Markets Continue to Retreat to February Levels

While officials continued to investigate computerized trading glitches and possible human errors that may have triggered Thursday’s wild market gyrations, fearful investors remained wary of European debt maneuvering, sending the Dow Jones Industrial Average (an unmanaged index of 30 widely held stocks) down another 140 points to finish at a level not seen since late February.

As the week ended, the Dow was at 10,379.60, down 5.7% from April’s close. The NASDAQ Composite (an unmanaged index of common stocks listed on the NASDAQ National Stock Market) and the S&P 500 (an unmanaged index of 500 widely held stocks) were down 7.9% and 6.4%, respectively.

Markets were positive early in the day, following the Labor Department’s announcement that nonfarm payrolls added 290,000 jobs in April, considerably more than had been forecast. Job growth was at its fastest pace in four years, although the unemployment rate ticked up to 9.9% from 9.7% because job-seekers who had taken themselves out of the hunt for employment streamed back in. Unemployed persons are not counted as such unless they are actively seeking work.

While everyone watched the attempts to contain the oil spilling from the BP well into the Gulf of Mexico, investor attention soon turned to troubles within the European Union. Although Germany’s government approved a bailout package for Greece and the Greek parliament adopted a stringent austerity package, concerns about the creditworthiness of some key European nations remain.

European investors were wary, too. Germany’s DAX index dropped 3.3%, France’s CAC 40 lost 3.5% and Britain’s FTSE 100 finished 2.56% lower on the day. British concerns were in part related to the “hung parliament” the country was left with following Thursday’s general election, in which no political party won an overall majority. The euro continued a modest recovery against the U.S. dollar, trading in the $1.27 range much of the day.

Spain’s central bank had some good news Friday, announcing a 0.1% growth in the Spanish economy during the first quarter of 2010. A tiny figure, perhaps, but in Europe’s fifth largest economy – in recession since the second half of 2008 – it was seen as a welcome contrast to the preceding six straight quarters of contraction.

These are restive market days despite U.S. figures that continue to show a moderate economic recovery. I’ll be happy to discuss the market if you have concerns about your portfolio. Just contact us.

Past performance is not indicative of future results. Investors cannot invest directly in an index.