For the week of September 19, 2011 through Friday, September 23, 2011
- Standard & Poor’s 500 Index: -6.54%
- Dow Jones Industrial Average: -6.41%
- NASDAQ Composite: -5.30%
The last week of summer ends with the market in a roller coaster. Wednesday ended with a small sell-off, followed by a larger drop on Thursday. The Federal Open Market Committee meeting ended on Wednesday, and the Federal Reserve announced a new plan to assist the economic recovery, “Operation Twist.” The plan involves the Fed purchasing $400 billion in long-term U.S. Treasurys, along with mortgage backed securities, and will supposedly lower long-term interest rates. The Fed cited weak economic indicators and significant downside risk to the economy, as justification for the move. Time will tell if the strategy helps stimulate the economy.
Political news was interesting as details of President Obama’s jobs bill come to light. We believe this bill has no benefits for the economy or for the employment situation in the country. Its announcement was seen more as a symbolic political move than a solution to unemployment. On the bright side, the U.S. dollar rose against most currencies this week, as global recession fears created a demand for the safe haven currency.
Economic Data
- The United States Dollar
- The dollar rose against most currencies this week, as global recession fears rose.
- Despite the downgrade of U.S. debt by S&P in August, the dollar still remains the world’s safest currency.
- The euro fell to a 26-month low versus the dollar, as the European debt crisis continues.
- Federal Open Market Committee Meeting
- On Wednesday, the FOMC announced that the Federal Reserve felt that there was enough concern about the struggling economy to initiate “Operation Twist.”
- The Fed will sell $400 billion in short-term securities and purchase an equal amount of long-term debt and mortgage backed securities in order to drive the yield on long-term debt lower.
- The concerning news was the wording of the Fed’s report on the economy, which likely spurred the sell-off on Wednesday.
- There were dissenting votes over the measure by three Fed members.
- On Wednesday, the FOMC announced that the Federal Reserve felt that there was enough concern about the struggling economy to initiate “Operation Twist.”
- Jobless Claims
- Initial claims fell to 423,000 from 432,000, which was a positive move.
- Claims from a week ago were revised higher from 428,000 to 432,000.
- Unfortunately, the jobless rate has not declined enough to have a positive impact on the market.
Company News
- FedEx Corporation (NYSE: FDX)
- FedEx announced earnings for the year have been revised down, citing a weaker worldwide economy.
- Earnings met analysts’ expectations for the quarter with net income of $464 million, or $1.46 per share, more than $380 million and $1.20 per share last year.
- Revenue rose to $10.52 billion, an 11% increase.
- Causing the downward revisions were slowing shipments in Asia.
- Growth on the continent had been strong, but has declined.
- FedEx revised earnings guidance down between $6.25 to 6.75 per share, from $6.35 to 6.85 per share.
- Shares lost 3% on the news.
- FedEx announced earnings for the year have been revised down, citing a weaker worldwide economy.
- Hewlett-Packard Company (NYSE: HPQ)
- Hewlett-Packard fired their CEO last week and announced Thursday Meg Whitman was chosen as the successor.
- Whitman is a former CEO of eBay, and a former gubernatorial candidate for the state of California.
- HP had decided to spin off their PC business and has canceled their tablet division.
- Time will tell if Whitman can get the technology company moving in the right direction again.
Interest Rates
- The two-year Treasury rose to 0.19%, just above the all-time low of 0.15% set Monday.
- The five-year Treasury set a new all-time low of 0.79%.
- The 10-year Treasury also set a new record low at 1.77%.
- The 30-year Treasury yield plummeted 47 basis points to 2.85%, remaining 0.30% above the all time low of 2.55%.
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.
