Free Market Update for the Week of July 6, 2010

Presented by Mark Lund, The Investor Coach.

QUOTE OF THE WEEK:
“You are never too old to set another goal or to dream a new dream.”– Les Brown

Jobless rate drops to 9.5%

The Labor Department said 83,000 new jobs were created in the private sector in June, yet non-farm payrolls shrank by 125,000 positions (an effect of temporary U.S. Census workers being laid off). Still, the 0.2% drop in unemployment was considerably better than the 0.1% increase anticipated on Wall Street.¹

Gains in personal spending, personal income & personal savings

Consumer spending rose by 0.2% as incomes climbed 0.4% in May, the Commerce Department stated last week. The personal savings rate reached 4.0% in May, a high unseen since September 2009. So consumers are aiding the recovery, albeit cautiously.²

$8K homebuyer tax credit is back

The real estate market got some relief Friday morning as President Obama signed an extension of the federal homebuyer tax credit ($8,000 for first-time home purchasers and $6,500 for existing homeowners who move). The credit is now extended until September 30.³

Cheapest fixed-rate mortgages in decades

Right now, conventional home loans are almost as cheap as they were in the 1950s. The national average interest rate on 30-year FRMs fell to 4.58% last week, according to Freddie Mac’s final June estimate. This is the lowest rate Freddie Mac has recorded since the start of its Primary Mortgage Market Survey.⁴

Surprise drop in factory orders, but ISM index shows further growth

Factory orders fell 1.4% in May. Economists surveyed by Bloomberg had forecast a 0.5% slip. Minus transportation orders, the category was down 0.6% for the month. The Institute for Supply Management’s June manufacturing index slipped to 56.2 from 59.7 in May, but that still means growth.^5,6

Wall Street in sell mode

It seemed like every market day started with a descent last week. The S&P 500 ended the week at 1,022.58, the Dow at 9,686.48, and the NASDAQ at 2,091.79. It was rough going – on the week, the marquee U.S. indices lost between 4.5%-5.9%. On June 30, the yield on the 10-year Treasury note fell to 2.95%, which was the first time it went below 3% since April 2009.^4,7

Last week’s riddle: Can you determine four consecutive prime numbers that add up to 220?

Last week’s riddle answer: 47 + 53 + 59 + 61 = 220.

Citations.
1 – forbes.com/2010/07/02/labor-markets-bumpy-road-markets-economy-jobs-unemployment.html [7/2/10]
2 – voices.washingtonpost.com/economy-watch/2010/06/may_income_spending_and_person.html [6/28/10]
3 – marketwatch.com/story/home-buyers-win-more-time-to-claim-tax-credit-2010-07-02 [7/2/10]
4 – cnbc.com/id/38037896 [7/1/10]
5 – dailyfinance.com/story/May-factory-orders-fall-economic-slowdown/19539948/ [7/2/10]
6 – bloomberg.com/news/2010-07-01/u-s-manufacturing-grows-at-slower-pace-than-forecast-in-ism-s-june-index.html [7/1/10]
7 – cnbc.com/id/38064102 [7/2/10]
8 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=7%2F2%2F09&x=0&y=0 [7/2/10]
8 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=7%2F2%2F09&x=0&y=0 [7/2/10]
8 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=7%2F2%2F09&x=0&y=0 [7/2/10]
8 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=7%2F1%2F05&x=0&y=0 [7/2/10]
8 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=7%2F1%2F05&x=0&y=0 [7/2/10]
8 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=7%2F1%2F05&x=0&y=0 [7/2/10]
8 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=7%2F3%2F00&x=0&y=0 [7/2/10]
8 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=7%2F3%2F00&x=0&y=0 [7/2/10]
8 – bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=7%2F3%2F00&x=0&y=0 [7/2/10]
9 – ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield.shtml [7/2/10]
9 – ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield_historical.shtml [7/2/10]
10 – treasurydirect.gov/instit/annceresult/press/preanre/2000/ofm11200.pdf [1/12/00]

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.