Weekly Economic Update for the Week of September 7, 2009

Market shrugs off jobless data. While the jobless rate climbed from 9.4% in July to 9.7% in August, the Labor Department reported a 22% reduction in the pace of job losses – payrolls were only trimmed by 216,000 last month. So there was no triple-digit shock to the Dow – it actually gained 96.66 Friday. Analysts polled by Bloomberg think the jobless rate will hit 10% in early 2010.^1,2

ISM manufacturing index hits 52.9. When was the last month in which the manufacturing industry expanded? January 2008. You can chalk some of this up to demand for autos, of course – but the August reading from the Institute for Supply Management seems “a sign that we’re on the path to economic recovery,” in the words of President Obama.³

Service sector gets closer to growth. As for the ISM’s other closely watched index … it improved to 48.4 for August. It was at 46.4 for July. Six of seven industries within the index reported growth last month, and ISM services survey chairman Anthony Nieves believes the service sector index may top 50 (indicating expansion) by fall.⁴

$1,000 gold on the horizon? Gold almost reached that psychological benchmark last week. December futures closed at $996.70 on the NYMEX Friday, after nearly hitting $1,000 an ounce Thursday. While gold gained 4.0% last week, silver did even better as interest in precious metals really picked up. Silver rose 9.9% last week to close Friday at $16.28 per ounce, after reaching a 13-month high of $16.40 per ounce earlier in the day. As for oil, it had its poorest week since mid-July, losing 6.5% across five trading days. Oil futures closed at $68.02 a barrel Friday.^5,6

A rally ends a week of hubbub. Last Monday, concerns about China troubled Wall Street. Last Tuesday, frets about bank failures pushed stocks down. Friday’s rally was welcome, but the S&P 500 still lost 1.22% for the week. U.S. stock markets are closed for Labor Day.¹ 

 

% Change	Y-T-D	1-Yr Avg	5-Yr Avg	10-Yr Avg
DJIA	+7.58	-15.61	-1.60	-1.48
NASDAQ	+28.01	-10.64	+1.89	-2.90
S&P 500	+12.53	-17.82	-1.75	-2.51
10YrTIPS Yd	-25.76	0.00	-1.91	-4.83

(Source: CNNMoney.com, ustreas.gov, bls.gov, 9/4/09)^7,8,9

Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends.

 

These views are those of Peter Montoya Inc., and not Statler Financial Services, Inc. and should not be construed as investment advice. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. It is not possible to invest directly in an index. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx^®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world’s largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. All economic and performance data is historical and not indicative of future results. The market indices discussed are unmanaged. Investors cannot invest in unmanaged indices. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards.

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 Citations.

 1 bloomberg.com/apps/news?pid=20601087&sid=aa.NY.SpFOnY# [9/4/09]
2 cnbc.com/id/32691370 [9/4/09]
3 marketwatch.com/story/obama-says-aug-ism-show-economy-on-right-path-2009-09-01 [9/1/09]
4 marketwatch.com/story/ism-services-sector-index-rebounds-in-august-2009-09-03 [9/3/09]
5 google.com/hostednews/ap/article/ALeqM5hLdQzzkk_vLW3OsMLzbo-eZnRKbAD9AGM8S82 [9/4/09]
6 marketwatch.com/column/Futures%20Movers [9/4/09]
7 money.cnn.com/data/markets/dow/ [9/4/09]
7 money.cnn.com/data/markets/nasdaq/ [9/4/09]
7 money.cnn.com/data/markets/sandp/? [9/4/09]
7 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=9%2F4%2F08&mode=add&symb=DJIA[9/4/09]
7 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=9%2F3%2F04&mode=add&symb=DJIA [9/4/09]
7 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=9%2F3%2F99&mode=add&symb=DJIA [9/4/09]
7 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=9%2F4%2F08&mode=add&symb=COMP [9/4/09]
7 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=9%2F3%2F04&mode=add&symb=COMP [9/4/09]
7 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=9%2F3%2F99&mode=add&symb=COMP [9/4/09]
7 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=9%2F4%2F08&mode=add&symb=SPX [9/4/09]
7 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=9%2F3%2F04&mode=add&symb=SPX [9/4/09]
7 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=9%2F3%2F99&mode=add&symb=SPX [9/4/09]
8 ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield.shtml [9/4/09]
8 ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield_historical.shtml [9/4/09]
8 ustreas.gov/offices/domestic-finance/debt-management/interest-rate/yield_historical_1999.shtml [9/4/09]
9 bls.gov/news.release/history/cpi_10191999.txt [10/19/99]