September 6th, 2010: Jobless Rate Rises, and So Do Stocks

Chad J. Karl Presents: WEEKLY ECONOMIC UPDATE

WEEKLY QUOTE: “Pleasure may come from illusion, but happiness can come only of reality.” – Sebastien-Roch Nicolas De Chamfort

WEEKLY TIP: Teach your children about saving, spending, giving and investing before they have disposable income. Visit www.themint.org for tools and tips.

WEEKLY RIDDLE: The name of a particular insect is six letters long. You can lop off the last three letters from its name and end up with the name of another insect. What is this six-letter word?

Last week’s riddle: A woman walking along a canal sees a boat full of people, yet there isn't a single person on board. How could this be?

Last week’s answer: Everyone aboard the boat is married.

September 6, 2010

JOBLESS RATE RISES, AND SO DO STOCKS: Friday, the Labor Department reported 9.6% unemployment in August. While that was no improvement from July’s 9.5% mark, there was some good news within the report – news that helped the Dow to a triple-digit Friday gain. First of all, the private sector hired 67,000 new workers – more than the 41,000 analysts expected. Economists polled by Briefing.com feared the report would show a net loss of 107,000 jobs; instead, that net reduction was just 54,000. Job losses for June and July were also revised downward by the Labor Department.1,2

CONSUMER SPENDING UP: 0.4% Personal spending had been flat in June, so investors welcomed the change of pace in July. Personal income rose 0.2% in July, with private sector salaries and wages up 0.5%. The personal savings rate declined to 5.9% from June’s 6.2% mark, implying that more after-tax income had been spent.3

ISM INDICES SIGNAL EXPANSION: The Institute for Supply Management’s manufacturing sector index went to 56.3 in August from 55.5 in July. ISM’s August service sector index came in at 51.5, below the 53.5 forecast by economists polled by Reuters. Anything above 50 means growth, yet this is down from the 54.3 mark of July. The index’s employment barometer fell to 48.2 and its new orders gauge fell to 52.4 from 56.7 in July. 4

CONFERENCE BOARD GAUGES MORE OPTIMISM: The Conference Board Consumer Confidence Index rose to 53.5 in August, a notable increase from the 51.0 of July. Peering deeper into the survey, the CB’s index of present conditions slipped to 24.9 in August from 26.4 in July, but its index of future expectations improved from 67.5 all the way to 72.5.5

HOME PRICES RISE FOR THIRD STRAIGHT MONTH: The June edition of the Case-Shiller Home Price Index revealed a 1.0% gain – the third monthly advance for the index, which studies prices of existing homes in 20 metropolitan areas. Only one of those 20 areas saw prices decrease: Las Vegas.6

DOW GOES BACK IN THE BLACK: September got off to a nice start on Wall Street – the three major U.S. indices all gained ground. The DJIA advanced 2.93% last week to settle at 10,447.93 Friday. The NASDAQ soared 3.72% to 2,233.75, and the S&P 500 topped the 1,100 level with a 3.75% weekly gain (it closed at 1,104.50 Friday).7

% CHANGE
Y-T-D
1-YR CHG
5-YR AVG
10-YR AVG
DJIA
+0.19
+11.81
+0.00001
-0.70
NASDAQ
-1.56
+12.63
+0.87
-4.72
S&P 500
-0.95
+10.09
-1.86
-2.74
REAL YIELD
9/3 RATE
1 YR AGO
5 YRS AGO
10 YRS AGO
10 YR TIPS
1.09%
1.69%
1.59%
4.03%

Source: cnbc.com, bigcharts.com, ustreas.gov, bls.gov - 9/3/107,8,9,10
Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly.
These returns do not include dividends.


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«RepresentativeDisclosure»

This material was prepared by Peter Montoya Inc., and does not necessarily represent the views of the presenting Representative or the Representative’s Broker/Dealer. This information 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. 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. www.montoyaregistry.com www.petermontoya.com

Citations.
1 - cnbc.com/id/38988946 [9/3/10]
2 - briefing.com/Investor/Public/Calendars/EconomicCalendar.htm [9/3/10]
3 - online.wsj.com/article/SB10001424052748703369704575461293945190712.html [8/31/10]
4 - marketwatch.com/story/services-growth-slows-in-august-ism-says-2010-09-03-102400 [9/3/10]
5 - conference-board.org/press/pressdetail.cfm?pressid=3997 [8/31/10]
6 - marketwatch.com/story/us-home-prices-rose-10-in-june-2010-08-31?dist=countdown/ [8/31/10]
7 - cnbc.com/id/38996210 [9/3/10]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=9%2F3%2F09&x=0&y=0 [9/3/10]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=9%2F3%2F09&x=0&y=0 [9/3/10]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=9%2F3%2F09&x=0&y=0 [9/3/10]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=9%2F2%2F05&x=0&y=0 [9/3/10]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=9%2F2%2F05&x=0&y=0 [9/3/10]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=9%2F2%2F05&x=0&y=0 [9/3/10]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=9%2F1%2F00&x=0&y=0 [9/3/10]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=9%2F1%2F00&x=0&y=0 [9/3/10]
8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=9%2F1%2F00&x=0&y=0 [9/3/10]
9 - ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield.shtml [9/3/10]
9 - ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield_historical.shtml [9/3/10]
10 - treasurydirect.gov/instit/annceresult/press/preanre/2000/ofm11200.pdf [7/12/00]