Stocks had their WORST Thanksgiving Week Since 1932

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Last week, U.S. stocks tumbled in the worst Thanksgiving-week loss for the Standard & Poor’s 500 Index since 1932 as concern grew that Europe’s debt crisis will spread and American policy makers failed to reach agreement on reducing the federal budget. For the week, the Dow, S&P 500, NASDAQ, and Russell 2000 all dropped -4.8%, -4.7%, -5.1%, and -7.4%, respectively.

 

Equity Performance Table
Last Week
Year to Date
Last 52 Weeks
Dow Jones Industrial
-4.8%
-3.0%
+1.3%
S&P 500 (Large Caps)
-4.7%
-7.9%
-2.6%
NASDAQ (Technology)
-5.1%
-8.0%
-3.7%
Russell 2000 (Small Caps)
-7.4%
-15.0%
-9.1%
International Stocks (EAFE)
-5.7%
-20.5%
-15.8%
Dow Jones Total Stock Market (Broad Market)
-4.9%
-9.0%
-3.7%

 

 

Interest Rates
Prime Lending Rate
3.25%
Interest Rate Bias
Short-Term = Neutral; Intermediate Term = Neutral; Long-Term = Neutral
90 T-bill Rate
0.02%
90 Day LIBOR
0.52%
TED Spread
0.50%
30-Year Mortgage Rate
4.02%
15-Year Mortgage Rate
3.38%
5-Year Adjustable Mortgage Rate
2.97%
30-Year Treasury Yield
2.92%
10-Year Treasury Yield
1.97%
5-Year Treasury Yield
0.93%
2-Year Treasury Yield
0.28%

 

 

Notable Dividend Increases – 2011
Lockheed Martin (“LMT”)
33.3%
NextEra Energy (“NEE”)
10.0%
United Technologies (“UTX”)
12.9%
Proctor & Gamble (“PG”)
9.0%
Abbott Labs (“ABT”)
9.1%
Clorox (“CLX”)
9.0%
Colgate Palmolive (“CL”)
9.4%
Chevron Corp (“CVX”)
8.3%
Emerson Electric (“EMR”)
15.9%
General Mills (“GIS”)
8.9%
International Business Machines (“IBM”)
15.4%
Union Pacific Corp (“UNP”)
25.0%
Intel Corp (“INTC”)
33.0%
McDonalds Corp (“MCD”)
14.8%
Kimberly Clark (“KMB”)
6.1%

 

 
Now, all the details……………………
The S&P 500 has fallen for seven days, the longest streak in four months, and has tumbled -7.6% so far in November. U.S. equities erased an early advance on the final session last week as S&P lowered Belgium’s credit rating and Reuters reported that Greece is demanding private investors accept larger losses on their debt. “We’ve resumed focus on the European debt issues,” Terry L. Morris, senior equity manager at Wyomissing, Pennsylvania-based National Penn Investors Trust Co., said in a Bloomberg telephone interview.  His firm manages about $2.2 billion.  “The situation in Europe doesn’t seem to be improving, which makes the market defensive,” he said.  “Spending cuts kicking in the U.S. will be a negative too because it will be a drag on economic growth.”
The cost of insuring European sovereign bonds against default rose to a record last week as Germany failed to find buyers for 35% of the bonds offered at an auction.  German Finance Minister Wolfgang Schaeuble said market turbulence sparked by the euro region’s sovereign-debt crisis will last for “a few months.” U.S. Congress’s special debt-reduction committee failed to reach an agreement last week, setting the stage for $1.2 trillion in automatic spending cuts and fueling concern that economic-stimulus measures that are set to expire will not be renewed. Still, S&P reaffirmed it would keep the U.S.’s credit rating at AA+ after stripping the government of its top AAA grade on August 5th.
Stocks fell last Tuesday, November 22nd as revised Commerce Department figures showed that gross domestic product climbed at a 2% annual rate in the third quarter, less than projected and down from a 2.5% prior estimate.  U.S. stock exchanges were closed on November 24th for Thanksgiving and closed three hours early on November 25th.
All 10 groups in the S&P 500 fell last week, led by a -6.2% slump in energy producers and a -5.8% drop in financial shares.
The MSCI EAFE Index (broad developed international index) fell -5.7% last week. The Americas dropped -5.1% with Brazil down -3.2%, Mexico down -4.7%, and Canada down -3.6%. Europe dropped -4.6% with Germany down -5.3%. Asia-Pacific fell -4.5% with Australia down -4.6%, China down -1.5%, Hong Kong down -4.3%, India down -4.1%, Taiwan down -6.2%, and Japan down -2.6%.
Treasuries rose in price with the 10 year yield dropping to 1.97% from 2.01% in the week earlier.
The Baltic Dry Index, which tracks transport costs on international trade routes and may be a good leading indicator of economic activity, ended the week at 1,807, down from the prior week’s level of 1,895. The index reached a high of 11,793 on May 20, 2008 and a low of 663 on December 5, 2008. The index last peaked at 4,661 set on November 11, 2009.
The TED spread measuring the difference between LIBOR and Treasury bill rates, which rose as high as 464 basis points during the liquidity crisis of 2008, is currently in more of a normal range of 50 basis points, but has increased as of late due to Euro bank concerns. The TED spread is a gauge of the willingness of banks to lend to one another. The lower the TED spread the more willing banks are to lend with each other. The TED spread fluctuates over time but generally has remained within the range of 10 and 50 bps (0.1% and 0.5%) except in times of financial crisis. A rising TED spread often presages a downturn in the U.S. stock market, as it indicates that liquidity is being withdrawn.
Last week, oil was down -0.9% and closed at $96.77 per barrel. Year-to-date oil is up +5.9%. The average price of unleaded gasoline dropped -1.7% last week to end at $3.295 per gallon per November 27th data provided by AAA. Year-to-date, unleaded gasoline is up +7.2%. Natural gas was up +6.8% last week and closed at $3.542/MMBtu. Year-to-date, natural gas is down -19.6%.
Last week, gold dropped -2.3% closing at $1,685.50 per troy ounce. Year-to-date, gold is up +18.6%. The dollar was up +2.1% last week as measured by the U.S. Dollar Index with that index closing at 79.686. Year-to-date, the U.S. Dollar is up +0.8% as measured by the Dollar Index. The Euro was down -2.1% against the U.S. dollar closing at $1.3238/Euro. Year-to-date, the Euro is down -1.0% against the U.S. Dollar.
In the coming week, look for corporate earnings from companies such as Tiffany (“TIF”), Big Lots (“BIG”), Guess? Inc. (“GES”), and Barnes & Noble (“BKS”). Look for economic reports this week on new home sales, consumer confidence, manufacturing, unemployment rate, and weekly jobless claims data.
Sources: Bloomberg, The Wall Street Journal, Barron’s, The New York Times, ValueLine.
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