WEAK JOB MARKET PERSISTS IN JUNE
America’s unemployment rate remained at 8.2% in June with non-farm payrolls expanding by just 80,000 positions. The underemployment rate rose to 14.9%. The Labor Department report offered a troubling big-picture detail: our economy has generated fewer than 100,000 new jobs for four straight months, in what seems like a replay of May-August 2011 (when monthly job gains averaged just 80,000). Does this signal another “soft patch”? Maybe not. For example, January-May job growth has exceeded June-September job growth regularly since 1987. Two sobering facts remain: between January 2008 and February 2010, the economy shed almost 8.8 million jobs, and since then it has regained less than 44% of them.1,2
ISM GAUGES DROP FOR INDUSTRY & SERVICE SECTORS
The Institute for Supply Management’s closely watched manufacturing sector index dipped to 49.7 in June from May’s 53.5 mark (meaning sector contraction). ISM’s service sector index also saw a June descent to 52.1 from May’s 53.7 reading. Factory orders did rise 0.7% in June, far above the 0.2% expected by analysts polled by Reuters.3,4
AUTO SALES UP; CHAIN-STORE SALES DISAPPOINT
Big automakers announced nice 12-month sales gains for June: Toyota, +60%; Nissan, +28%; Chrysler, +20%; General Motors, +16%. The International Council of Shopping Centers gauged a 0.2% annualized increase in same-store sales in June, as opposed to a 1.7% yearly gain for May.4,5
A MIXED WEEK ON WALL STREET
While the NASDAQ advanced 0.08% last week to close at 2,937.33 Friday, the DJIA (-0.84% to 12,772.47) and the S&P 500 (-0.55% to 1,354.68) both staged weekly retreats. Bulls interpreted the European Central Bank’s July 5 interest rate cut as a token gesture, and last week’s encouraging ADP jobs report was not affirmed by the Labor Department’s numbers. Oil ended the week at $84.45 on the NYMEX (-0.60% for the week) while gold lost 1.58% last week to settle at $1,578.90 on the COMEX.2,6
THIS WEEK: Another earnings season is here: as usual, Alcoa leads the way on Monday. Tuesday brings earnings from Levi Strauss. Wednesday, we have reports on the U.S. trade deficit and wholesale inventories, Q2 results from Marriott and the June 20 FOMC minutes. Thursday, earnings from Fastenal and Progressive arrive along with new weekly jobless claims figures. On Friday, Wells Fargo and JPMorgan Chase issue Q2 results, and we get June’s Producer Price Index and the preliminary July consumer sentiment survey from the University of Michigan.
% CHANGE Y-T-D 1-YR CHG 5-YR AVG 10-YR AVG
DJIA +4.54 +1.16 -1.23 +3.62
NASDAQ +12.75 +3.65 +2.03 +10.28
S&P 500 +7.72 +1.15 -2.30 +3.70
REAL YIELD 7/6 RATE 1 YR AGO 5 YRS AGO 10 YRS AGO
10 YR TIPS -0.53% 0.74% 2.79% 3.48%
Sources: money.msn.com, bigcharts.com, treasury.gov, treasurydirect.gov – 7/6/122,7,8,9 Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends.
WEEKLY QUOTE
“All right, I am corny. But I think there are about 140 million people in this country just as corny as I am.”
– Walt Disney
WEEKLY RIDDLE
I may be red, green or yellow. Eat me, and you may stay a healthy fellow. My interior is white; I don’t give off light. What am I?
Last week’s riddle:
Two sailors stand at opposite sides of a boat. One looks west and the other looks east, and yet they are both able to see each other clearly. How can this be?
Last week’s answer:
The sailors are looking inward (into the boat) while standing with their backs against the sides of the ship.
Citations.
1 – www.boston.com/business/news/2012/07/06/employers-add-jobs-economy-struggles/xTVUZOt6lNJZGi1aBhxrGL/story.html [7/6/12]
2 – money.msn.com/market-news/post.aspx?post=96140b67-efa5-49c8-9ffc-85cd17eaea41 [7/6/12]
3 – www.ism.ws/ISMReport/NonMfgROB.cfm [7/5/12]
4 – money.msn.com/market-news/post.aspx?post=ac939968-c8f5-4806-909b-3d029be476e1 [7/6/12]
5 – finance.yahoo.com/news/retailers-report-tepid-june-sales-175710325.html [7/5/12]
6 – montoyaregistry.com/Financial-Market.aspx?financial-market=common-financial-mistakes-and-how-to-avoid-them&category=29 [7/6/12]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=7%2F6%2F11&x=0&y=0 [7/6/12]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=7%2F6%2F11&x=0&y=0 [7/6/12]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=7%2F6%2F11&x=0&y=0 [7/6/12]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=7%2F6%2F07&x=0&y=0 [7/6/12]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=7%2F6%2F07&x=0&y=0 [7/6/12]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=7%2F6%2F07&x=0&y=0 [7/6/12]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=7%2F5%2F02&x=0&y=0 [7/6/12]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=7%2F5%2F02&x=0&y=0 [7/6/12]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=7%2F5%2F02&x=0&y=0 [7/6/12]
8 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [7/6/12]|
8 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [7/6/12]
9 – treasurydirect.gov/instit/annceresult/press/preanre/2002/ofm10902.pdf [1/9/02]
This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. 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. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. 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 assistance is needed, the reader is advised to engage the services of a competent professional. This material was prepared by MarketingLibrary.Net Inc., for Stonecreek Wealth Advisors, Inc. an independent fee only registered investment advisor firm. Salt Lake City, Provo, Utah. Mark Lund is the author of the Effective Investor.
