The Markets
Like a host at a dinner party, the International Monetary Fund (IMF) put the performance of the U.S. economy on the table last week to be gnawed over by world markets. When the IMF presented its annual review of the world's largest economy, it stated that:
"Despite some improvements in economic indicators, particularly in the housing market, the very rapid pace of deficit reduction... is slowing growth significantly... U.S. growth is expected to slow to 1.9 percent in 2013, from 2.2 percent in 2012. This projection reflects the impact of the sequester ($85 billion of automatic U.S. government spending cuts), and the expiration of the payroll tax cut and the increase in tax rates for high-income taxpayers...Growth could pick up to 2.7 percent next year with a more moderate fiscal adjustment and a further strengthening of the housing market."
The IMF also said the Federal Reserve should continue quantitative easing through 2013.
It was not the only one pondering the Fed's quantitative easing program. The major U.S. stock market indices finished the week lower. The Dow Jones Industrials Average fell 1.2 percent last week, the Standard & Poor's 500 Index was off by 1 percent, and the NASDAQ dropped 1.3 percent. Remarkably, the Dow experienced four straight days of triple-digit swings.
The next Federal Open Market Committee Meeting is on June 18 and 19. While few people expect the Fed to announce it will reduce the pace of bond buying immediately, the majority of economists surveyed by USA TODAY predict the Federal Reserve will begin to reduce bond purchases by early fall.
Data as of 6/14/13
|
1-Week
|
Y-T-D
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
Standard & Poor's 500 (Domestic Stocks)
|
-1.0%
|
14.1%
|
22.4%
|
14.3%
|
3.7%
|
4.9%
|
10-year Treasury Note (Yield Only)
|
2.1
|
N/A
|
1.6
|
3.3
|
4.2
|
3.2
|
Gold (per ounce)
|
0.4
|
-17.9
|
-13.8
|
4.4
|
9.4
|
14.5
|
DJ-UBS Commodity Index
|
-0.7
|
-6.3
|
1.2
|
0.8
|
-10.6
|
1.1
|
DJ Equity All REIT TR Index
|
-0.8
|
7.0
|
16.1
|
15.6
|
5.8
|
11.0
|
Notes: S&P 500, Gold, DJ-UBS Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; the DJ Equity All REIT TR Index does include reinvested dividends and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.
Sources: Yahoo! Finance, Barron's, djindexes.com, London Bullion Market Association.
Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.
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