The markets continued with their pattern of robust growth this week, with the Dow up 2.12%, the S&P 1.43% and the NASDAQ 1.15%.  GDP data for last quarter was revised downward, as expected. Initial job losses continued to decline. The market responded favorably.

Recently, there has been a steepening of the yield curve.  That is, the yield for long-term bonds is higher than that of short-term bonds. There are two potential reasons for this steepening: the market may be signaling that that the economy is strengthening, or that inflation is coming and thus there is little demand for bonds. We suspect that it is some of both.  We have been calling for a rising interest rate environment for some time.  We may have been a bit early, but it seems to have been a correct prediction.

Next week, there will be very little data due to the Easter break. We hope to see the market continue its steady incline.

Despite faltering Friday, the markets ended the week with a very respectable gain; the Dow was up 1.1%, the S&P .86%, and the NASDAQ .28%.

The Federal Reserve’s comments on Tuesday did not stray far from what was expected. It was the general consensus that rates would not be raised, but some were worried that the Fed might hint at rate changes in the near future. The Fed did not telegraph any imminent changes, and the markets were mildly assuaged, moving up about  0.6% Tuesday.  We have observed that it is Bernanke’s style to be freer with telegraphing coming action than past Fed chairman Alan Greenspan.

We’ve paid special attention to the Dow Jones Transportation Index, and have noted that is it performing better than most other indices. The Transportation Index is a leading indicator. Typically, it is one of the first industries to move in the early stages of a recovery. If the shipping industry is doing well, it means there are more things being made that need to be shipped.   This message from the transportation index is good news for the economy overall, and helps to bolster our faith that the economy is on its path to recovery.

Next week will be relatively light on data. Durable goods, consumer confidence, and jobless claims will highlight the week.

The markets were up this week, with the NASDAQ leading the charge with a 1.78% gain, the S&P a bit behind, up .99%, and the Dow trailing, but still up nicely, at .55%.  The S&P and NASDAQ both set new highs for the year this week , but the S&P retreated below year-high levels Friday.  Retail sales numbers beat expectations, a good sign for our continued recovery, but the markets seemed nonplussed.

We continue to be leery of bonds. We think that interest rates are likely to go higher in the next few years. As such, bond performance will suffer. We think it best to keep maturities short for now.

Next week, the Fed meets to discuss the economy and interest rates.  We don’t expect the rate to change.  However, we do think the language of the statement will reflect changing attitudes about the recovery. We’ll also get data next week on housing and inflation.

This entry is a day late due to our investment meeting being rescheduled.

Last week, the markets rose, and the NASDAQ set a high for the year. The Dow was up 2.33%, the S&P 3.1%, and the NASDAQ 3.94%.

As expected, job numbers were the biggest driver of the markets. Nonfarm payrolls were down 36,000, as opposed to the 75,000 which were expected.  Unemployment held steady at 9.7%. Investors took this as further evidence of continued recovery, and bet on a continuation of that trend.

This week will a relatively light one for economic data. Retail sales numbers come out on Friday, and of course we’ll note the weekly jobless claims, but there are few other large events.

Markets broke a  two-week trend of gains to end the week down slightly, with the Dow down .74%, the S&P .42%, and the NASDAQ .25%. The markets did end the month up, however.  In fact, the February performance gain in the S&P 500 was the best February in 10 years.  For the year, though, the market is still down about 1%.

As expected, the markets did react strongly to Ben Bernanke’s comments Thursday.  However, an even stronger reaction was felt by the faltering commodity prices. Bernanke’s positive comments merely pared the losses related to commodities.

Next week should prove to be an interesting one.  We have more data on jobs, including the February unemployment rate, the ISM manufacturing and service numbers, and retail sales at the end of the week.  We expect the numbers will show us that the economy is recovering.

The markets have continued their steady plod back towards the recent highs of January 19^th. The Dow ended the week up 3.89%, the S&P 2.85% and the NASDAQ 3.04%.

Sovereign debt continues to be the buzzword of the markets.  Fears abound that the bailout of Greece and others will devalue the Euro.  However, markets were assuaged somewhat by Greece’s statement that it would not need a bailout and was progressing well.

As the U.S. deficit hovers near 10%, we remain concerned about inflation.  The spread between 2- and 10-year Treasurys is at an all-time high.  This fact could indicate an economic recovery, or impending inflation.  Either result will cause lower values for bonds currently being issued.  As such, we believe bonds are not a good value at this time.

Next week the big event will be Ben Bernanke’s semiannual monetary policy report to Congress.  Many market decisions will undoubtedly hinge on what Bernanke telegraphs at this meeting.

The first week of February was a rollercoaster. For the week, the Dow ended down .55%, the S&P .72%, and the NASDAQ .28%. These numbers do not tell the story, however, of a week that saw the Dow get down to 9835.

Among other woes, continuing concern over the debt obligations of Greece, Spain, and Portugal weighed on the markets. The countries appear to be in a position where they may default on debt owed to other countries.  While it is not likely to be an astronomical amount of money, the issue is concerning to an already-stressed Europe.

A good jobs report Friday can be credited with keeping the Dow over 10,000.  Unfortunately, it did not prevent the markets from falling as far as they did.

We had another disappointment in the markets this week.  The Dow ended the week down 5.11%, the S&P 5.46%, and the NASDAQ 6.15%.  Especially beaten were tech stocks, underscored by Apple suffering from those who “sold the news” of the new tablet, as well as some general pessimism about the tablet’s ability to be truly “revolutionary.”

We’re on the record saying we won’t have a double-dip recession though, and we still believe that.  GDP numbers released this morning were strong- the Commerce Department reported that the economy grew at an annual rate of 5.7% during the fourth quarter of last year.  While bad news continues to abound, it all comes down to the product of our economy, that is, the GDP.  We saw today’s report as the promise of a continued recovery.

Next week will be all about jobs.  While there will be some data released on manufacturing, the main focus will be on the unemployment rate. We will be looking to this number to tell us where we are on the road to recovery.

This week saw the year-to-date gains lost in just a few days’ trading.  Selling pressure came from two directions: first, an already-nervous market was primed to sell on earnings news. Second, the political rhetoric on healthcare and banking reform spooked many investors. The week ended with the Dow down 4.19%, the S&P down 4.65%, and the NASDAQ down 4.83%.

There has been concern that this is the beginning of the long-feared correction.  However, we believe the drop is short-term in nature, and depending on the severity, could present a good buying opportunity.

This idea of reform should not concern the market.  Rep. Barney Frank said that he would not let the banking reforms pass as described.  If any proposed bill does fail, it should assuage the fears of investors and help these losses be recovered.

Next week is a heavy earnings week, which we will be watching closely.  It is a light week for economic data.  While we will certainly be in tune to fresh data in housing and employment, the standout figure is the fourth quarter’s GDP number.

The markets had a down week, after a disappointing slide Friday.  The Dow ended mostly flat, finishing up the week -.08%. The S&P and NASDAQ were down .78% and 1.26%, respectively.  Leading the decline were financial stocks, after a disappointing report from J.P. Morgan that rekindled fears of large loan losses.  More banks report next week, and will hopefully bring brighter news.

This week, $74 million left domestic equities, while $2.7 billion entered foreign equities.  Investors continue to put money into ETFs- a relatively new strategy that is not captured in the above equity numbers.  The patterns of investing may have changed- but we believe that the “general consensus” will continue to tell us how to do what’s right- by doing what’s wrong.

The markets had a good week overall, starting the first week of the new year on a high note.  The S&P was up 2.68%, the NASDAQ 2.12%, and the Dow 1.82%. Mostly driving the gains were positive economic data.  The feared “correction” in the first part of the new year has yet to transpire. Bonds took a breather from the beating they were taking. Yields stabilized after four weeks of advancing.

Next week is a big one for data, bringing key readings that are critical to the recovery.  We will see numbers on industrial production, retail sales, inflation, and housing.

After a very dreary quarter, markets managed to recover substantially in 2009, for an impressive 26.5% return. The year started out very grim, with the S&P dropping 10.9%, on top of the 37% it lost the previous year. Overall, the index saw a peak-to-trough decline of 55.2% on a total return basis. From that trough on March 9, the S&P gained 67.8% as of December 31.

Treasuries dipped to levels some may have thought impossible, and certainly almost all saw as absurd.  Short-term Treasury yields dipped below zero for a brief time, actually offering negative returns.  Such was the fear at the bottom— people would accept a negative return just for the perceived safety of a treasury.

As the economy recovers, one of the most closely followed indicators will be an improving unemployment rate. We look towards weekly initial claims to gauge the health of employment. Now, we look for total claims to continue to fall— for those without a job, it is the only economic statistic that really matters.

For 2010, we expect equities to appreciate by 10-18%. Bonds, on the other hand, should provide negative returns for the year.

For more, look for the forthcoming Hardesty Horizons newsletter for 4Q 2009.

Markets were mostly flat this week, but were pummeled on Thursday due to employment data. For the week, the Dow lost 1.36%, and the S&P .36%. The NASDAQ  actually rallied Friday, ending the week up .98%.   Initial jobless claims unexpectedly rose on Thursday by 7,000 from the week prior, for a total of 480,000. While still below the 500,000 level, the unexpected increase signals that there is still far to go on the road to recovery.

Bond data released this week painted an interesting picture of the market.  Near record amounts of non-investment grade bonds have been sold this year.  The record was set in 2006, with $143.5 billion sold. This year, $142.8 billion have been sold.   These compare to last year, with only $48 billion of these bonds being sold. The new figures tell us that the appetite for risk is back in bonds.  Once again, investors are reaching for extra yield, and taking more risk to do so. It is frightening to think that investors have already forgotten the lessons to be learned in the near-collapse last year.

Next week, we continue to looks for signs of recovery.  We will get readings on the housing market, employment, and consumer confidence.

Stocks had a mixed week, with the Dow up .8%, the S&P up .04%, and the NASDAQ down .18%. Initial jobless claims were unexpectedly higher this week, but this fact was balanced somewhat by the report that the trade gap had narrowed. The resultant conclusion was that while employment may not be rocketing back, the economy does seem to have regained some footing.

Banks continue not to loan out money. Our estimation is that they are scared to do so because of the new perceptions of risk. The banks are angry in their position- they don’t seem to be renewing lines of credit held by businesses.

The markets seemed unsure of themselves this week— big gains on Tuesday, a drop in late trading Thursday, and big swings in both directions Friday.  The very positive jobs report Friday prompted some early gains— only to be reversed later in the day. When all was said and done, the Dow was up .77% for the week, the S&P 1.32%, and the NASDAQ 2.6%.

Looking forward to the holiday gift-buying season, there is some concern that inventories are too low, which will result in lower sales levels than what may be demanded. This shortage of supply would, however, enable retailers to earn higher margins on the inventory they do have- there would be no need for product markdowns.

Next week is a relatively light week for economic data. At the end of the week, we will be watching continuing claims for unemployment, retail sales, and consumer confidence.  Check back soon for our 2010 market outlook.