May 2nd, 2012 9:18 AM by Mel Samick
Last week, quarterly earnings, the FOMC meeting, mixed economic indicators and international economic activities were on investors' radars. Strong earnings and mixed economic indicators kept investors on their toes. In the first half of the week, investors were disappointed by manufacturing readings from France and Germany and only slightly improved Chinese manufacturing output. However, things started picking up right after the FOMC meeting minutes were released. The Fed maintained its stance in terms of keeping the low Fed rate policy in place until the end of 2014. In a follow-up to the FOMC statement, Fed chairman Bernanke hinted that further quantitative easing was not off the table. The rest of the FOMC statement was the same as the last meeting. The Fed added 20 basis points to its forecasts for 2012 GDP, with expectations of between 2.7 and 3.1 percent.
All major indices ended in positive territory at the end of the week. The S&P closed at 1,403 while the Dow ended the trading week at 13,228. In major economic indicators released last week, to investors' disappointment, Durable Goods Orders for March dropped by 4.2 percent; excluding Auto Goods, orders were down by 1.1 percent. For the month of April, Consumer Sentiment was within the range of market expectations. However, first quarter economic growth disappointed investors as growth came in at 2.2 percent compared to expectations of 2.5 percent. The drop in government spending was the big negative factor in the slow growth; however, accelerated Consumer Spending reversed some of this. In the earnings sector, two energy giants, Chevron and Exxon Mobil posted earnings, with the latter missing investors' estimates.
The Ten-Year Treasury yield was down 3 basis points and ended the week at 1.93 percent. Towing the same line, mortgage rates were also down a bit last week. At the end of the week, the Conforming Fixed 30-year rate leveled out at around 3.68 percent, while the Conforming Fixed 15-year rate finished at around 2.93 percent. Standard 5/1 ARM rates were hovering around 2.75 percent. Even with persistent low rates, the housing market is still in somewhat of a flux. For the month of March, Pending Homes Sales showed some improvement while New Home Sales were less than the previous revised month's sales.
This week investors will be busy with heavy economic data. In other major economic indicators, manufacturing sector health will be gauged from the ISM manufacturing index release on Tuesday and Factory Orders on Wednesday. The ADP employment report and other employment reports on Wednesday and Friday respectively will further clarify for investors as to whether or not the economy is moving in the right direction
Information provided by NYCB Capital Markets.