"The real distinction is between those who adapt their purposes to reality and those who seek to mold reality in the light of their purposes. "
Henry Kissinger
The Markets
Tech fail: Last week was a split decision. After coming out of the long weekend at its highest level since August 2008, the Nasdaq plummeted more than 2%, with many tech companies being hit particularly hard. The small-cap Russell 2000, which has led for much of the multi-year rally, also got whacked, giving up all of its year-to-date gains and more. However, the Dow hit a new post-2008 high, assuming the role of year-to-date leader for domestic equities, and the S&P 500 had its eighth straight week of gains despite a midweek stumble.
Last Week's Headlines
- Building permits for December were up 16.7% for the month, though still 2.8% below the previous December. However, the Department of Housing and Urban Development said housing starts fell 4.3% from November.
- Home resales rose 12.3% in December, according to the National Association of Realtors®, though the level was still roughly 25% lower than the 2005 peak.
- According to the National Bureau of Statistics of China, the Chinese economy grew 10.3% in 2010, 1.1% higher than the previous year.
- The Conference Board's Leading Economic Indicators index rose 1% in December. It was the fourth consecutive monthly increase, and was led by improvements in housing permits, interest rate spreads, unemployment statistics, and consumer expectations.
Eye on the Week Ahead
The Federal Reserve's Open Markets Committee (FOMC) announcement will be watched for any clues about any post-quantitative-easing plans. Friday's Gross Domestic Product (GDP) release will profile the nation's economic health. Investors also will be watching the tech sector to see if it can regain its footing, while several consumer-related companies dominate earnings announcements.
Key dates and data releases: Home prices (1/25); new home sales, Federal Reserve announcement (1/26); durable goods orders, pending home sales (1/27); gross domestic product (GDP), labor costs (1/28).
Data source: Includes data provided by Brounes & Associates. All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results. Equities data reflect price change, not total return.
The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indexes listed are unmanaged and are not available for direct investment.
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