Quarter-end: Will the stock rally continue?
As we near the quarter-end, investors are trying to determine whether the bull market in stocks that began in October can continue - and if so, for how long? Stocks are up over 25 percent since the October lows, when anxiety over Greece and Europe was running high. Since then, the European Central Bank facilitated two rounds of financing (LTRO), the troika has come to the table with another round of rescue funds and Greece has slashed its domestic spending. In addition to the short-term fix of the European debt crisis, U.S. economic data steadily improved, helping to propel stocks higher.
But over the past month, investors have begun to worry that a global slowdown is taking hold, alongside rising oil and gas prices. The combination could impede stock market progress, not to mention sap consumer confidence.
The worst part of rising gas prices is that consumers encounter them frequently, but rarely put them into a larger context of their financial lives. Here's an example of the simple math: Gas prices are up $.50/gallon since October and assuming that consumers fill their 16 gallon tanks once a week, they are likely to pay an extra $416 per year, if gas prices remain at current levels. Meanwhile, if the same consumer had $25,000 in a diversified retirement account as of October, he probably made at least $3,000 in that account within the same time horizon.
Before you write and tell me that this isn't a fair comparison, let me underscore that rising gas prices are regressive. That means they negatively impact those at the lower income brackets far more significantly than those in higher brackets. Also, those at the lower end might not have $25,000 in a retirement account. Still, it's worth noting that $416 over the course of the year may mean one less medium coffee per work day at Dunkin Donuts.
A potential economic slowdown, rising gas prices and sheer exhaustion caused investors to call a timeout last week. The Dow and the S&P 500 had their worst weeks of the year, which isn't saying much, in a low volatility environment where stocks have enjoyed swift gains.
-- DJIA: 13,080, down 1.1% on week, up 7% on year
-- S&P 500: 1,397, down 0.5%, up 11% on year (snaps 5-week winning streak)
-- NASDAQ: 3,067, up 0.4%, up 17.7% on year
-- April Crude Oil: $106.87, down 0.6% on week
-- April Gold: $1662.40, up 0.4% on the week
-- AAA national average price for gallon of regular gas: $3.89 (up from $3.61 a month ago)
FACTOIDS OF THE WEEK: Millionaires (Source: Spectrem Group and IRS)
Maybe you're like Cole Porter and don't want to be millionaire (h/t "High Society"). After all, audits for big earners are on the rise - last year, the IRS audited 12 percent of returns for those who made between $1 and $5 million and 21 percent of those who made between $5 and $10 million. Here are some stats on U.S. millionaires:
-- Number of millionaire households in 2011: 8.6 million
-- Increase in millionaire households from 2010: 200,000, or 2 percent
-- Peak millionaire households: 9.1 million (2007 - in 2008, the millionaire population plunged 27%)
-- Number of households worth $5 million or more: 1.078 million
-- Number of households worth $25 million or more: 107,000
Largest number of residents with a net worth of $2 million or more:
-- California - 329,000 (1.2% of total adult population)
-- New York - 160,000 (1.1% of the adult population
-- Florida - 155,000 (1.2% of total adult population)
-- Texas - 100,000 (or 0.6% of total adult population)
-- Illinois - 83,000 (or 0.6% total adult population)
-- New Jersey - 71,000 (or 1.1% of total adult population)
-- Pennsylvania - 57,000 (or 0.6% of total adult population)
-- Massachusetts - 51,000 (or 1% of total adult population)
-- Ohio - 50,000 (or 0.6% of total adult population)
-- Virginia - 49,000 (or 0.8% of total adult population)
THE WEEK AHEAD: Reports on factory activity, housing and a final reading at fourth-quarter economic activity, as well as new readings on consumer sentiment, and incomes and spending.
Mon 3/26:
Supreme Court begins to hear oral arguments on the constitutionality of health care reform
8:30 Chicago Fed activity Index
10:00 Pending home sales
10:30 Dallas Fed manufacturing
Tues 3/27:
9:00 Case-Shiller Home Price Index
10:00 Consumer confidence
10:00 Richmond Fed manufacturing
Weds 3/28:
7:00 Weekly mortgage applications
8:30 Durable goods orders
Thurs 3/29:
8:30 Weekly jobless claims
8:30 GDP (final reading of Q4, previous=3%)
8:30 Corporate profits
Fri 3/30:
Eurozone finance ministers discuss size of permanent rescue fund
8:30 Personal income and spending
9:45 Chicago PMI
9:55 Consumer sentiment