Market notes from CEOCAST:
Markets gained last week on positive earnings reports and more positive news out of Europe that seems to indicate arrangements will be made to keep the system solvent. The Dow gained 240 points or 1.9% to close at 12,880. It is now once again up over 5% for the year. The Nasdaq gained 43 points or 1.5% to close at 2,935, leaving the index up 12.7% for the year. The S&P 500 gained 27 points or 12% to close up 8.4% for the year at 1,362. The Russell 2000 surged 2.8% to close at 797, up 22 points for the week and 7.7% for the year.
In economic news, new home sales increased more than expected from 343,000 in April to 369,000 in May, the most homes sold in a single month since April 2010. The lack of supply of distressed properties has led to a decrease in existing home sales and an increase in prices, and an increase in new home sales as the price difference makes new homes more attractive to buyers. This bodes well for future construction projects. Consumer confidence dropped a point to 62 according to the Conference Board, but positive income growth should improve consumption regardless of confidence levels. Durable goods orders increased a surprising 1.1% for May after dipping 0.2% in April, and orders of nondefense capital goods increased a healthy 1.6%. Initial unemployment claims fell from an upwardly revised 392,000 for the week ending June 16th to 386,000 for the week ending June 23rd. Continuing claims declined from an upwardly revised 2.311 million for the week ending June 9th to 3.296 for the week ending June 16th. GDP for the first quarter of 2012 remained at 1.9% after the third estimate, after an increase of 3.0 in the final quarter of 2011. Personal income increased a modest 0.2% for a second month in a row in May, with zero wage growth but a 0.2% increase in disposable spending (likely due to lower energy costs), and the savings rate grew for the first time since December to 3.9%.
Despite the ongoing financial slump and lost confidence in the financial industry, the banking sector was surprisingly unaffected by the JP Morgan Chase Co and Barclays scandals. The New York Times reported on Thursday that an internal JP Morgan Chase report revealed that trading losses could in fact amount to up to $9 billion. This sank the stock for the day, but it recovered Friday along with the rest of the banking sector on more positive news out of Europe. Positive news out of Europe comes in spite of the allegations that Barclays and several other European banks were manipulating Libor and Euribor lending rates, and the bank was fined $452 million Wednesday in connection with the case. This put a drag on European banking stocks, but was largely unfelt by American banks.