February 9th, 2011 9:48 AM by Mel Samick
Despite the tensions in Egypt, the Dow managed to end the week above 12,000. There was plenty of news that helped the Dow this week. Consumer Spending, the Core PCE price index, and Chicago PMI were all better than expected. Personal Income came in right on target. The ISM Index of Manufacturing rose unexpectedly as the Dow closed at 12,040 on Tuesday. Car sales also increased to a pace of 12.53 million units. There was also good news out of Asia and Europe. Europe's labor market showed signs of improvement; while China and the U.K. both reported an increase in manufacturing. The market closed at 12,092 on Friday.
The employment data throughout the week was mixed, keeping the Dow from rallying even further. The unemployment rate had a sharp decline to 9% (from 9.4%). Over the last two months it has fallen by eight-tenths of a percentage point; the biggest 2 month drop in the last 53 years. However, that data is muted because a larger number of people have stopped looking for jobs and are no longer included in the denominator. Friday's disappointing non-farm employment report seemingly confirmed that. Only 36,000 jobs were created in January. Also, Monday, the Commerce Department reported that Construction Spending fell 2.5% while it was expected to increase by .1%. Homebuilding outlays decreased 4.1 percent. The housing outlook remains cautious in 2011. Between a high number of foreclosures and high unemployment, homebuilding may continue to remain anemic. Foreclosure filings increased in 75% of U.S. cities last year.
In other news: Fannie Mae purchased $87.6 billion of mortgages in December and $855 billion in 2010. Fannie Mae accounts for 54% of the market share and Freddie Mac accounts for 26%. The Federal Reserve bought back $8.87 Billion in Treasury debt on Thursday. This is part of the second round of quantitative easing. Treasuries pared back losses after the buyback.
On the schedule for this week is:
Tuesday - Job Openings
Thursday - Jobless Claims - Wholesale Inventories - Federal BudgetFriday - Trade Balance - Consumer Sentiment
Information provided by NYCB Capital Markets