Weekly Economic Update for July 5, 2011

Presented by Mark K. Lund, Investor Coach.

WEEKLY QUOTE
“People are definitely a company’s greatest asset. It doesn’t make any difference whether the product is cars or cosmetics. A company is only as good as the people it keeps.”
– Mary Kay Ash

SOFT SPENDING DURING THE SOFT PATCH
After ten consecutive months of gains, personal spending was flat for May and actually retreated 0.1% when adjusted for inflation. Weak auto sales may have been the biggest influence. Economists polled by Reuters had projected a 0.1% gain in the indicator. The Commerce Department did note that personal incomes rose 0.3% for the second straight month. The personal consumption expenditures (PCE) price index showed a 2.5% year-over-year advance.¹

ISM INDEX SURPRISES
Analysts thought the Institute for Supply Management’s factory index would decline in June. It didn’t. The index rose from May’s 53.5 mark to 55.3. The U.S. was the only nation in the world whose benchmark manufacturing PMI rose last month.²

CONSUMER CONFIDENCE WANES
This was not surprising given recent headlines. The University of Michigan’s final June consumer sentiment poll slipped to 71.5 from May’s 74.3 reading, and the Conference Board’s June consumer confidence index also declined to 58.5 from last month’s revised 61.7 mark.^2,3

HOME PRICES, HOME SALE AGREEMENTS INCREASE
The National Association of Realtors announced that pending home sales were up 8.2% for May, rebounding from April’s 7-month low. There were 17.0% more sales contracts signed last month than in June 2010, which represents the trough for pending home sales since the real estate downturn began. You can’t read too much into the April edition of the S&P/Case-Shiller Home Price Index; home prices in 20 major cities were up 0.7% overall, but it was the start of homebuying season.^4,5

WALL STREET SHIFTS INTO RALLY MODE
Equities looked far more attractive after Greece passed austerity measures and U.S. indicators showed improvement. Here are the five-day gains from the stock market’s best week in nearly two years: NASDAQ, +6.15% to 2,816.03; S&P 500, +5.61% to 1,339.67; DJIA, +5.43% to 12,582.77.⁶

THIS WEEK: Monday being July 4, U.S. markets are closed. Tuesday, we get the Commerce Department report on May factory orders. Wednesday brings the June edition of the ISM service sector PMI. New initial and continuing claims reports arrive Thursday. Friday, we have the Labor Department’s unemployment report for June plus data on May wholesale inventories.

Sources: cnbc.com, bigcharts.com, treasury.gov, treasurydirect.gov – 7/1/11^6,7,8,9 Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends.

WEEKLY RIDDLE
What is the number missing within this sequence? 4, 7, 11, 18, 29, 47, __, 123, 199, 322.

Last week’s riddle:
Wilson, Xavier, Yolanda, and Zach are standing in line at the market. See if you can figure out their order from these clues: Yolanda is between Wilson and Xavier, Zach is next to Wilson, and Xavier is not first.

Last week’s answer:
Zach is first, Wilson is second, Yolanda is third, and Xavier is fourth.

Citations.
1 – cnbc.com/id/43546166/ [6/27/11] 
2 – blogs.wsj.com/marketbeat/2011/07/01/ism-much-better-than-expected/ [7/1/11]
3 – marketwatch.com/story/consumer-sentiment-declines-in-june-2011-07-01 [7/1/11]
4 – usatoday.com/money/economy/housing/2011-06-29-pending-home-sales_n.htm [6/29/11]
5 – blogs.forbes.com/morganbrennan/2011/06/29/what-can-homeowners-learn-from-case-shillers-home-price-index/ [6/29/11]
6 – cnbc.com/id/43608555 [7/1/11]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=7%2F1%2F10&x=0&y=0 [7/1/11]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=7%2F1%2F10&x=10&y=18 [7/1/11]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=7%2F1%2F10&x=0&y=0 [7/1/11]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=6%2F30%2F06&x=0&y=0 [7/1/11]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=6%2F30%2F06&x=0&y=0 [7/1/11]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=6%2F30%2F06&x=0&y=0 [7/1/11]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=7%2F2%2F01&x=0&y=0 [7/1/11]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=7%2F2%2F01&x=0&y=0 [7/1/11]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=7%2F2%2F01&x=0&y=0 [7/1/11]
8 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [7/1/11]
8 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [7/1/11]
9 – treasurydirect.gov/instit/annceresult/press/preanre/2001/ofm11001.pdf [1/10/01]
10 – montoyaregistry.com/Financial-Market.aspx?financial-market=the-balancing-act-weathering-the-burden-of-sudden-wealth&category=22  [7/03/11]

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. a fee only registered investment advisor form in Salt Lake City, Utah, providing wealth management services.  Mark Lund is the author of The Effective Investor.