Saturday, June 5, 2010

Weekly Wrap

Weekly Wrap Friday's weaker-than-expected jobs number combined with worries that Hungary may default on its debt fueled a sharp sell-off in equities. That helped the S&P 500 close the holiday-shortened week lower by 2.3%.

All 10 sectors lost ground this week, with industrials and financials showing the heaviest losses. Surprisingly, consumer discretionary stocks outperformed on a relative basis.

Geopolitical issues, including poor Chinese economic data and Israel raiding an aid flotilla, sent stocks lower at the open Tuesday. Selling pressure in BP (BP) following its announcement that the "top-kill" procedure to stop the Gulf of Mexico oil spill was unsuccessful caused weakness in the energy sector, giving investors another excuse to sell stocks.

However, the market regained Tuesday's decline on Wednesday as the energy sector rebounded from oversold conditions and the major averages experienced a late-session surge (for a change).

On Friday, though, the market gave back all of its previous gains and then some as default fears in Hungary caused investors to dump riskier assets and look to the safe haven of Treasuries. The 10-year Treasury yield dropped from 3.37% to 3.20%. The debt fears also sent the euro to fresh 4-year lows, falling below 1.2000.

This week's economic data had a major impact on the direction of the market.

On Wednesday, the major averages extended their gains following a better-than-expected number for pending home sales. The Briefing.com consensus was looking for a gain of 4.3%, but the actual number came in at 6.0%. While it appears to show strength in the housing market, the results are skewed as investors look to purchase homes before the deadline for the homebuyer tax credit.

Friday's jobs number, however, missed analysts expectations as the consensus called for an addition of 500,000 jobs and the number came in at 431,000. Investors were also discouraged that 411,000 of the jobs added for the month came in the form of temporary Census Bureau hirings, a sign that private sector hiring still remains weak.

Looking ahead to next week's data, the key releases will be the Fed's Beige Book on Wednesday as well as Retail Sales and Michigan Sentiment on Friday. There will also be another round of Treasury auctions next week.

IndexStarted WeekEnded WeekChange% ChangeYTD %
DJIA10136.639931.97-204.66-2.0-4.8
Nasdaq2257.042219.17-37.87-1.7-2.2
S&P 5001089.411064.88-24.53-2.3-4.5
Russell 2000661.61633.97-27.64-4.21.4

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