Monday, May 13, 2013
Stock Market Recap for Last Week– The Dow Jones Industrial Average (DJIA) closed above the 15,000 level for the first time last week. The DJIA recorded its weekly gain even though it was down two out of the five trading days. Small cap and mid-capitalization stock performance exceeded their larger counterparts as the level of interest for growth type stocks continued to build last week. It was reported last week that stock ownership is at its lowest level since 1998. However, it is beginning to appear that investors are beginning to shake off their “financial fear” that has kept them from participating in the stock market during the past few years. It can also be seen in the fixed income area where junk bond prices have moved substantially higher over the past few months. This type of activity is usually reflective of investors willing to shoulder more risk. Much of this psychological adjustment by investors is due to the Federal Reserve’s aggressive monetary policy in providing an extraordinary amount of liquidity into the economy via bond purchases and other interest rate reduction mechanisms. It has sent interest rates to extremely low levels and has provided significant fuel for the stock market’s rally. Looking at trading last week, the only real hiccup for the market occurred when there was some question over whether the Federal Reserve’s bond buying would continue at the same level as it has been and for how long.
Current Outlook and Comment – The S&P 500 closed at 1633.70, while the Dow Jones Industrial Average closed the week at 15,118.49. Just like the previous week, both indices recorded all time record highs and all time record high closes last week. Earnings reports are on the wane this week, but economic data will be released and Friday is options expiration. Commodity prices continue to get clobbered as the U.S. dollar keeps strengthening. This is a big win for consumers as falling commodity prices reduce the price of everything that consumers buy.
Sources: bankrate.com, bloomberg.com, briefing.com, Dow Jones News, Financial Times, finviz.com, Investor's Business Daily, marketwatch.com, seekingalpha.com, Thomson Reuters/First Call, U.S. Dept of Treasury, yahoo.com and individual company web sites and press releases.
Leonetti & Associates, LLC views or opinions are as of a certain date and subject to change without notice. The material contained herein is for informational purposes only and obtained from sources we consider reliable. We make no guarantee as to its accuracy or completeness. References to specific securities and industries/sectors should not be considered recommendations to buy or sell any security or advisory service. Past performance is not a guarantee of future results. _____________________________________________________________________________________________________________