Market Matters…
|
Market/Index |
Year Close (2013) |
Qtr Close (12/31/13) |
Previous Week (12/27/13) |
Current Week (01/03/14) |
YTD Change |
Week Change |
|
Dow Jones Industrial |
16,576.66 |
16,576.66 |
16,478.41 |
16,469.99 |
-0.64% |
-0.05% |
|
NASDAQ |
4,176.59 |
4,176.59 |
4,156.59 |
4,131.91 |
-1.07% |
-0.59% |
|
S&P 500 |
1,848.36 |
1,848.36 |
1,841.40 |
1,831.37 |
-0.92% |
-0.54% |
|
Russell 2000 |
1,163.64 |
1,163.64 |
1,161.09 |
1,156.09 |
-0.65% |
-0.43% |
|
Global Dow |
2,483.62 |
2,483.62 |
2,476.65 |
2,461.03 |
-0.91% |
-0.63% |
|
Fed Funds |
0.25% |
0.25% |
0.25% |
0.25% |
0 bps |
0 bps |
|
10 yr Treasury (Yield) |
3.04% |
3.04% |
3.01% |
3.00% |
-4 bps |
-1 bps |
So how do you top a year when the Dow Jones gained 27% which was, by the way, the WORST index performance of the four domestic majors (S&P 500 + 30%, Nasdaq + 38%, Russell 2000 + 37%)? Investors shook off continued shenanigans from DC which included a “fiscal cliff” fiasco and a temporary government shutdown, and some uncertainties from the Federal Reserve in the form of a new Chair-elect and the “beginning-of-the-end” of bond buying stimulus, and instead focused on a strong recovery in housing as well as solid showings in manufacturing and labor.
The Blue Clips experienced their best gains in 18 years and set 52 new highs along the way (including on the last day of the year). The record-setting year ended on a high note with nine winning sessions out of the last 11 as no one seemed to want to buck the friendly trend. Retail (mom and pop) investors finally joined their institutional brethren at the stock market party as many got sick and tired of watching “the rich get richer,” while they sat on the sidelines. Private equity firms rewarded their “rich and famous” partners for their participation in risky early-stage deals with liquidity events to the tune of over $120 billion in cash in the aftermath of the many IPOs and sizable debt offerings of the year. Optimistic investors hope that the recent budget deal and Fed policy shift have lessened the uncertainties of the past 12 months and the markets should continue to rock along in bullish mode (though 27%+ may be a bit much to ask).
This week, board rooms remained active, as they had been throughout the year, as Fiat acquired the remaining shares of Chrysler in a $4.35 billion dollar deal that ended the prior talk of IPO. Investors returned from their Amateur Night (New Year’s Eve) festivities and took some profits as the Dow suffered its first “first-trading-day-of-the-year” decline since 2008. Likewise energy traders reassessed the supply/demand dynamic and backed off near $100/barrel as crude gave back some recent gains. No need to panic quite yet. Most heavy-hitters are still “wining and dining” it up in the Hamptons as trading desks operate at skeleton staffs and the positive fundamentals (economic and market) remain intact.
HAPPY NEW YEAR!!! (And don’t spend those 2013 profits all in one place).
Economic Calendar
|
Date |
Release |
Comments |
|
December 31 |
Consumer Confidence (12/31) |
Highest reading since September |
|
January 1 |
New Year’s Day |
Markets closed |
|
January 2 |
Jobless Claims (12/28/13) |
Slight decline in filings |
|
Construction Spending |
Best showing in 5 years |
|
|
ISM – Manu (12/13) |
Expansion for 7 straight months |
|
|
The Week Ahead |
||
|
January 6 |
Factory Orders (11/13) |
|
|
ISM – Services (12/13) |
||
|
January 7 |
Trade Balance (11/13) |
|
|
January 8 |
Fed Policy Meeting Minutes |
|
|
Consumer Credit (11/13) |
||
|
January 9 |
Jobless Claims (01/04/13) |
|
|
January 10 |
Nonfarm Payroll (12/13) |
|
|
Unemployment Rate (12/13) |
The year that was the domestic economy also ended with a bang with solid signs across all sectors. Construction spending climbed to its highest level in almost five years, while pending the S&P/Case Shiller home-price index jumped 13.6% in October from last year’s levels. The consumer appeared to be back on track after a worrisome period focused on the gov shutdown and the Fed as the confidence index rallied in December to its best showing in three months. Jobless claims fell again in the latest weekly release though analysts are quick to disregard this data as late-year filings often come with caveats and aberrations. The ISM (manufacturing) reading kicked off the new year on a strong note as the manufacturing index rose for the seventh consecutive month and remains comfortably in expansion mode
The news in Europe was similarly good as its manufacturing sector grew for the third straight month, providing further optimism for a 2014 economic resurgence. Of course, Germany remained the EU leader, though positive signs also emerged from Italy, Ireland, and even Greece (sadly not France). China’s numbers were not quite as favorable, as manufacturing there has been slowing, though the sector still indicates expansion (ever so slightly). China also ended its prior freeze on IPOs after a year-long hiatus as the gov worked through reforms on a system that often led to overpriced offerings and price declines immediately after the opening trades.
On the Horizon …While few analysts can claim they saw the solid equity market performances of 2013 coming, even fewer will predict more of the same (at least, of that magnitude) for the current year. January could go a long way in setting the tone. According to the January Barometer, when stocks close higher than they opened during the first month of the year, the entire year will end “in the black.” Last year, the Dow jumped about 6% in January, a nice precursor for the remainder of the year. Despite the initial day pullback, investors are, most likely, easing their ways back into the year as many remain on vacations for the first few sessions. Trading will return in earnest next week and investors will be greeted with minutes revealing the Fed’s mindset on the domestic economy and “tapering,” and crucial labor releases. So for now, “ Should old acquaintance be forgot …?” At least, as far as the year 2013 goes, methinks not.
© Brounes & Associates
