Week In Review

Stocks:

The S&P 500 rose 21.74 points this week, or 1.71%, to 1293.24.  The Nasdaq Composite rose 52.13 points, or 1.93%, to 2755.30.  The Dow Industrials rose 112.62 points, or 0.96%, to 11787.38. 

• Verizon (VZ) said Tuesday that it will begin selling the popular iPhone 4 from Apple (AAPL) in February, at prices identical to rival AT&T’s (T).  This launch will greatly expand the iPhone’s potential audience in the U.S. market.
• JP Morgan Chase (JPM) reported quarterly results on Friday which were highlighted by a recovery in M&A and equity and debt offerings.  However, they reported lackluster results in key trading businesses.

Bonds:

End of week bond yields:

2 Year yield = 0.57%, down 2 bps from last week.

3 Year yield = 0.99%, up 1 bps from last week.

5 Year yield = 1.92%, down 4 bps from last week.

10 Year yield = 3.33%, up 1 bps from last week.

30 Year yield = 4.53%, up 5 bps from last week.

• Last week Moody’s put out a report detailing the reasons for the recent municipal market selloff and which types of issuers would be most pressured should they lose access to market funding. The overall tone was positive as they attributed recent investor selling to the Bush tax cut extension, concern over the expiration of the Build America Bond program, and negative press reports regarding municipal finances. With the exception of four types of issuer categories, the rating agency was positive on municipalities’ abilities to weather hostile capital market conditions. Issuers that rely on debt issuance to fund operating deficits (State of Illinois and California), rely on short-term notes to finance seasonal cash flow needs (State of Illinois and California), issue bond anticipation notes (BANS) for interim construction financing (certain community college districts in CA), and seek to convert outstanding variable rate demand bonds to a fixed rate mode due to expiring credit or liquidity support (certain hospitals) are in the most danger should they be shut out of the markets.

What to look for next week:

                        Monday           All Markets Closed for Martin Luther King Jr. Day

                        Tuesday           Citi and Apple report earnings

7:30 AM          Wednesday     Housing Starts

7:30 AM          Thursday         Jobless Claims

9:00 AM          Thursday         Existing Home Sales

9:00 AM          Thursday         Philadelphia Fed Survey

                        Friday              GE reports earnings