US Stocks Week Ended June 1, 2012

Another week passes and the questions remain the same, how will investors be impacted by the turmoil in Europe? And, how can European sovereign credit issues be resolved? Thus far, there have been many attempts, but no answers. The market wasn't helped by economic data Stateside either. The US economy added jobs of only 69,000 in May, significantly missing expectations. The jobless rate now stands at 8.2%. After Friday's close the Dow stood 336 points lower, a 2.7% decrease from the previous week. Company specific news was light. Mining equipment manufacturer, Joy Global, met earnings expectations but reduced next year's sales and earnings guidance. The stock trades at $55.69 down from a 52 week high of $101.44. JP Morgan announced that CEO, Jamie Dimon, will testify before Congress on the bank's $2 billion trading loss. Congress intends to investigate the trading losses incurred by JP Morgan trader, Bruno Iksil. The company contends that it wasn't a rogue trader, but rather poor execution of a hedging strategy the bank used to reduce risk. Looking ahead, Asian and Australian markets have already closed down Monday, possibly in response to the performance of Friday's western markets. Tuesday, the ISM non-manufacturing index will report its May performance. Also on Tuesday, the London Stock Exchange will be closed to celebrate Queen Elizabeth's Diamond Jubilee. Friday, investors will learn if the US trade deficit narrowed or widened in April. While these data points have been gloomy, there are reasons to feel optimistic. As of close on Friday, the dividend yield of the S&P 500 stood at 2.22% compared to a yield on the 10 year treasury of 1.45%. When the S&P 500's yield has exceeded the yield on the 10 year treasury by more than 50 basis points, the average one year forward return dating back to the 1950's has been 24.58%.
Posted on Monday, June 4, 2012 @ 8:44 AM

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.