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Courtesy of David Brown, Chief Market Strategist, Sabrient
The markets opened up today on the heels of last week’s positive developments in Europe. Unfortunately, Manufacturing ISM came in unexpectedly low at 49.7 versus an expected 52.2, which was down sharply from last month’s 53.5. The market quickly gave up those early gains; the S&P 500 and the Dow took a small loss while the NASDAQ held onto a small gain. A little help came minutes later as Construction Spending jumped from a loss of 0.6% last month to a gain of 0.9%. The market had expected only a small gain of 0.2%. Once everything was “fully digested,” the market closed up about 0.50% for NASDAQ, up about 0.25% for S&P 500, and down less than 0.1% for the Dow.
This will probably be a slow week with the holiday on Wednesday, following a half day tomorrow. Investors will be looking for signs of economic improvement in Friday’s Employment Report. We also get ISM services and Initial Jobless Claims on Thursday.
Last week was, of course, quite positive due to the accord reached at the European Summit to directly assist ailing banks, and in addition, provide yet more capital, so banks can resume lending. As we had pointed out last week, the market was ready for some solution to our global economic malaise.
And indeed, money poured into undervalued stocks with Mid-cap Value leading the way, up for the week at 3.23%. Small-caps were the best across all styles, up a solid 3%. Mid-cap Growth lagged, gaining only 1.51%.
The sectors were led up by Energy’s sharp 4.1% rise, and Consumer Non-Cyclicals and Basic Materials followed close behind with gains above 3%. Technology lagged, gaining only 1.1% in part due to its stronger performance earlier in the year, and in part, due to a poor week from Apple (APPL) as modest gains on Friday pushed it just above the breakeven point for the week.
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