|
Weekly |
YTD |
12 month |
||||
|
3-May-13 |
26-Apr-13 |
% Change |
% Change |
% Change |
||
| S&P 500 Index |
1,614.42 |
1,582.24 |
2.03% |
13.20% |
17.92% |
|
| Dow Jones Industrial Average |
14,973.96 |
14,712.55 |
1.78% |
14.27% |
14.85% |
|
| Nasdaq Composite |
3,378.63 |
3,279.26 |
3.03% |
11.89% |
14.28% |
|
| Russell 2000 |
954.42 |
935.25 |
2.05% |
12.37% |
20.53% |
|
| MSCI EAFE (International) |
1,749.86 |
1,729.64 |
1.17% |
9.09% |
16.37% |
|
| 10 Year U. S. Treasury Yield |
1.75% |
1.71% |
2.34% |
NA |
NA |
|
| 30 year U.S. Treasury Yield |
2.95% |
2.89% |
2.08% |
NA |
NA |
|
These advances were not without immediate merit, as economic and earnings news came in fairly strong during the week.
Housing prices, consumer confidence, the trade balance, weekly jobless claims and the monthly employment report all came in better than expected. And, I would be remiss if I didn’t mention corporate earnings, which are on pace to set another all-time high this quarter.
Why do we love round numbers so much? They’re easy to recognize and conceptualize, of course. Investors don’t follow the S&P 512 or the Dow 32, and stockcar drivers don’t race in the Daytona 493. There’s just a ring to round numbers. The S&P 500 at 1,600 is just easier.
Round numbers like 1,600 don’t necessarily predict anything more or less than say 1,602.37-frankly, I’d rather have 1,602.37-but we gravitate toward and put meaning on these round numbers. While we’re at it, consider a few more round numbers that may prove meaningful to investors:
- 1%: A 1% decline in unemployment from 7.5% to 6.5% is the Fed’s target for ending quantitative easing
- $1 trillion: The approximate size of the expected U.S. budget deficit in 2013
- 0%: The approximate Fed Funds rate and return available to many investors’ cash holdings
Clearly, comparing the bullet points above to the market quotes from above, we can say that some round numbers are better than others. I like Dow 15,000 far more than my government spending $1 trillion more than they take in, by a long shot. That said, round numbers, are easy to remember.
Source: Edited remarks of Kane Cotton, CFA, Bellatore Financial, Inc.