October 5th, 2011 9:28 AM by Mel Samick
Last week, volatility ruled the stock market. Stocks started the week with a rally, but fluctuated wildly the rest of the week. However, due to investors' lack of confidence in the economy, a pattern of liquidating was seen at ends of trading sessions most days last week. Europe's debt issues along with a lack of strong domestic indicators played a major role in investors' lack of confidence. Greece debt was the "talk of the town", once again, as European leaders were unable to reach any consensus with respect to debt bail-out terms. France and Germany, the EU's strongest economies, want countries to coordinate their spending and borrowing more closely. Other countries see that as a threat to their sovereignty.
Amid high volatility, the S&P 500 lost 0.4 percent to 1,131, dropping for a second straight week. Raw material companies led declines among 10 S&P 500 industries, losing 3.2 percent as a group for the week. The Dow Jones Industrial Average (DJIA) rose 142 points, or 1.3 percent, to 10,913. On a quarterly basis, all major indices, the Dow, S&P 500 and Nasdaq each declined by more than 12 percent this quarter, the most since the financial crisis crested at the end of 2008. The volatility Index, VIX, more than doubled this quarter to 42.96. Some positive news on the domestic front is that orders for U.S. capital goods were up in August by the most in the prior three months, according to a Commerce Department report. But, on other hand, consumers spent slightly more in August, but earned less for the first time in nearly two years.
The Ten-year treasury yield was up 15 basis points and ended at 1.92 percent. Towing the same line, mortgage rates was also up slightly last week. At the end of the week, the conforming Fixed 30-year rate leveled out at around 3.76 percent, while the conforming Fixed 15-year rate finished the week at around 3.25 percent. Standard 5/1 ARM rates were last seen hovering around 2.92 percent.
This week, investors will be focusing on the Euro debt situation and solution. In other major economic indicators, the Manufacturing sector health will be gauged from the release of the ISM Manufacturing Index on Monday and Factory Orders on Tuesday. The ADP Employment report and the big Employment report on Wednesday and Friday, respectively, will tell us all a lot more about the single biggest threat to economic growth.
Information Provided by NYCB Capital Markets