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

 

Weekly Market Snapshot

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

Scott J. Brown Ph.D., Chief Economist Raymond James Investment Services

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

  Last Last Week YTD return %
DJIA 13103.68 13548.94 7.25%
NASDAQ 2986.12 3072.87 14.62%
S&P 500 1412.97 1457.34 12.35%
MSCI EAFE 1525.61 1563.65 8.00%
Russell 2000 816.82 837.12 10.24%

Consumer Money Rates

  Last 1-year ago
Prime Rate 3.25 3.25
Fed Funds 0.17 0.07
30-year mortgage 3.50 4.16

Currencies

  Last 1-year ago
Dollars per British Pound 1.613 1.600
Dollars per Euro 1.296 1.392
Japanese Yen per Dollar 80.200 75.940
Canadian Dollars per Dollar 0.994 1.014
Mexican Peso per Dollar 12.965 13.425

Commodities

  Last 1-year ago
Crude Oil 85.68 92.99
Gold 1712.48 1697.33

Bond Rates

  Last 1-month ago
2-year treasury 0.30 0.25
10-year treasury 1.79 1.84
10-year municipal (TEY) 2.66 3.08

Treasury Yield Curve – 10/26/2012

Treasury Yield Curve – 10/26/2012

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

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

Economic Calendar

October 29th

 —

Personal Income and Spending (September)
October 30th

 —

Consumer Confidence (October)
October 31st

 —

Chicago PM Index (October)
November 1st

 —

ADP Payroll Estimate (October)
Jobless Claims (week ending 10/27)
Productivity (3Q12, preliminary)
ISM Manufacturing Index (October)
Motor Vehicle Sales (October)
November 2nd

 —

Employment Report (October)
November 6th

 —

Election Day
November 12th

 —

Veterans Day (bond market closed)
November 14th

 —

Retail Sales (October)
November 22nd

 —

Thanksgiving (markets closed)
December 12th

 —

FOMC Policy Decision, Bernanke Press Briefing

Important Disclosures

Past performance is not a guarantee of future results. There are special risks involved with global investing related to market and currency fluctuations, economic and political instability, and different financial accounting standards. The above material has been obtained from sources considered reliable, but we do not guarantee that it is accurate or complete. There is no assurance that any trends mentioned will continue in the future. While interest on municipal bonds is generally exempt from federal income tax, it may be subject to the federal alternative minimum tax, state or local taxes. In addition, certain municipal bonds (such as Build America Bonds) are issued without a federal tax exemption, which subjects the related interest income to federal income tax. Investing involves risk and investors may incur a profit or a loss.

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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