Market Commentary by Scott J. Brown, Ph.D., Chief Economist
News of the death of Osama bin Laden had only a fleeting positive effect on the stock market on Monday. The economic data were mixed, with some disappointment in the ISM Non-Manufacturing Index and weekly jobless claims, but there was an upside surprise in nonfarm payrolls. Commodity prices tumbled sharply on Thursday, reflecting a partial unwinding of the speculative element.
Nonfarm payrolls rose by 244,000 (median forecast: +195,000), with a 46,000 upward revision to the two previous months. Private-sector payrolls rose by 268,000 – a 233,000 average over the last three months (vs. +104,000 in the three months before that) and gains were broad-based. State and local government payrolls fell by 22,000, down 272,000 (or -1.4%) over the last 12 months. The unemployment rate rose to 9.0%, from 8.8% (it was 9.8% in November), but these figures have been unreliable in recent months. The employment-to-population ratio, a better measure of capacity utilization in the labor market, edged down to 58.4%, little changed over the last year.
Next week, the important economic data bunch up at the end of the week. The seasonal adjustment anticipates increase in the wholesale and retail price of gasoline in April. Hence, the impact on the headline PPI and CPI will be limited. Core inflation is expected to remain relatively low, although at a somewhat higher trend than in 2010. Retail sales figures are adjusted for shifts in the timing of Easter, but it’s tough to get it precisely right. Higher gasoline prices should add to the retail sales total. However, sales results were generally better than expected last month.
Indices
 | Last | Last Week | YTD return % |
DJIA | 12584.17 | 12763.31 | 8.69% |
NASDAQ | 2814.72 | 2872.53 | 6.10% |
S&P 500 | 1335.10 | 1360.48 | 6.16% |
MSCI EAFE | 1755.56 | 1792.80 | 5.87% |
Russell 2000 | 829.24 | 861.55 | 5.82% |
Consumer Money Rates
 | Last | 1-year ago |
Prime Rate | 3.25 | 3.25 |
Fed Funds | 0.10 | 0.21 |
30-year mortgage | 4.62 | 5.07 |
Currencies
 | Last | 1-year ago |
Dollars per British Pound | 1.642 | 1.513 |
Dollars per Euro | 1.458 | 1.289 |
Japanese Yen per Dollar | 80.160 | 94.160 |
Canadian Dollars per Dollar | 0.967 | 1.026 |
Mexican Peso per Dollar | 11.690 | 12.646 |
Commodities
 | Last | 1-year ago |
Crude Oil | 99.80 | 79.97 |
Gold | 1481.60 | 1172.25 |
Bond Rates
 | Last | 1-month ago |
2-year treasury | 0.61 | 0.89 |
10-year treasury | 3.22 | 3.50 |
10-year municipal (TEY) | 4.28 | 5.11 |
Treasury Yield Curve – 5/6/2011Â
S&P Sector Performance (YTD) – 5/6/2011Â
Economic Calendar
May 10th |  — | Small Business Sentiment (April) Import Prices (April) |
May 11th |  — | Trade Balance (March) |
May 12th |  — | Jobless Claims (week ending May 7th) Producer Price Index (April) Retail Sales (April) |
May 13th |  — | Consumer Price Index (April) Consumer Sentiment (mid-May) |
May 17th |  — | Building Permits, Housing Starts (April) Industrial Production (April) |
May 30th |  — | Memorial Day Holiday (markets closed) |
June 21st-22nd |  — | FOMC Meeting Bernanke Press Conference |
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 May 5th, 2011.
©2011 Raymond James Financial Services, Inc. member FINRA / SIPC.