For the week of August 22, 2011 through Thursday, August 25, 2011
- Standard & Poor’s 500 Index: 3.18%
- Dow Jones Industrial Average: 3.07%
- NASDAQ Composite: 3.32%
After turmoil earlier this month, the markets rose this week as investors began reentering the markets on news of a possible third round of quantitative easing. However, we will have to wait until next week to find out the news. Treasurys rose as investors sold the safe-haven assets. Gold ended its rapid rise with more than a 7% sell-off on Tuesday and Wednesday, and remained flat on Thursday.
Unemployment claims ticked up this week, but this is partly due to the Verizon strike according to the Labor Department. Real estate remains troubled. New home sales dropped slightly. Previously owned homes that have been foreclosed make up 31% of sales. Until the unemployment rate begins to decline, the housing market will likely continue to struggle. On the bright side, durable goods orders rose. The increase was mostly due to transportation, but it is good news for manufacturing. Overall, this was a good week. We expect the markets to continue to rise.
Economic Data
- New Home Sales
- Sales of new homes fell 0.7% for the month of July to a seasonally adjusted annual rate of 298,000.
- However, sales are still higher than they were one year ago by 6.8%.
Prices have risen 4.7%, and inventory has fallen to 165,000 units, or 6.6 months of supply.
- Durable Goods
- In July, manufacturing picked up, with an increase in new durable goods orders of 4%.
- Transportation represented the majority of the increase.
- New orders rose 0.7% excluding transportation, inventories rose 0.8% and total shipments rose 2.5%.
- Core capital orders decreased 1.5%.
- Jobless Claims
- Initial claims rose to 417,000 from 412,000, which was more than were expected.
- Claims from two weeks ago were revised higher.
- The Verizon strike has driven the number of claims up:
- 8,500 claims from two weeks ago and 12,500 total.
- The employment market has not shown any significant signs of improvement and appears to have stalled.
- Gold
- Gold, the commodity, has been on a tear recently, reaching an intraday high of more than $1,900.00 a troy ounce on Tuesday.
- However, on Wednesday the shiny metal shed more than $100 a troy ounce in a massive sell-off.
- Gold can fall faster than it has risen, just as it did in 1980.
- Following the drop, the Chicago Mercantile Exchange raised the margin requirements for trading in gold futures by 27%.
Earnings:
- H.J. Heinz Company (NYSE:HNZ)
- HNZ took some cost cutting measures recently by closing plants and downsizing the workforce.
- Profits were down 6%, but the company beat expectations as a result of increased sales in emerging markets.
- Profit was $226.1 million, which was lower than last year’s $240 million.
- Shares dropped 1.2% after the earnings news.
- Heinz is focusing on growing sales in emerging markets with the acquisitions of Foodstar in China and Quero in Brazil.
Interest Rates
- The two-year Treasury barely increased to 0.20%, slightly above the all-time low of 0.18%.
- The five-year Treasury rose to 0.98%, only 0.11% above the all-time low.
- The 10-year Treasury rose 0.15% to 2.22% after remaining near all-time lows for several weeks.
- The 30-year Treasury yield soared 0.19% to 3.58%, but still remains about .80% below levels from a year ago.
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.
