Weekly Stock Market Commentary 6 29 2009


Stock Market Commentary
For the week of June 29, 2009

The Market
Stocks ended the week mixed as news came that consumers are saving more than they are spending, suggesting that consumers are being very careful with their money. For the week, the Dow lost 1.16 percent to close the week at 8,438.39. The S&P 500 ended the week down 0.21 percent to finish the week at 918.90, while the NASDAQ rose 0.59 percent to end the week at 1,838.22. Markets will be closed this Friday, July 3, in observance of Independence Day.

Weekly Stock Market Commentary 6 29 2009
Source: Morningstar.com. * Past performance is no guarantee of future results. Indexes are unmanaged and cannot be invested into directly. Three and five-year returns are annualized. The S&P, excluding “1 Week” returns, is a reflection of return to an investor, by reinvesting dividends after the deduction of withholding tax.

Fewer Millionaires – Last year’s market decline has taken its toll on the ranks of the world’s millionaires. The number of people with assets between $1 million and $30 million dropped 14.9 percent in 2008 to 8.6 million, according to the recently released World Wealth Report. The decrease was the largest in the 13-year history of the report, released by Merrill Lynch Global Wealth Management and Capgemini. The world now has fewer millionaires than it had in 2005.

The Doctor Will See You Now – The average American spends twice as much per year on health care expenditures as the average German. The average American spends $6,714 per year vs. $3,371 for the average German (Source: Senate Finance Committee, BTN Research).

A Matter of Supply and Demand – The total production capacity of automakers worldwide is 86 million vehicles annually. Total auto sales are projected to be 56 million in 2009 (Source: Financial Times, BTN Research).

Spending Less – The personal savings rate in the U.S. at the end of April 2009 was 5.7 percent. Just over a year earlier (i.e., March 31, 2008), the nation’s personal savings rate was 0.2 percent (Source: Commerce Department, BTN Research).

The Best – Twenty-one of the best 50 percentage-gain days for the S&P 500 during the past 50 years have occurred since the U.S. slipped into a recession in December 2007, including seven of the top eight. The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market (Source: BTN Research).

WEEKLY FOCUS – Help for Student Aid

Education Secretary Arne Duncan last week unveiled plans that simplify the federal student aid application process in an effort aimed ultimately at increasing the
number of U.S. students who earn college degrees.

Under the proposal, some of the application’s 153 questions, many of them unverifiable, would be eliminated, and families would be able to skip questions that don’t apply to them. Already this summer, students at least 24 years old or married can skip 11 questions asking about their parents’ finances. Families would also be able to use tax-related information already provided to the IRS to answer 18 major financial questions.

The Department of Education estimates that 16 million students and families complete the Free Application for Student Aid (FAFSA), with about 92 percent of those applying online. Department data also suggests that an estimated 1.5 million students who are likely eligible for federal Pell Grants have not applied for them, and that students may be opting for private loans carrying a higher interest rate than they could have gotten through a federal loan program.

The value of a college education to your child or grandchild’s future is significant. The College Board’s 2007 study, Education Pays, found that holders of a bachelor’s degree earn 60 percent more than those with a high school education. That translates to $800,000 more in earnings over an average lifetime.

Student aid from federal grants and loans, as well as through scholarships, will continue to be important for most families. Although the cost of college in 2008-2009 increased just slightly over 2007-2008 according to the College Board, there is more than $143 billion in financial aid available. That’s especially positive for parents who, faced with college savings plans hit by the market decline, have considered raiding their retirement savings.

It’s never too early to start planning. If you, your friend or a family member needs help in finding ways to save for a child or grandchild’s education, contact our office. We can explain different ways to make college part of your overall investment plan.

* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Morgan Stanley Capital International Europe, Australia and Far East Index (MSCI EAFE Index) is a widely recognized benchmark of non-U.S. stock markets. It is an unmanaged index composed of a sample of companies epresentative of the market structure of 20 European and Pacific Basin countries and includes reinvestment of all dividends. Written by Securities America. SAI# 298598