The major equity indices ended mixed on Monday as stocks gave back most of the session’s earlier gains -- late-day weakness continues.  The Dow Industrials and S&P 500 managed to hold positive territory, but the broad market has endured final-hour declines for eight of the past 10 sessions, which is the opposite of what we were seeing when the market was on the rise.  The NASDAQ Composite along with mid and small cap indices failed to hold above the cut line.

Again the traditional areas of safety were among the outperforming sectors, but financials and telecoms topped the list yesterday.  Energy and basic material shares led the losses.

The CRB Index was pushed lower, currently 7% off its post-bubble peak but 3% above the recent low hit in mid-May, as just two of its 20 components gained ground – the prices of coffee and cattle were up.  Crude, silver and natural gas prices weighed most heavily on the index.  The price of crude slipped to $97/bbl, but wholesales gasoline held at $3.00/gal.  This will keep the national average at the pump above $3.60 – that retail average is $3.70 this morning.

We didn’t have an economic release yesterday, so it was more concern about Asian growth and European debt woes that kept investor optimism at bay, even with a couple of M&A deals, which generally fires things up.

Same old stuff happening in the eurozone, kind of in a state of limbo here (except that PIG bonds continue to get hammered) as EU finance ministers and the ECB work out their disagreements on how to implement the next bailout.   The ECB is reluctant to accept maturity extensions as it will trigger a credit event (technical default, even though they’ll do all they can to call it something else).  Oh, and the ECB is the largest holder of Greek bonds, which may play a role in the central bank’s unwillingness to go with the re-scheduling of those bonds.

Market Activity for June 13, 2011

Sector Activity for June 13, 2011

This Week

On the data front, we get back to it this morning with NFIB, producer prices, retail sales and business inventories.  Later in the week we get CPI, two regional manufacturing reports (Empire and Philly), jobless claims and industrial production.

So these data will provide us with a good deal of insight.  Retail sales, NFIB, the inflation data and industrial production are all May figures, and we already know that was another weak month.  Still, these are market-moving releases.  The more timely data will come from those regional factory reports (June) and jobless claims (last week), so we’ll see if the deceleration within the manufacturing sector and latest round of increased layoffs continue.

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Happy Flag Day!

Brent Vondera, Senior Analyst

Phone: 636-449-4900