S&P Sector Performance (YTD) – 10/26/2012

Economic Calendar

Important Disclosures

US government bonds and treasury bills are guaranteed by the US government and, if held to maturity, offer a fixed rate of return and guaranteed principal value. US government bonds are issued and guaranteed as to the timely payment of principal and interest by the federal government. Treasury bills are certificates reflecting short-term (less than one year) obligations of the US government.

Commodities trading is generally considered speculative because of the significant potential for investment loss. Markets for commodities are likely to be volatile and there may be sharp price fluctuations even during periods when prices overall are rising. Specific sector investing can be subject to different and greater risks than more diversified investments.

Tax Equiv Muni yields (TEY) assume a 35% tax rate on triple-A rated, tax-exempt insured revenue bonds.

Material prepared by Raymond James for use by its financial advisors.

The information contained herein has been obtained from sources considered reliable, but we do not guarantee that the foregoing material is accurate or complete. Data source: Bloomberg, as of close of business October 25th, 2012.

©2012 Raymond James Financial Services, Inc. member FINRA / SIPC.

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