Stock Market Investing Update for October 4, 2010

Presented by Mark Lund, The Investor Coach.

WEEKLY QUOTE
“There is only one happiness in life – to love and to be loved.”
– George Sand

CONSUMER SPENDING UP 0.4%
August personal spending beat the 0.3% gain forecast by economists polled by Bloomberg News. Personal income was up 0.5% for August, the biggest monthly gain of 2010. The “core” PCE price index (minus food and energy prices) rose just 0.1% in August, a signal of tame inflation. The personal savings rate ticked up to 5.8% from 5.7%. 1,2

MIXED RESULTS FROM CONSUMER POLLS
Early last week, the Conference Board’s consumer confidence index slumped to 48.2 for September, more than five points below forecasts. Yet a fresh Reuters/University of Michigan consumer sentiment survey surprised analysts Friday – that barometer came in at 68.2, above the consensus of 67.0 forecast by Bloomberg and improved from the previous 66.6 reading.3,4

ISM: MANUFACTURING GROWS MODESTLY
The Institute for Supply Management released its September manufacturing index on Friday. The September reading – 54.4 – indicated further growth, but also the slowest pace of expansion in 10 months.1

SURPRISE INCREASE IN CONSTRUCTION SPENDING
Analysts surveyed by Reuters felt we would see a 0.4% drop in this indicator for August. Instead, construction spending rose by 0.4% in that month (a month in which housing starts also surged). The downside: investment in private sector projects hit its lowest level since January 1998.5

FRIDAY GAINS WRAP UP A DOWN WEEK
The DJIA’s four-week winning streak ended Friday, even as the index gained 41.63 on the first day of October. For the week, the DJIA went -0.28% to 10,829.68, the S&P 500 went -0.44% to 1,146.24 and the NASDAQ went -0.21% to 2,370.75. The final September numbers were pretty spectacular: DJIA, +7.72%; S&P 500, +8.76%; NASDAQ, +12.04%. Statistically, September 2010 was the best September for the Dow and S&P in 71 years. All ten industry groups in the S&P 500 advanced last month.6,7

COMING NEXT WEEK: On Monday, we get news on August pending home sales & factory orders. Tuesday, ISM releases its September service sector index. Thursday, we have the latest initial claims numbers & August consumer credit. On Friday, we will get the September unemployment rate from the Labor Department; August wholesale inventories data will also be released.

% CHANGE

Y-T-D

1-YR CHG

5-YR AVG

10-YR AVG

DJIA

+3.85

+13.89

+0.49

+0.12

NASDAQ

+4.48

+15.23

+2.04

-3.36

S&P 500

+2.79

+11.30

-1.34

-2.02

REAL YIELD

10/1 RATE

1 YR AGO

5 YRS AGO

10 YRS AGO

10 YR TIPS

0.75%

1.50%

1.78%

4.03%

Source: cnbc.com, bigcharts.com, ustreas.gov, bls.gov – 10/1/106,8,9,10
Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly.
These returns do not include dividends.

WEEKLY RIDDLE
Ian bought a bag of apples on Friday and ate a third of them. On Saturday he ate half of the remaining apples. On Sunday he looked in the bag and found that just two apples were left. How many apples were originally in the bag?

Last week’s riddle:
I have no heart or mind, but I do have two legs. Yet they only touch the ground when I am not carrying things around. What am I?

Last week’s answer:
A wheelbarrow.

Citations.
1 – businessweek.com/news/2010-10-01/u-s-stocks-rise-as-consumer-spending-confidence-boost-outlook.html [10/1/10]
2 – marketwatch.com/story/aug-personal-income-up-05-spending-up-02-2010-10-01 [10/1/10]
3 – news.blogs.cnn.com/2010/09/28/consumer-confidence-drops-but-stocks-rise/ [9/28/10]
4 – bloomberg.com/news/2010-10-01/u-s-consumer-confidence-declines-less-than-forecast-michigan-index-shows.html [10/1/10]
5 – foxbusiness.com/markets/2010/10/01/construction-spending-rises-unexpectedly-august/ [10/1/10]
6 – cnbc.com/id/39463494 [10/1/10]
7 – cnbc.com/id/39444625/ [9/30/10]
8 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=10%2F1%2F09&x=0&y=0 [10/1/10]
8 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=10%2F1%2F09&x=0&y=0 [10/1/10]
8 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=10%2F1%2F09&x=0&y=0 [10/1/10]
8 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=9%2F30%2F05&x=0&y=0 [10/1/10]
8 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=9%2F30%2F05&x=0&y=0 [10/1/10]
8 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=9%2F30%2F05&x=0&y=0 [10/1/10]
8 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=10%2F2%2F00&x=0&y=0 [10/1/10]
8 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=10%2F2%2F00&x=0&y=0 [10/1/10]
8 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=10%2F2%2F00&x=0&y=0 [10/1/10]
9 – ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield.shtml [10/1/10]
9 – ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield_historical.shtml [10/1/10]
10 – treasurydirect.gov/instit/annceresult/press/preanre/2000/ofm11200.pdf [7/12/00]

This material was prepared by Peter Montoya Inc., and does not necessarily represent the views of the presenting Representative’s Broker/Dealer. This information should not be construed as investment advice. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. It is not possible to invest directly in an index. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world’s largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. All economic and performance data is historical and not indicative of future results. Market indices discussed are unmanaged. Investors cannot invest in unmanaged indices. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards.

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