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Gold Index
Weekly Wrap
All ten sectors posted a loss, with financials (-4.0%) and materials (-3.2%) coming under the most selling pressure. Defensive sectors outperformed on a relative basis, with consumer staples shedding 0.1%. The shortened summer week resulted in light trading volume, with roughly 1 billion shares averaged on the NYSE compared to the 200 day moving average of 1.5 bln.
The national employment situation remains weak. Nonfarm payrolls fell by 467,000, which was worse than the expected decline of 325,000, and broke the recent trend of smaller payroll declines. Some market participants anticipated a larger-than-expected decline after the worse-than-expected private payroll report from ADP on Wednesday. Still, stocks sank 2% following the release of the official government data on Thursday.
Further large payroll declines are expected until weekly new jobless claims drop below 400,000. On a related note, new jobless claims for the week ended June 27 came in at a very high 614,000.
The unemployment rate rose 0.1% to 9.5%, which was slightly better than the expected rate of 9.6%. However, the increase was due to fluctuations in the labor force, and the unemployment rate is likely to increase further over the next several months.
The continued difficulty in obtaining a job was reflected in the latest consumer confidence report. The Conference Board Consumer Confidence report for June came in at 49.3%, dropping from 54.8% in May and missing the consensus estimate of 55.3%. The Present Situation Index declined to 24.8% from 29.7% and the Expectations Index dropped to 65.5% from 71.5%.
Consumers remain bearish regarding employment, with those anticipating more jobs in the months ahead falling to 17.4% from 19.3%.
In other economic news, May construction spending missed expectations (-0.9% m/m versus -0.6% consensus), while June ISM manufacturing (44.8 versus 44.9 consensus) and June Auto Sales (9.7 mln versus 9.8 mln consensus) were nearly in-line with estimates.
In corporate news, General Mills (GIS) rose 5.8% after the company posted better-than-expected earnings, gave an upbeat forecast and raised its dividend.
The second quarter ended Tuesday and recorded the biggest quarterly gain since 1998 for the S&P 500. Specifically, the S&P 500 gained 15%, the Dow advanced 11% and the Nasdaq climbed 20% in the quarter. In second quarter commodities action, oil prices surged 41%, gold advanced 0.5%, and the CRB Index rose 14%. Meanwhile, the dollar index fell 6.2%.
Looking ahead, earnings reports are light next week, but Dow component Alcoa (AA) marks the start of earnings reporting season Wednesday.
| Index | Started Week | Ended Week | Change | % Change | YTD % |
| DJIA | 8438.39 | 8280.74 | -157.65 | -1.9 | -5.6 |
| Nasdaq | 1838.22 | 1796.52 | -41.70 | -2.3 | 13.9 |
| S&P 500 | 918.90 | 896.52 | -22.38 | -2.4 | -0.7 |
| Russell 2000 | 513.22 | 497.36 | -15.86 | -3.1 | -0.4 |
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