Rising oil prices and interest rates once again curbed the enthusiasm of market participants…


The summer doldrums seemed to arrive a few weeks early as rising oil prices and interest rates once again curbed the enthusiasm of market participants. Even though the majority of the major averages posted minor gains for the week, the reality was that the market as a whole went nowhere. For the fourth week in a row the Dow Jones Industrial Average was down, losing 46 points (-0.46%) and closed at 9966. This was the first time since the week ending 12/05/03 that the Dow closed under the 10000 mark on all five trading days.

The NASDAQ also traded in a tight range last week and seems to have found its support at around 1890. For the week, the NASDAQ gained 8 points (+0.42%) and closed at 1912. For the year, the Dow is down 4.7% while the NASDAQ is down 4.8%.

The markets continue to focus on several important factors: the looming handover of power in Iraq, the ramifications of a rising interest rate environment, rising inflation, as well as seasonal factors. With the stellar earnings season coming to a close, many companies have raised guidance for the remainder of the year. This good news is already factored into the markets, and is now being discounted by the major investment institutions. The ten-year treasury has risen significantly in yield (fallen in price) in response to the strengthening economy, indicating that the market has already done much of the Fed’s work by itself.


No changes to our portfolios during the past week. With the markets unable to gain traction in either direction, our current asset allocation remains as-is. Missing from the aforementioned market statistics of the last week is the real story: on both Wednesday and Friday afternoons the markets were unable to hold the significant gains recorded in their respective mornings, finishing out each day significantly off of their daily highs. Coupled with the “triple witching” expiration of futures, commodities and options, the week actually demonstrated significantly volatility. The conservative allocations in our actively managed portfolios (Compass STAR, STAR Plus, and STAR Balanced) remain extreme, but follow the discipline that has served us so well. Our tax-efficient portfolio, Compass Voyager, remains fully invested and continues to offer full market participation in a very efficient and cost effective manner.

You will notice a significantly different look to the printed version of our Weekly Market Comment. We have added a bit more data to our update, hopefully in a manner that is easy to read, which helps give you more up-to-date allocation data, and which helps reinforce the value of our management process over time. At the left you will see a summary of our current asset allocation models, both for our actively managed portfolios and for our more tax-efficient portfolio, Compass Voyager. On the following page, you’ll see our most recent Morningstar™ rankings, and you’ll find a chart showing the best/worst 1-year performance for each of our model portfolios and for the S&P 500 index. Our goal is to keep you better informed of the prescriptions of our wealth management discipline, and to help give you a better understanding of what each portfolio discipline is designed to achieve. Knowing what to expect in all market conditions is the key to investing comfortably, and it is our goal to offer our clients the best combination of performance and predictability available.


A gauge meant to forecast the economy’s performance in the coming months barely edged higher in April, a research group said Thursday, coming in below Wall Street forecasts. The Conference Board said its index of leading economic indicators rose just 0.1% in April after a revised 0.8% gain in March. Economists surveyed by Briefing.com had forecast a gain of 0.2% for April. The Conference Board, a New York-based business research group, had originally reported that the indicators rose 0.3% in March.

The number of Americans filing for unemployment assistance rose by 12,000 last week, the government reported, coming in above economists’ estimates for the second consecutive week. Initial claims for unemployment insurance rose to 345,000 in the week ended May 15 from a revised 333,000 the previous week. Economists had expected initial claims of 326,000, according to Briefing.com.

Lastly, President Bush nominated Alan Greenspan to another four-year term as chairman of the Federal Reserve Tuesday, and Greenspan accepted. White House press secretary Scott McClellan made the announcement just before Bush met with the 78-year-old Fed chief.

By | 2004-05-24T14:02:57+00:00 May 24th, 2004|Market and Portfolio Commentary|Comments Off on Rising oil prices and interest rates once again curbed the enthusiasm of market participants…

About the Author:

Mark’s commitment to objective, independent wealth management led him to establish The Appleton Group LLC in April of 2002. With over 19 years of experience in the financial services industry, Mark serves as portfolio manager for our private client group, and co-manages all assets held in our suite of portfolio offerings. His responsibilities include risk analysis, asset allocation, market research, and institutional client development. Mark also serves as both Principal and CEO of The Appleton Group LLC. He earned his Accredited Investment Fiduciary (AIF) designation in 2016