Closing Wrap-Up, June 30
June 30, 2009
Despite losses Tuesday, S&P 500 ($SPX) sees largest quarterly gain in 11 years. On Tuesday, the Dow ($INDU) fell 82.38 points, or 0.97 percent, to a level of 8,447.00. The S&P 500 ($SPX) gave up 7.91 points, or 0.85 percent, to a level of 919.32. The Nasdaq ($COMPQ) lost 9.02 points, or 0.49 percent, closing at 1,835.04. Volume remained light on the session with the NYSE trading just 1.33 billion shares and the Naz turning over 2.07 billion shares. Market breadth was negative by a 13-to-17 and 12-to-15 margin on the Big Board and Naz respectively.
Economic news that didn't live up to expectations left stocks lower on the session, enough to push the Dow negative for the month of June. However, the Naz continued its winning streak, adding 3.42 percent during the month and 20.05 percent for the quarter. The Dow gained 11.01 percent in the second quarter with the SPX up 15.22 percent.
The bears did win the battle to end the month and they have something else on their side, mainly a lot of optimism by financial leaders. In fact, a recent Reuters survey of equity strategists showed that they expect the SPX to gain another 8 percent by year's end. This would take out a double dip bottom, but when we see too much optimism and a lack of fear, it can lead to declines. The CBOE Market Volatility Index ($VIX) fell 40 percent in the quarter and gave up nearly 9 percent for the month, despite a flat June for the SPX.
Economic data has been showing green shoots in the economy, but there are concerns that without the appropriate care and attention, these green shoots could die. On Tuesday, consumer confidence fell to 49.3 for June as measured by the Conference Board. This was down from 54.9 in May and well below expectations for a gain to 57.0. The expectations component also declined, falling 6 points to 65.5.
In other economic news, the Chicago PMI rose to 39.9, roughly matching expectations. New orders moved higher as well, up 4.3 points, but both readings are still in weak territory with levels below 50 a sign of contraction. Home prices as measured by the S&P/Case-Shiller report showed a 0.6 percent contraction. Though down, the index is showing a deceleration and was much better than the string of 2.0 percent plus declines seen in prior months. However, this data is for April, not especially timely.
Jody Osborne
Senior Writer & Options Strategist
Optionetics.com ~ Your Options Education Site
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