Short but noisy week ahead for stocks
After the best June for stocks in at least 12 years, the coming week compresses a lot of information into 4 days. The big event is Friday's jobs report, but key reports are due on manufacturing and auto sales. Europe will move markets as well.
If nothing else, the past week offered plenty of drama -- if not entertainment -- for investors as June had a surprisingly strong finish. The week ahead will have its own dramatic moments, even as U.S. markets take a daylong break on Wednesday for the July 4 holiday. They will also close early on Tuesday.
Everything will build up to the jobs-and-unemployment report on Friday, which most economists believe won't be much to get excited about. There's the Institute for Supply Management's June report on manufacturing on Monday and auto manufacturers' reports on sales for the month on Tuesday.
While there are few earnings reports that can really move markets on the schedule, there is still Europe to worry about. Stocks shot up Friday largely because eurozone leaders said they were crafting a new plan to save their banking system and start to get their debt crisis under control. The coming week will bring the hard questions on how the plan will work. There will be lots of skepticism because so many plans were immediately found wanting.
Among the big questions that will be asked is if the Europeans can craft a plan fast enough to minimize the slowdown that is gaining strength by the day. Shares of Ford Motor (F) and Nike (NKE) fell on Friday after both said the slowdown in Europe is hurting their businesses.
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The U.S. market looked like it might fall off a cliff after a narrow majority on the Supreme Court upheld President Obama's health care law, but the hint of a European deal brought stocks back late Thursday and the announcement of a deal on Friday set off a big rally.
The Dow Jones industrials ($INDU) finished up 278 points for the day, and the blue chips ended the week with a 1.9% gain, and a 3.9% gain for June, its biggest monthly increase since October and its best June since 1999.
The Standard & Poor's 500 Index ($INX) rose 4% for the month -- also its best June since 1999 and its best month since October. The Nasdaq Composite Index ($COMPX) added 3.8% for month, its best since February and its best June since 2000.
For the year, the Dow is up 5.4%, after a 2.5% loss in the second quarter. The S&P 500's gain at midyear is 8.3% after falling back 3.3% in the quarter, and the Nasdaq is sporting a relatively gaudy 12.7% for the year despite a 5.1% decline in the second quarter.
At the same time, crude oil (-CL) in New York fell 1.8% in June to $84.96 a barrel and was off 17.5% for the quarter. The national average price of gasoline has fallen to $3.353 a gallon from a high of $3.936 a gallon in April. The price fell 7.4% in June and 14.6% in the quarter.
The cost of a 20-gallon fill-up has fallen from $78.72 to $67.06. That's a savings of $11.66. If you live in, say, Los Angeles, the savings are real.
There are lots of head winds for the market for the rest of the year. The biggest are Europe and the so-called fiscal cliff. Plus, profit growth for the second quarter is expected to slide.
Europe will be a big issue because the chatter about the debt crisis has morphed into a probable regionwide recession that is affecting businesses elsewhere. Like Ford, Nike and others.
The fiscal cliff that the federal government faces -- if not dealt with with care and a spirit of compromise -- could cause huge and abrupt spending cuts that would probably send the domestic economy into something that feels like a recession. The cliff is so-called because a combination of expiring Bush tax cuts and required spending cuts could hit at the end of the year.
Industries that have been stalwarts in the recovery -- energy and automobiles -- may be about to stop growing. Drilling-rig counts are falling because of low natural gas prices in particular but falling oil prices as well.
One reality that seems to be emerging: Profit growth is slowing. Thomson Reuters says negative preannouncements are ahead of positive preannouncements by 3.6-to-1. That's the weakest showing since the third quarter of 2001.
| Markets for the week | ||||||||||||
| 6/29/2012 | 6/15/2012 | % chg. | YTD chg. | |||||||||
| Dow Industrials | 12,880.09 | 12,640.78 | 1.89% | 5.42% | ||||||||
| S&P 500 | 1,362.16 | 1,335.02 | 2.03% | 8.31% | ||||||||
| Nasdaq | 2,935.05 | 2,892.42 | 1.47% | 12.66% | ||||||||
| Russell 2000 | 798.49 | 775.16 | 3.01% | 7.77% | ||||||||
| Crude oil | $84.96 | $79.76 | 6.52% | -14.03% | ||||||||
| (per barrel) | 0.00 | 0.00 | 0.00% | 0.00% | ||||||||
| U.S. Dollar Index | 81.75 | 82.44 | -0.84% | 1.53% | ||||||||
| 10-yr. Treasury | 1.66% | 1.67% | -0.78% | -11.33% | ||||||||
| Gold | $1,604.20 | 1,566.90 | 2.38% | 2.39% | ||||||||
Here's what the week ahead looks like:
The ISM Manufacturing report, due Monday: Look for a slide to a reading of about 50. That will reflect the cool-down that hit the economy this spring.
Construction spending, due Monday from the Commerce Department. Expect a small gain, largely because of apartment construction. Government spending will fall for the sixth straight month.
Auto and truck sales, due Tuesday. The expectation is for continued strength, although sales haven't been as strong as earlier this year. The consensus on auto sales is a seasonally adjusted annual rate of 13.9 million units, up slightly from May. Watch for a negative surprise. There have been anecdotal reports of slowing sales since Memorial Day. Truck sales may decline because of slowing in the oil patch.
ISM Non-Manufacturing Index, due Thursday. The last index reading came in at 53.7. Look for something closer to 53. Europe is the problem.
Jobless claims, due Thursday. Look for 385,000 new claims for the week ended June 30, the same as the week of June 23.
Payrolls and unemployment, due Friday from the Labor Department. The consensus estimate is for a gain of 90,000 jobs in June, but there are many people who see 75,000 or less. Private-sector growth is stalling; public sector jobs are slumping. The unemployment rate should hold at 8.2%.
Europe... America... no difference. The need for job recovery before anymore financial scams is the highest priority. It's all in the markets, so freeze it there and write checks to fund the cost of putting everybody back in career positions, recovering all the lost wages and de-funding those ridiculous PACs. I support closing the banks and reconciling the entire financial sector and the Federal Reserve. Time to "claw back" those "talent" incomes, bonuses and validate businesses based on relevance to America. A "business" has it's operations, facilities, personnel AND management here. There is no such thing as global business, only worldwide corruption.
We learned that Barclays Bank criminally manipulated the LIBOR along with 20 other institutions. NONE should be open for business right now... but they are. Time for REAL government with the balls to recognize when it's better to jail the offender then to accept compensation from corruption.
1 - Lower taxes for SMALL business
2 - Close tax loopholes for multinational corporations
3 - Stop subsidizing multinational corporations, especially the financial industry (sorry Jamie)
4 - Approve Bernie Sanders constitutional amendment to overturn Citizens United
5 - Create Usury Laws for Credit Card companies (yes, a National usury law)
Adding: Maybe we need to outlaw lobbyists.
Once again Comrade ActiveRIA...
Mr. Obama increased spending from 3 trillion to 3.8 trillion. Revenue is estimated to set an all time record this year at 2.45 trillion.
We do not have a taxing problem, taxes are at an all time high. What we have is a run away SPENDING problem. Republicans will consider tax increases when the BUDGET is BALANCED, not before. That means the can be ZERO tax increases until SPENDING is SLASHED.
All of Mr. Obama's spending must end. You refuse to compromise, you insist this SPENDING must continue. Once we slash 1.2 trillion in SPENDING we can consider new taxes to be used to pay down DEBT ONLY. There is no sense raising taxes to support any of this spending.
It is the Donkeys who refuse to compromise... They INSIST on this SPENDING and WANT it FUNDED forever.
We have a corrupt, lazy, economically clueless, dumb president. He has to go.
You make money, you spend it. You make more money, you spend it. You keep the cycle going and accept the residual difference as a tip for your prosperity. We have retirement accounts and Social Security that provide enough for millions to live on as they settle out of the workforce. When you are a grubber who takes takes takes, there is a shortfall somewhere else. In our current times-- it's the entire rest of the economy. Being young enough to work and having too much so that corruption or absolute power pollute your thinking is-- absolutely wrong. People with more than they need who let the nation bleed are unAmerican. The US isn't uncompetitive. We have a wealth or resources and attributes and free people to employ and enjoy them. The problem is-- lazy wealth set targets abroad that cannot be equally measured here. We are a GREAT nation, It will be greater when we suppress New World Order and get back to life liberty and the pursuit of happiness.
ah well, they deleted my post for the second time and also have some type of tracking mechanism installed.
i guess since most of microsoft people are gazillionaires with their stock gains they are anti-social change and anti-we the people. political censorship of free speech at msn money - who woulda thunk it?
"Jobs cannot return while Mr. Obama continues his war on business. Jobs come from profits and a good investment environment. We have the highest taxes in the world (on paper and actual paid) for corporations."
I run businesses and am not at war with the President. Your perception of a business is likely not like mine. Platforms (business management only- no substance) aren't businesses. Banks that don't hold and service portfolios (tangible instruments) are not businesses. Financial houses that became banks after 1999 are not businesses. Any corporation without the Founder in place, who sold off machinery, facilities, terminated personnel and replaced these with imports and used the cash windfall to invest, are not only not businesses, they are unAmerican enterprises. It's no secret that broad collusion runs our current course, but the greed that fuels it cannot d anything on it's own, it needs underlings and to suppress people who are inherently good but fear losing everything if they quit, or fear change. What you don't realize is-- there is NO need to keep greed once it controls all. They can be jettisoned permanently and replaced easily with all the skilled and experienced people that still exist, but are likely sharper in many ways now.
It's explained best this way--- the scam began like a cancer spreading everywhere until it took over the whole body of America. But it had to feed and veat to thrive and first eliminated all outsiders to it's core, then began in on it's own weaker parts. The realm narrowed. Now... it is a very hard and pussy pimple on the forehead of a whole globe that resorted to sub-economic aspects to survive and have. WHEN the globe moves to change financial aspects to restore and recover, the pimple simply pops and must assimilate. It only knows greed, which new regulations and rules impede. A pussy mess without a backbone can't stand on it's own and ends up down the drain. Big business has not recognized the sheer windfall opportunity that exists today in legitimacy. Global population is growing disenfranchised with greed and illegitimacy. This has nothing to do with the President... it has everything to do with New World Order. You don't have to recover jobs. You don't have to stay in business either. The choice will come before the election, I assure you.
V_L... I can only agree if we say UNIONS and PUBLIC EMPLOYEES keep your hands off my government also. And lets keep Religious organizationsout too...
Corporations sought nothing that any any other organization didn't want.
We need a level playing field. Not just Democrats caving into public employee Unions and then the Unions turning around and giving them huge contributions from the public treasury.
Treat all organizations the same. Or in typical democrat fashion, you wish to ban free speech you disagree with?
Greed has many manifestations...
For instance, workers demanding more money for the exact same work...
There is ZERO wrong with maximuizing investment. Why did the US become uncompetetive?
Is not the USA paying it's "Fair share" being so rich to the rest of the world?
Sorry, but America's problem is (To quote Ross Perot) that great sucking sound of our jobs going overseas. The second great sucking sound is our capital going overseas too...
Why is that? Well you seem to ignore all the root causes. You blame corporate greed. You seem to think we need to punish success and reward sloth. I contend that government polices are the root cause. I am your typical manufacturer. I recently moved from Illinois to Texas, for a far friendlier business climate. If I wasn't such an old fart I would have moved overseas. Under Obama, America has taken a far left turn. He is at war with business regardless if you see it or not. Big government is being funded by corporate profits instead of the American Worker.
If you are blind to that, thats Ok... But put the blame where it belongs... On our anti-business government polices and the huge growth of Government (from 18% of GDP to 26+% over the last 3 years). If Mr. Obama and his job killing polices remain, we will have at leat 4 more more years of "Recovery summers" if not an outright depression.
Feel free to hire away, but I am planning more layoffs to account for Obamacare. It will be bad enough to have exit providing healthcare to employees. They will be saddled with all the additional cost. But this is reality.
Hire away if you think this is going to be a great economy moving forward. I plan to hunker down even more. There is no risk in that. I have been in business for almost 40 years, and my judgement of conditions is they will get a lot worse if Obama is re-elected. Like I said there is no risk in hunkering down. The risk is if he is re-elected...
Tumbleweed...
I do understand that 4 justices thought the whole thing was unconstitutional in it's entirety. I do also understand that inspite of Obama and the demcorats INSISTING it was not a tax, Obama's lawyers said it ws in oral arguments, and that Roberts agreed it was a tax. I think the constitution is pretty clear, that Congress' power to tax is unlimited. I don't watch Fox news, but I do watch CNN and Kudlow everyday.
I do not understand why leftists MUST insist on massive deficit spending in this country. Germany is fine example of a country that wants socialism. It's poor and middle class pay for it. With a 17% VAT tax and a 8% minium tax on the very poor, and a 23% at what we would call poverty level, and a 45% on the middle class, Germans pay for theirs without massive deficits.
The rest of Europe has lower taxes on the poor and middle class and runs huge deficits. When the collapse comes they will be the ones cruxified, not the rich. Look at Greece.
My election logic remains sound, in my opinion. Feel free to cancel my vote out. I can wait 4 years more to fix the economy. I am not being harmed in the least. I however, believe the middle class and poor are being punished by Obama's policies. I am OK with that. He is hurting the very people he swore to help. He will probably drive Chicago's South and west sides unemployment rate to over 50% with 4 more years of his polices. Again, I am OK with that.
was a lazy weekend ~ off to a local casino-resort for a fun time (near zero gambling, i'm cheap). was surprised to see on TV news forecasting of an economic calamidy ahead! I SELDOM see such pessimissim reaching regular TV!
must be really brewing when the regular TV channels seem to start talking about it
"Change can begin in november if we can rise up and enforce a simple rule:
CORPORATIONS KEEP YOUR HANDS OFF MY GOVERNMENT!!!!"
Perfectly said... of the people for the people by the people, even if John Roberts cannot distinguish a person from an entity. Casting pearls? I think not... more like waves lapping against a wall that feels it is invincible. I believe We the People will hold more than feet to the fire to restore balance.
"VL, as previously stated on this board: I'd like to meet with all you so called pro small government females to see wtf is wrong with you"
I think you are referring to the paid political poster crowd here. I support the CORRECT amount of government for our needs and small business over big business oligarchies. You sound an awful lot like one of those... I get mine but it's not the same as what they get and I'm jealous, folks. I get mine by earning it, no subsidies, hand-outs, benefits, stipends, payouts, pensions... and not by gambling in the markets.
I'll take a man who doesn't opt for the popular decision, he does what's good for all people, over a Mitt who doesn't think anything was wrong with his own use of an offshore account, but expects to make all the right decisions "once elected". Let's don't.
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