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Last Update: 04-Nov-11 17:31 ET
Weekly Wrap for October 31, 2011
Renewed weakness on Friday left stocks to finish the week on a down note, contributing to the market's worst weekly performance in more than a month. As has been the case all week, participants paid close attention to the events of Europe.
Greece drove trade for virtually the entire week and, by extension, was responsible for most of the market's volatility. During the course of this week's first two sessions stocks sank more than 5% as participants reacted to news that Greece wanted to pursue a referendum of the eurozone bailout, effectively threatening to undermine the efficiency with which the plan could be completed and implemented. Stocks spiked in the next two sessions as sentiment improved amid reports that officials put pressure on Greece to acquiesce to the agenda of other eurozone members by abandoning its plans for a referendum. Although the drama didn't exactly rival a Greek tragedy, it still made for interesting theatre.
By Friday, stocks were unable to build on the gains achieved in the past two sessions. Buying was partly diffused by news that discourse during a G-20 meeting became less than amicable. That seemed to suggest that, despite recent efforts, an agreement on how to handle Greece and precarious conditions in the rest of Europe remain elusive.
Market participants were also uninspired by news that unemployment eased down to 9.0% from 9.1%, which is where it had been expected to remain. Nonfarm payrolls for October totaled 80,000, which is slightly less than the tally of 85,000 that had been expected, on average, among economists polled by Briefing.com. Nonfarm private payrolls increased by 104,000, which is less than the consensus call for an increase of 117,000, but on par with the ADP Employment Change that was reported this past Wednesday. The latest weekly initial jobless claims count of 397,000 was not included in calculations, though it is worth noting that that tally marked the first time in a month that initial claims slipped below 400,000.
In all, the employment levels proved on par with weak-to-moderate economic growth. With that in mind, the Fed announced mid-week that it raised its long-run umemployment rate forecast to 5.6% from 5.4%. The Fed also cut its growth forecast for fiscal 2011 to the range 1.6% to 1.7% from the range 2.7% to 2.9%. For 2012, growth is expected the range from 2.5% to 2.9%, down from a range of 3.3% to 3.7% that had been previously projected.
In its most recent policy statement, the FOMC kept its target interest rate at 0.00% to 0.25%. It also stated that the Fed remains prepared to employ its tools to promote a stronger economic recovery and that it will continue to extend the average maturity of its securities holdings. At the European Central Bank's latest meeting, members decided to become more accommodative by trimming the key lending rate by 25 basis points to 1.25%.
Other data this week featured the October ISM Manufacturing Index, which declined to 50.8 from 51.6 in the prior month. It had been expected to improve to 52.1. As for the ISM Services Index, it came in at 52.9, which is less than the 53.9 that had been broadly expected.
Given the market's fixation on macro-related headlines, earnings were given secondary concern. Overall, results this week were generally better-than-expected. Pfizer (PFE 56.50, +0.39), Kraft (KFT 35.18, -0.60), MasterCard (MA 360.09, -6.50), and Qualcomm (QCOM 56.50, +0.39) were among the more major names that reported -- each exceeded what Wall Street had expected. Comcast (CMCSA 22.75, -0.57), ArcelorMittal (MT 20.31, -0.29), Kellogg (K 49.91, +0.00) and Marsh & McLennan (MMC 30.58, -0.19) were among the more widely held names that came short of the consensus estimate.
With earnings mattering little to market participants this week, stocks slid to a 2.5% weekly loss. That snapped four straight weeks of gains.
Amid the market's weakness, the dollar attracted buyers. For the week it climbed about 2.5% against a basket of major foreign currencies. Most of its strength came earlier in the week, when participants had dumped the euro amid all of the headlines out of the eurozone. The yen also slumped earlier this week. Its dive came after Japan's officials intervened in the currency in an effort to curb its strength. Just last week the yen set a post-WWII record high.
..Nasdaq 100 -0.5%. ..S&P Midcap 400 +0.1%. ..Russell 2000 -0.7%.
Greece drove trade for virtually the entire week and, by extension, was responsible for most of the market's volatility. During the course of this week's first two sessions stocks sank more than 5% as participants reacted to news that Greece wanted to pursue a referendum of the eurozone bailout, effectively threatening to undermine the efficiency with which the plan could be completed and implemented. Stocks spiked in the next two sessions as sentiment improved amid reports that officials put pressure on Greece to acquiesce to the agenda of other eurozone members by abandoning its plans for a referendum. Although the drama didn't exactly rival a Greek tragedy, it still made for interesting theatre.
By Friday, stocks were unable to build on the gains achieved in the past two sessions. Buying was partly diffused by news that discourse during a G-20 meeting became less than amicable. That seemed to suggest that, despite recent efforts, an agreement on how to handle Greece and precarious conditions in the rest of Europe remain elusive.
Market participants were also uninspired by news that unemployment eased down to 9.0% from 9.1%, which is where it had been expected to remain. Nonfarm payrolls for October totaled 80,000, which is slightly less than the tally of 85,000 that had been expected, on average, among economists polled by Briefing.com. Nonfarm private payrolls increased by 104,000, which is less than the consensus call for an increase of 117,000, but on par with the ADP Employment Change that was reported this past Wednesday. The latest weekly initial jobless claims count of 397,000 was not included in calculations, though it is worth noting that that tally marked the first time in a month that initial claims slipped below 400,000.
In all, the employment levels proved on par with weak-to-moderate economic growth. With that in mind, the Fed announced mid-week that it raised its long-run umemployment rate forecast to 5.6% from 5.4%. The Fed also cut its growth forecast for fiscal 2011 to the range 1.6% to 1.7% from the range 2.7% to 2.9%. For 2012, growth is expected the range from 2.5% to 2.9%, down from a range of 3.3% to 3.7% that had been previously projected.
In its most recent policy statement, the FOMC kept its target interest rate at 0.00% to 0.25%. It also stated that the Fed remains prepared to employ its tools to promote a stronger economic recovery and that it will continue to extend the average maturity of its securities holdings. At the European Central Bank's latest meeting, members decided to become more accommodative by trimming the key lending rate by 25 basis points to 1.25%.
Other data this week featured the October ISM Manufacturing Index, which declined to 50.8 from 51.6 in the prior month. It had been expected to improve to 52.1. As for the ISM Services Index, it came in at 52.9, which is less than the 53.9 that had been broadly expected.
Given the market's fixation on macro-related headlines, earnings were given secondary concern. Overall, results this week were generally better-than-expected. Pfizer (PFE 56.50, +0.39), Kraft (KFT 35.18, -0.60), MasterCard (MA 360.09, -6.50), and Qualcomm (QCOM 56.50, +0.39) were among the more major names that reported -- each exceeded what Wall Street had expected. Comcast (CMCSA 22.75, -0.57), ArcelorMittal (MT 20.31, -0.29), Kellogg (K 49.91, +0.00) and Marsh & McLennan (MMC 30.58, -0.19) were among the more widely held names that came short of the consensus estimate.
With earnings mattering little to market participants this week, stocks slid to a 2.5% weekly loss. That snapped four straight weeks of gains.
Amid the market's weakness, the dollar attracted buyers. For the week it climbed about 2.5% against a basket of major foreign currencies. Most of its strength came earlier in the week, when participants had dumped the euro amid all of the headlines out of the eurozone. The yen also slumped earlier this week. Its dive came after Japan's officials intervened in the currency in an effort to curb its strength. Just last week the yen set a post-WWII record high.
..Nasdaq 100 -0.5%. ..S&P Midcap 400 +0.1%. ..Russell 2000 -0.7%.
| Index | Started Week | Ended Week | Change | % Change | YTD % |
| DJIA | 12231.11 | 11983.24 | -247.87 | -2.0 | 3.5 |
| Nasdaq | 2737.15 | 2686.15 | -51.00 | -1.9 | 1.3 |
| S&P 500 | 1285.08 | 1253.23 | -31.85 | -2.5 | -0.4 |
| Russell 2000 | 761.00 | 746.49 | -14.51 | -1.9 | -4.7 |
