Wednesday, 04 August 2010 14:06 Last Updated on Wednesday, 04 August 2010 14:18
The major financial indices finished the month mixed, but results for July overall were generally encouraging. A considerable amount of territory lost in the May and June market decline was recovered, although values didn’t come close to matching the highs for 2010 so far. Those were reached in late April.
Among worrisome factors was the second quarter gross domestic product advance estimate that shows the economy expanding at annualized, seasonally adjusted estimated annual rate of 2.4%, down marginally from the 2.5% economists had expected. In the first quarter, in contrast, the economy grew by 3.7%.
Despite indications that the slowly recovering U.S. economy has shifted into an even slower gear, all the major indices recorded gains for the month (see figures below).
7/30/10 Close 6/30/10 Close Gain/Loss
DJIA 10,465.94 9,774.02 +7.09%
NASDAQ 2,254.70 2,109.24 +6.90%
S&P 500 1,101.60 1,030.71 +6.88%
Good news punctuated July, encouraging investment and dampening previous concerns. A series of upbeat corporate earnings reports for the second quarter came amid news that only seven of 91 banks failed the stress tests devised by the European Central Bank. Although some questioned whether the tests were rigorous enough, the results tended to reassure investors that Europe’s financial sectors may be healthier than had been thought. The euro, which hovered in the $1.22 range as the month began, climbed toward $1.31 as July ended, showing more strength than had been forecast.
Continued weakness in the U.S. housing sector and relentlessly downbeat employment figures – the unemployment rate officially stands at 9.5% – fostered continued investor uncertainty. The two are inexorably linked: housing demand doesn’t grow when people are unemployed or fearful of losing their jobs.
You may have noticed continuing volatility during the month. However, even in such times, compelling investment opportunities can emerge. I’ll be happy to review your portfolio in the light of current market trends if you wish. Just give me a call at 818-730-2000.
Investing involves risk, and investors may incur a profit or a loss. Past performance is not an indication of future results. Investors cannot invest directly in an index. The Dow Jones Industrial Average is an unmanaged index of 30 widely held stocks. The NASDAQ Composite Index is an unmanaged index of all common stocks listed on the NASDAQ National Stock Market. The S&P 500 is an unmanaged index of 500 widely held stocks.
