Sunday, June 08, 2014

Week Ahead Magazine: June 8, 2014

With the 2.7% increase in the small cap Russell 2000 Index last week, most broader U.S. market indices are now showing positive returns for 2014:
  • S&P 500 Index: +5.5%
  • Dow Jones Industrial Average: +2.1%
  • Russell 2000 Index: +.1%
  • Wilshire 5000 Index: +4.9%
  • Nasdaq Composite: +3.5%
Many of last week's economic reports were positive and the market seems to be satisfied with a 200,000 handle on the non farm payroll reports.
  • The ECB came through on the monetary stimulus front which included a negative rate of interest on reserve deposits at the European Central Bank.
  • Auto sales exceeded expectations in May and some below this is due to roll off of the Cash for Clunkers program from 2009.
  • Positive reports were delivered for the manufacturing and non manufacturing PMIs. Importantly, new orders and backlog within the manufacturing report were strong.
Looking at the week ahead economic reports are expected to be on the light side. Jobless claims are reported Thursday along with retail sales. PPI is reported Friday. With respect to retail sales, the Week Ahead Magazine contains a link to a Thomson Reuters AlphaNow article that covers the recent improvement in retail sales.

Lastly, several articles cover the fact the U.S. equity market does seem extended on a short term basis. However, outside of some unforeseen external shock, any correction may likely be viewed as a buying opportunity. Below is the link to this week's magazine.

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