For the week of October 11, 2010 through the market close on Thursday, October 14, 2010 the S&P 500 Index was up 0.74%; the Dow Jones Industrial Average was up 0.80%; the NASDAQ was up 1.39%, and the Russell 2,000 was up 1.57%. Interest rates increased a little this week, with the two-year Treasury at 0.37%; the five-year Treasury up to 1.14%, and the 10-year Treasury up to 2.50%. The 30-year Treasury is up to 3.91%.
So far, the earnings that have come from the third quarter have been really strong. While only 7% of companies have reported, 79% have beat expectations. We believe we are on pace for 24% growth in earnings for the third quarter. The economy is also heading into a seasonally strong time of the year, and we are not seeing any signs of weakness.
Initial claims for unemployment rose more than expected, rising to 462,000. This was the first increase in a few weeks, and thus, supports our opinion that the job market recovery is going to be bumpy. California and Florida were the only states reporting a decrease in claims of more than 1,000, while Pennsylvania, New Jersey and Georgia were the only states reporting an increase in claims of more than 1,000.
On Tuesday, President Obama lifted the moratorium on deepwater drilling in the Gulf of Mexico. With elections just around the corner, it is not a surprise that Obama would make this political move to grab headlines. We think Democrats are facing a difficult election. Even veteran Democrat, U.S. Rep. Barney Frank in Massachusetts is struggling with his campaign.
We think the market rally has been influenced by the public’s assumption that Republicans will take the House in the election. While it is not a foregone conclusion, it certainly is not hurting the market. We feel it is a win-win situation, as any Democrat who retains their seat will be voting conservatively and will likely not vote for Nancy Pelosi (D-Ca.) to lead the party.
More than politics, we feel that earnings and mergers and acquisitions are fueling the market’s rally. Every Monday, we are hearing more merger news. This week we heard that Pfizer Inc. (NYSE: PFE) will be purchasing vertically integrated branded pharmaceutical company King Pharmaceuticals (NYSE: KE) for $3.3 billion.
Year-to-date, the S&P 500 Index is up 5.27%; the Dow Jones Industrial Average is up 6.39%; the NASDAQ is up 7.33%, and the Russell 2,000 is up 12.68%. Year-over-year the S&P 500 Index is up 7.49%; the Dow is up 10.77%; the NASDAQ is up 12.11%, and the Russell 2,000 is up 12.95%.
Disclosures
This article is meant to provide valuable background information on particular investments, NOT a recommendation to buy. The investments referenced within this article may currently be traded by Henssler Financial. All material presented is compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. The contents are intended for general information purposes only. Information provided should not be the sole basis in making any decisions and is not intended to replace the advice of a qualified professional, such as a tax consultant, insurance adviser or attorney. Although this material is designed to provide accurate and authoritative information with respect to the subject matter, it may not apply in all situations. Readers are urged to consult with their adviser concerning specific situations and questions. This is not to be construed as an offer to buy or sell any financial instruments. It is not our intention to state, indicate or imply in any manner that current or past results are indicative of future profitability or expectations. As with all investments, there are associated inherent risks. Please obtain and review all financial material carefully before investing. Henssler is not licensed to offer or sell insurance products, and this overview is not to be construed as an offer to purchase any insurance products.
