FRIDAY, SEPTEMBER 28, 2012
STOCK MARKET COMMENTARY:
MONDAY-WEDNESDAY’S ACTION- Stocks Continue Too Consolidate Recent Move
Stocks opened higher on Tuesday but ended lower as fear spread that the global economy will slow. Thousands of protesters gathered in Spain to express their discontent over the new round of austerity measures for the 2013 budget. In the US, Charles Plosser, the head of the Philadelphia Fed, said that QE 3 will not do much boost economic growth or lower employment. In other news, the S&P Case Shiller index said home prices edged higher for a sixth-consecutive month which bodes well for the ongoing housing recovery. Elsewhere, consumer confidence bounced back and hit the highest level in seven months in September.
Stocks and a slew of other risk-on markets fell on Wednesday after European shares fell as protesters spread from Spain to Greece. The euro slid to a two-week low after yields on Spanish and Italian debt rose. Economic news was a nonevent. The Commerce Department said new home sales totaled 373k which fell short of the Street’s estimate for 380k. However, the reading was just shy of two year highs. Home prices rose compared to the same period last year which is a net positive for the ongoing housing recovery. The Mortgage Bankers Association said weekly mortgage applications rose last week as interest rates fell to record lows.
THURSDAY & FRIDAY’S ACTION: Stocks Fall On Fresh EU Woes
Stocks fell on Friday after news spread that France will raise taxes and investors were concerned that Spanish banks would not do well on with their latest stress tests. The Chicago PMI report fell to 49.7 which missed estimates and fell below the boom/bust level of 50. Elsewhere, consumer sentiment fell to 78.3 from 79.2. Consumer spending matched estimates and rose in August by the largest amount in six months. Personal income rose by +0.1% but after adjusting for inflation and taxes income fell by 0.3%. For the quarter, the Dow Jones Industrial Average ended up nearly 4% and the S&P and Nasdaq rose more than 5%.