Weekly Market Update

Economic reports have continued to show modest improvements in the economy. Better-than-expected manufacturing numbers and a surprise increase in housing starts appeared to boost market sentiment last week. Read more now.

Equity markets surged higher last week, led by technology and small-cap stocks. The S&P 500 gained 6.01 percent.

While the S&P 500 is still slightly in the red, both the Nasdaq and Dow Jones Industrial Average are back in positive territory for the year-to-date period. International indices and smaller-cap stocks have a larger hole to dig out of before they get close to breaking even. Read more now.

Look for the release of the Federal Open Market Committee (FOMC) minutes on Oct. 12 to help give us a sense of the Federal Reserve’s intentions and its assessment of the economic outlook.

Treasuries sold off last week on better-than-expected economic numbers and more positive news coming out of Europe earlier in the week. Read more now.

Equity markets moved slightly lower this week. Although the S&P 500Index (S&P 500) lost only 41 basis points (bps), there was significant intraday volatility and the VIX spent most of the week above 40.

Although there was not a lot of action last week, it did close out one of the worst quarters for equities, as the S&P 500 lost 14.3 percent. Read more now.

Last week’s Federal Open Market Committee announcement that it would use the ‘twist’ approach by selling short-term Treasuries (duration of 3 years or less) and purchasing long-term Treasuries (duration of 6 years to 30 years) had an immediate impact on the yield curve.

The 10-year shot down to new record lows—below 1.76 percent—and the 30-year, which had the largest move, stood at about 2.87 percent, down from 3.15 percent a day earlier.

Read more now.

The Federal Reserve may implement a “twist” strategy, selling short-term securities that make up the majority of its balance sheet and purchasing longer-dated securities, in an attempt to lower longer-dated rates. The move could be made public at this week’s Fed meetings.

Anticipation of some sort of action from the Fed sent equity prices higher last week. The S&P 500 gained 5.4 percent.
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Equity markets slipped lower during the holiday-shortened week. The S&P 500 Index lost 1.65 percent.

President Obama’s speech last Thursday night—which outlined a new jobs package intended to help stimulate hiring—did little to inspire equity markets. Doubts immediately surfaced about the temporary nature of many of the programs presented, as well. Read more now.

Equity markets ended very close to where they started, and the benchmark S&P 500 Index (S&P 500) lost 18 basis points. But the market took a circuitous route to get there, as the small change was not as straightforward as it would have first appeared, with volatility spiking again late in the week on the jobs report.

The disappointing employment report showed that the U.S. economy had added net-zero jobs in August. This sent equity markets tumbling and reversed several days of solid gains. Read more now.

Federal Reserve Chairman Ben Bernanke’s speech in Jackson Hole, Wyoming, last week was largely a nonevent, as he provided no new information or outlook. Read more now in our Weekly Market Summary.

The Federal Reserve stated last week that it plans to maintain an accommodative rate environment “through at least mid-2013.” This is a change from the “extended period of time” language the Fed has used during the last few years.

The 2-year Treasury reached a new historical low of 0.168 percent during intraday trading last week, after the Fed’s announcement. Read more now.