WALL STREET WATCHES BUDGET FIGHT
While journalists and political analysts worldwide pondered the effects of a federal government shutdown last week, Wall Street conducted business as usual. Any prolonged shutdown would test the stock market: while the Federal Reserve would not be forced into a hiatus, the majority of Treasury Department employees would be furloughed, and the Securities and Exchange Commission, Federal Trade Commission and Department of Justice could halt review of M&As, IPOs and new stock and bond issues. Still, much of the Street’s attention will be focused on the new earnings season this week. (For the record, stocks actually advanced about 5% during the three-week federal budget impasse of 1995-1996.)1,2,3

ISM SERVICE SECTOR INDEX DESCENDS TO 57.3
The Institute for Supply Management’s February non-manufacturing index came in at 59.7; the March edition is 2.4% lower, and ISM’s survey estimated a 7.2% decline in business activity/production for the month and a 4.0% increase in the backlog of orders. However, the ISM non-manufacturing index has shown sector expansion for 16 months.4

REMARKABLE GAINS FOR CRUDE & GOLD
Oil prices rose 4.49% last week, and they have soared 11.60% in the last three weeks. NYMEX crude ended the week at $112.79 a barrel. (The American Automobile Association said the price of a gallon of regular unleaded gas averaged $3.73 nationally as of Friday.) Gold advanced $45.30 last week to settle at $1,473.40 on the COMEX.5,6

A FLAT LANDSCAPE FOR STOCKS
The Dow, NASDAQ and S&P 500 didn’t move much between Monday and Friday. Here is how things went for the week: DJIA, +0.03% to 12,380.05; S&P 500, -0.32% to 1,328.17; NASDAQ, -0.33% to 2,780.41.7

THIS WEEK: Monday, a fresh earnings season begins with 1Q results from Alcoa. Tuesday (assuming no federal shutdown), we have data on March import and export prices. On the schedule for Wednesday, we have the Commerce Department report on March retail sales and a new Beige Book from the Federal Reserve – and before the bell, earnings from JPMorgan. Scheduled for Thursday, we have the weekly initial and continuing claims data, the March PPI and 1Q results from Google and Hasbro. The March CPI, the initial University of Michigan March consumer sentiment survey and a report on March industrial output are all slated for Friday, and that day starts with 1Q results from Bank of America and Mattel.




This information should not be construed as tax, legal, or investment advice. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. It is not possible to invest directly in an index.


Citations.
1 – cnbc.com/id/42478476/ [4/7/11]
2 – blogs.wsj.com/marketbeat/ [4/8/11]
3 – money.cnn.com/2011/04/08/markets/thebuzz/index.htm [4/8/11]
4 – ism.ws/ISMReport/nonmfgROB.cfm [4/5/11]
5 – blogs.wsj.com/marketbeat/2011/04/08/data-points-energy-metals-483/ [4/8/11]
6 – charlotteobserver.com/2011/04/08/2208080/gas-prices-are-on-rise-again.html [4/8/11]
7 – cnbc.com/id/42498783 [4/8/11]
8 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=4%2F8%2F10&x=0&y=0 [4/8/11]
8 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=4%2F8%2F10&x=10&y=18 [4/8/11]
8 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=4%2F8%2F10&x=0&y=0 [4/8/11]
8 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=4%2F7%2F06&x=0&y=0 [4/8/11]
8 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=4%2F7%2F06&x=0&y=0 [4/8/11]
8 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=4%2F7%2F06&x=0&y=0 [4/8/11]
8 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=4%2F9%2F01&x=0&y=0 [4/8/11]
8 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=4%2F9%2F01&x=0&y=0 [4/8/11]
8 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=4%2F9%2F01&x=0&y=0 [4/8/11]
9 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [4/8/11]
9 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [4/8/11]
10 – treasurydirect.gov/instit/annceresult/press/preanre/2001/ofm11001.pdf [1/10/01]

JOBLESS RATE DOWN 1% SINCE NOVEMBER
In March, the nation’s jobless rate declined to 8.8%. That is the lowest level of unemployment since April 2009 and represents a 1.0% reduction in unemployment in the last four months. The Labor Department said the economy added 216,000 jobs in March, 78,000 in the category of professional and business services._1,2

CONSUMER SPENDING UP 0.7%
Personal spending increased for the eighth month in a row in February, but Commerce Department data showed that much of the gain went to pay for higher food and energy costs. The Personal Consumption Index (PCE) advanced 0.4% for the month. So the inflation-adjusted gain in personal spending was 0.3%. Wages rose by 0.3% in February.₃

ISM: MANUFACTURING GROWTH MODERATES
The March PMI index from the Institute for Supply Management showed a slight reduction in the pace of the sector’s growth: it came in at 61.2 versus February’s 61.4 mark. However, the index has recorded 20 straight months of sector expansion.₄

IN REAL ESTATE, SOME MIXED NEWS
The National Association of Realtors said that pending home sales rose 2.1% in February. The number of contracts for existing home purchases was still down 8.2% from a year ago. In January, the S&P/Case-Shiller home price index fell 1.0% from its December level; if it slips another 1.2%, it will fall below its April 2009 trough, which would signal the dreaded “double dip”._5,6

STOCKS ADVANCE FOR THE WEEK & QUARTER
How did the big indices do last week? DJIA, +1.28% to 12,376.72; S&P 500, +1.42% to 1,332.41; NASDAQ, +1.70% to 2,789.60. In the first quarter, the DJIA gained 6.41%, the NASDAQ 4.83% and the S&P 500 5.42%._7,8

THIS WEEK: Monday, Federal Reserve chairman Ben Bernanke speaks at the Atlanta Fed. On Tuesday, the most recent FOMC minutes will be released, plus the ISM service sector report for March; we also get an earnings report from KB Home. Wednesday brings earnings from Monsanto and Bed, Bath & Beyond. Thursday we have announcements from the European Central Bank and Bank of England along with initial and continuing claims and earnings from Rite-Aid. No major economic releases are scheduled for Friday.




This information should not be construed as tax, legal, or investment advice. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. It is not possible to invest directly in an index.