July 2012 Market Recap
(For the month ended July 31, 2012.)
Stocks overcame weakness early in the month to finish July with modest gains fueled in part by encouraging corporate earnings and speculation that the Federal Reserve may take additional steps to stimulate the U.S. economy. The Dow Jones Industrial Average notched its ninth monthly gain in the past 10 months. Stocks’ early struggles started in the wake of disappointing reports on manufacturing, nonfarm payrolls, and the unemployment rate, heightening worries that the economy might be headed back into recession. But despite lingering concerns about the European debt crisis and global economic growth, momentum began to shift in the middle of the month on speculation that Federal Reserve Chairman Ben Bernanke might propose an economic stimulus plan in his testimony to Congress. While Bernanke said it was “certainly possible” the central bank could take new steps to support the economic recovery, he did not offer any details about what that might entail. The market was also boosted by better-than-expected earnings reports from IBM, eBay, Google, and Textron that offset a mixed bag of economic data, including news of a drop in new home sales and June retail sales.
| Through 7/31/12* | July | YTD | 1-Year | 3-Year | 5-Year | Closing Value |
| S&P 500 | 1.3% | 9.7% | 6.7% | 11.8% | -1.1% | 1,379.32 |
| Dow Jones Industrials | 1.0% | 6.5% | 7.1% | 12.4% | -0.3% | 13,008.68 |
| Nasdaq Composite | 0.2% | 12.8% | 6.6% | 14.1% | 2.9% | 2,939.52 |
Source: Standard & Poor’s. The S&P 500, Dow Jones Industrials, and Nasdaq Composite are unmanaged indexes. It is not possible to invest directly in an index. Past performance is no guarantee of future results.
*Price only. Does not include dividends.
Fed facts In his semiannual monetary policy report to Congress, Fed chairman Ben Bernanke was more downbeat than in previous testimonies. He noted that economic growth decelerated during the first half of the year and that the United States saw only 75,000 job gains per month during the second quarter — one-third of the 226,000 gains seen in the first quarter. He also acknowledged that a decline in the unemployment rate over the coming months will be “frustratingly slow.”
Treasury talk Disappointing reports about the U.S. economy underpinned demand for safer assets in July, dropping the yield on 10-year Treasuries to 1.48% at the end of the month, from 1.65% at the end of June.
Housing views New home sales are now 15.1% above the 304,000 unit rate in June 2011 and well above the 273,000 record-low in February of 2011. That may help explain why builders are so happy: The National Association of Home Builders’ builder sentiment index jumped to its strongest reading since May 2007.
