ETF/No Load Fund Tracker StatSheet
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THE LINK TO OUR CURRENT ETF/MUTUAL FUND STATSHEET IS:
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Market Commentary
Friday, July 5, 2013
JOB DATA CHEERS BULLS—BOND ETFS TANK AS INTEREST RATES SPIKE
After a holiday break yesterday, the major U.S. averages entered the weekend on a positive note. After choppy trading through much of Friday, which was marked by light volume, stocks rose sharply in late afternoon amid an allegedly strengthening labor market. The Dow Jones Industrial Average closed 147 points higher (1.0%) at 15,136. The S&P 500 Index increased 16 points (1.0%), the biggest rally in three weeks, to close above its 50-day moving average at 1,632. The Nasdaq Composite gained 36 points (1.0%) at 3,479.
The markets responded positive to robust jobs data that pointed to economic growth as investors overcame concerns that the Fed may begin scaling back its stimulus efforts as soon as September.
The much anticipated June’s employment report showed broad-based progress in labor market conditions. Nonfarm payrolls increased by 195,000, above the consensus of 160,000. Private nonfarm payrolls rose 202,000, and have increased 6.7% from the cyclical trough in February 2010. Private sector payrolls increased by 202,000 in June, versus the forecast of a gain of 175,000.
On the extremely negative side, the number of people working part-time for economic reasons jumped by 322,000. There were also increases in the number of marginally attached and discouraged workers. The unemployment rate remained at 7.6%, compared to the decline to 7.5% that economists had expected.
After the job release, treasuries sold off aggressively and spent the remainder of the session on their lows. The benchmark 10-yr yield jumped 22 basis points to end at 2.72%, its highest level since August 2011. Today’s jobs report also gave a notable boost to the dollar, sending the Dollar Index to a three-year high amid all-around greenback strength. What about stocks?
The financial sector settled higher by 1.8% after spending the entire session atop the leader board. Industrials registered a strong gain (1.5%) as transportation-related names drove the sector higher. Health care sector (+1.3%) also finished among the leaders as biotech companies outperformed.
On the flip side, the jump in yields contributed to weakness in the utilities sector, which ended lower by 0.5% after spending the entire day in negative territory. Two other rate-sensitive groups, consumer staples (+0.2%) and telecom services (+0.5%) spent some time in the red, but rallied into the close. Energy sectors rallied throughout the day amid ongoing clashes in Egypt.
For the holiday-shortened week, stocks climbed amid weak volume. The Dow rose 1.5 percent; the S&P 500 was up 1.6 percent and the Nasdaq composite advanced 2.2 percent. The markets have recovered nicely since the correction which started few weeks ago.
The economy is supposed to be back on track for growth as the Fed will likely to slow down its stimulus. Personally, I don’t see that happen yet as fundamentals are far from the point at which the economy could generate sustainable organic growth (growth without any stimulus).
Our Trend Tracking Indexes (TTIs) closed the week as as follows:
Domestic TTI: +1.24% (last week +0.84%)
International TTI: +3.70% (last week +2.88%)
My latest e-book “How to beat the S&P 500…with the S&P 500” has now been uploaded, and you can download your free copy here.
Have a great week.
Ulli…
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READER Q & A FOR THE WEEK
All Reader Q & A’s are listed at our web site!
Check it out at:
http://www.successful-investment.com/q&a.php
A note from reader Maghar:
Q: Ulli: Your recent comment that normally conservative securities have shown twice the volatility, like SPLV was down about 8% compared to SPY about 4. I wonder how that could happen?
A: Maghar: We are having a totally distorted and manipulated market environment and risk on and risk off tendencies switch at a moment’s notice so that alleged less volatile ETFs all of a sudden can get very volatile.
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