For the week of Tuesday, May 29, 2012, through Friday, June 1, 2012
- Standard & Poor’s 500 Index: -3.02%
- Dow Jones Industrial Average: -2.70%
- NASDAQ Composite: -3.17%
The markets continued their downward trend, ending in the red for another week. Friday was the worst day of the year for stocks after a highly disappointing jobs report. The Bureau of Labor Statistics announced Friday that employers added just 69,000 jobs in May. This was far less than economists’ forecast of a gain of 150,000 jobs. The nation’s jobless rate edged up to 8.2% from 8.1%
The Dow Jones Industrial Average has lost all its gains for the year, while the S&P 500 and the NASDAQ are down more than 10% from the year’s highs. U.S. Treasury bonds climbed amid a flight to safety.
On a bright note for consumers, gasoline prices fall to $3.61, according to AAA, the cheapest seen since February.
Economic Data
- Case-Shiller Home Price Index:
- On a year-ago basis, existing-home price declines continued for the three months ending in March.
- The 10-city composite dropped 2.8% from last year, with the 20-city composite down 2.6% over the same period.
- Not seasonally adjusted, the 10-city slipped 0.1% on month-to-month basis, while the 20-city composite held steady.
- Seasonally adjusted, performance was slightly better: Both composites gained 0.1% from a month ago.
- Conference Board Consumer Confidence:
- Dropping 3.8 points to 64.9, the Conference Board Index of Consumer Confidence fell more than expected in May.
- The drop was from an already downwardly revised 68.7, previously 69.2.
- Perceptions of weaker conditions, caused both present and future subindexes to fall to their lowest levels since January.
- Dropping 3.8 points to 64.9, the Conference Board Index of Consumer Confidence fell more than expected in May.
- Chain Store Sales Snapshot:
- ICSC chain store sales index fell 0.5% in the latest week.
- This was a fifth straight decline, and the sixth in seven weeks.
- MBA Mortgage Applications Survey:
- The mortgage applications composite index declined 1.3%, dragged down by a drop in refinance applications.
- The refinance index declined 1.5% from the previous week, even as mortgage interest rates fell across the board.
- The purchase index was down 0.6%, the third consecutive week of declines.
- Gross Domestic Product:
- U.S. first quarter GDP was revised down to 1.9% from the advance estimate of 2.2%.
- Real inventory for last quarter was $11.8 billion, which was lighter than initially reported,
- This eases the headwind to growth for the second quarter.
- This is our first look at corporate profits, and they posted the weakest gain in three years.
- ADP Jobs Report:
- With only 133,000 jobs created versus the expected 150,000, the economy added fewer jobs than expected in May.
- Companies with more than 500 employees added 9,000 workers;
- Mid-sized companies created 57,000 jobs, and
- Companies with fewer than 50 employees increased payrolls by 67,000.
- Goods-producing industries, from manufacturers to builders, only added 1,000 workers.
- Construction and factory employment fell 1,000 and 2,000, respectively.
- Service providers, however, added 132,000 workers.
- With only 133,000 jobs created versus the expected 150,000, the economy added fewer jobs than expected in May.
- Jobless Claims
- Unexpectedly jobless claims rose last week although little change was expected. This is a sign of the struggling labor market trying to find firm footing.
- Initial claims increased by 10,000 to 383,000.
- The prior week’s claims were revised from 370,000 to 373,000.
- Continuing claims decreased in the prior week.
Interest Rates
- Rates fell this week as investors turned to U.S. Treasury bonds amid the continuing European debt issues.
- The two-year treasury rate fell three basis points to 0.27%.
- This is off about 10 basis points in the second quarter.
- The five-year treasury rate sank 10 basis points to an all-time record low of 0.69%.
- The 10-year treasury rate plunged 18 basis points to another record low of 1.60%.
- The 30-year treasury yield plummeted nearly 20 basis points to 2.68%, a level not seen since the height of the 2008 financial crisis.