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Financial Commentary

Insight & Market Analysis.

  • Overview Stocks Snapped Two Weeks of Declines

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    Overview Stocks Snapped Two Weeks of Declines

    July 13, 2015 — Stocks narrowly erased a loss for the week, snapping two weeks of declines, as prospects for a bailout agreement between Greece and creditors provided much needed investor relief. Greek Prime Minister Alexis Tsipras submitted a conciliatory-toned proposal, requesting a three-year €53.5B (US$59.5B) loan facility from the European Stability Mechanism (ESM). After Friday’s closing bell, Greek lawmakers endorsed the proposal and, over the weekend, Eurozone leaders reached a deal with Greece, voting unanimously to approve it. All that remains is for the Greek parliament to enact and implement required reform measures. Also helping build global optimism, China’s markets rebounded after entering a bear market, with the Shanghai Composite rallying 4.5% on Friday, adding onto Thursday’s 5.8% rebound for its best two-day gain since 2008.

    In economic highlights during the week, the U.S. trade deficit widened more than expected in May, as exports declined notably due to continuing strength in the dollar. Imports also declined. A government report, on job openings, showed that employers are not only holding onto existing workers, but openings rose to a record 5.363 million. Meanwhile, written minutes from the Fed’s latest policy meeting revealed that members acknowledge risk associated with overseas concerns, specifically Greece and China.

    For the week, after Friday’s strong rebound, the S&P 500 rose 0.03%, the Dow Industrials gained 0.19% and the NASDAQ Composite fell 0.23%. Six, of the ten, S&P 500 major sector groups declined, led by Materials (-1.6%), Energy (-1.5%) and Technology (-0.8%). Among advancers, Consumer Staples (+2%) and Utilities (+1.7%) gained the most. Treasury prices slipped lower last week, pulling the yield on 10-year Treasury notes up just 1.5 basis points to finish at 2.398%.

     

  • Overview Stocks End Slightly Lower Ahead of Greek Austerity Vote

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    Overview Stocks End Slightly Lower Ahead of Greek Austerity Vote

    July 6, 2015 — U.S. equity averages finished slightly lower last Thursday, ending an Independence Day shortened week as an uninspiring June payrolls report gave investors pause ahead of a key Greek referendum vote. The economy added 223,000 jobs last month, shy of economists’ consensus projection for 230,000, while government revisions to April and May subtracted 60,000 jobs. A decline in the labor force participation rate, falling to a 1977 low, contributed toward driving the unemployment rate to a seven-year low at 5.3%. Average hourly wages were unchanged. A separate report showed factory orders fell 1% in May, versus economists’ consensus forecast for a 0.5% decline. On Sunday, more than 60% of Greeks voted “no” to further austerity measures, increasing the likelihood of the country’s exit from the Eurozone.

    In other economic highlights, momentum is building for existing home sales as buyers respond to the likelihood that the Federal Reserve will begin raising interest rates later this year. The National Association of Realtors pending home sales index rose 0.9% in May to 112.6, the highest level dating back to 2006, before the financial crisis. On Tuesday, the Conference Board’s consumer confidence index jumped nearly seven points in June to 101.4, the second- strongest year-to-date reading. Lastly, on Wednesday, the ISM manufacturing activity index rose from 52.8 to 53.5, matching economists’ forecast.

    The S&P 500 ended lower for a second week, this time experiencing its largest weekly decline since March. For the week, the S&P 500 fell 1.14%, the Dow Jones Industrial Average lost 1.15%, and the NASDAQ Composite declined 1.38%. Nine of the ten major sector groups ended negative last week, with Energy (-2%), Materials (-1.7%) and Industrials (-1.5%) falling the most. Utilities (+1.2%) outperformed as dividend yields appeared attractive. Treasury prices rose last week amid the decline in risk appetites, pulling the yield on 10-year Treasury notes down nine basis points to finish at 2.383%.