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Market Commentary Markets were relatively flat yesterday Markets were relatively flat yesterday. June’s consumer confidence declined more than expected because of concerns about jobs. On the other hand the yield on the two year treasury—the instrument most sensitive to monetary policy—rose to 0.637% from last week’s all time record low yield of 0.556%. Second quarter earnings have been fantastic…profits are up an astronomical 60% as per Bloomberg for the 179 S & P 500 companies that have thus posted results. Analysts were expecting a 34% gain on July 1. For calendar 2010 profits are expected to rise by 35%, the greatest increase in 22 years. The S & P has been on a major earnings driven advance since July 2 and yesterday crossed over the key 200 day moving average for the first time in over a month. While I am not a technical analyst, this is bullish. Even though this marquee average is now flat for the year, the S & P is still down about 8.4% from its late April peak. Will these highs be challenged? In my view it now depends upon the data. Today June’s Durable Goods orders are released. So is the Beige Book, the statistical compilation of the country’s economic activity utilized the early August FOMC meeting. Friday second quarter GDP is released. Analysts are expecting a 2.5% growth rate but most will focus upon momentum indicators. What will occur today? Last night the foreign markets were mixed. The Dow should open nominally lower on economic concerns and profit taking. The 10 year is up 8/32 to yield 3.02%. The information is the personal views of Kent Engelke and is not necessarily indicative of those of Capitol Securities Management. The information contained herein has been compiled from sources believed to be reliable; however, there is no guarantee of its accuracy or completeness. Any opinions expressed here are statements of judgment on this date and are subject to certain risks and uncertainties which could cause actual results to differ materially from those currently anticipated or projected. Any future dividends, interest, yields and event dates listed may be subject to change. An investor cannot invest in an index, and its returns are not indicative of the performance of any specific investment. Past performance is not indicative of future results. Capitol Securities Management, Inc. is a Mid-Atlantic based, privately owned brokerage and investment firm with branch offices in Mclean and Richmond, VA, Boston MA, Hickory, NC, Florham Park, NJ and Tampa, FL. Capitol employs over 170 fulltime investment professionals and independent affiliates in locations from New England to Florida and has been serving the needs of its investors for over 25 years. It is a member of FINRA and SIPC. © Copyright 2008 Capitol Securities, Inc. All Rights Reserved. |
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