Market Recap
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June market decline leads to quarterly loss for stock market This market recap for the month ended June 30, 2010, was provided by Scott Olson, Investment Product Marketing For the month, the Dow Jones Industrial Average (DJIA) and the S&P 500 Index fell 3.4% and 5.2%, respectively, leaving both indexes in negative territory for the year-to-date period through June 30, 2010. Although foreign equity returns were also negative during the month, a weakening dollar provided some support to returns of non-dollar denominated securities. The MSCI EAFE Index of developed-economy stocks lost 1.0% during the month, but was down 13%-14% for the quarter and year-to-date periods. Developing-market equities have done slightly better, with the MSCI Emerging Markets Index falling 0.7% during the month and off a more modest 6.0% in the first half of 2010. On the other hand, returns across most bond categories were positive in June, highlighted by the Barclay’s U.S. Aggregate Bond Index’s 1.6% gain for the month, bringing its year-to-date total return to approximately 5.3%. These positive returns were driven by price gains in corporate bonds as well as government debt. Demand for Treasuries has pushed prices higher and yields lower, with the benchmark 10-Year U.S. Treasury Note closing June at a yield of 2.95%, the lowest level since April 2009. Some concerns that existed earlier in the year have nearly vanished, namely that U.S. Treasury bond prices were poised to fall due to rapidly growing domestic debt levels, a pickup in inflationary pressures, and correspondingly higher interest rates. First-quarter 2010 gross domestic product (GDP), a measure of U.S. economic growth, was reduced to 2.7% from its initial 3.2% estimate due primarily to downward revisions in consumer spending. “Given the persistently high unemployment rate and no signs of inflationary pressures, it is difficult to see how short-term interest rates will be rising any time soon,” noted Russell Swansen, chief investment officer at Thrivent Asset Management. In fact, the Federal Reserve recently reiterated its intention of keeping interest rates at exceptionally low levels for an “extended period” of time. As has been the case for some time now, mixed economic data has left investors frustrated in their attempt to identify a clear trend. Housing market data had been stabilizing and improving, but home sales figures have begun to weaken as the tax credit expired. Unemployment and the sovereign debt situation in Europe remain key concerns, and the oil spill in the Gulf of Mexico has been a continual negative news headline for several months. While it is not unusual for growth to moderate in the second year of an economic recovery, “we continue to feel that the recovery will be sustained and corporate earnings will be solid, providing a basis for the equity markets to recover in the second half of 2010,” according to David Francis, head of equities at Thrivent Asset Management. “That said, we acknowledge that fundamental risk to our outlook has increased versus six months ago.” Given the number of risks facing the markets, both economic and geopolitical, we continue to encourage investors to work with their FR, who can be of assistance with helping them in positioning their portfolios in an attempt to help meet their short- and long-term investing goals. Insurance products issued or offered by Thrivent Financial for Lutherans, Appleton, WI. Not all products are available in all states. Securities and investment advisory services are offered through Thrivent Investment Management Inc., 625 Fourth Ave. S., Minneapolis, MN 55415, 800-847-4836, a FINRA and SIPC member and a wholly owned subsidiary of Thrivent Financial for Lutherans. Thrivent Financial representatives are registered representatives of Thrivent Investment Management Inc. They are also licensed insurance agents of Thrivent Financial. 201002917 |