This week, our investment management team discusses the record closing highs of the S&P 500 and Dow Jones Industrial Average as well as recent news from Europe:
Domestic equity markets rebounded from the prior week as the consternation caused by Cypress’s bailout abated. Both the S&P 500 and the Dow Jones Industrial Average (DJIA) ended the quarter at new all-time highs. The S&P 500 set a new all-time closing high of 1,569.15 on Thursday, surpassing its prior record of 1,565.15 set in October 2007, while the DJIA reached another new height, closing at 14,578.54. The records occurred even as the majority of the week’s economic news failed to meet expectations. However, the data continued to confirm the U.S. economic recovery, highlighted by an 8.1% year-over-year (Y/Y) increase in the Case-Shiller Index, providing further evidence of the housing recovery.
In Europe, Cypress and Italy dominated the coverage. Cyprus’s banks re-opened for the first time in nearly two weeks, following its bailout, with little evidence of the bank run that many pundits had expected. In Italy, the leader of the Democratic Party indicated that forming a coalition government would not be possible after meeting with rival politicians. The stalemate increases the likelihood that the country will hold new elections in June. It also leaves markets unsure as to the sustainability of recently enacted austerity measures.