SOME WEAKER ECONOMIC data and statements from the US Federal Reserve indicating that it has downgraded its view of the US economy caused stocks to sink sharply of late, ending a multi-week run of gains. For the week ended Aug 13, the Dow Jones Industrial Average lost 3.3% to 10,303, the Standard & Poor’s 500 Index declined 3.8% to 1,079 and the Nasdaq Composite Index fell 5.0% to 2,173. With these losses, all three indices are back into negative territory on a YTD basis.

EQUITY MARKETS WERE roughly flat for the week ended July 30, with the major averages posting mixed results. The Dow Jones Industrial Average gained 0.4% that week to close at 10,466, while the Standard & Poor’s 500 Index dropped a miniscule 0.1% to 1,102 and the Nasdaq Composite declined 0.7% to 2,255. Stocks posted their first monthly advance since April, with US equities up close to 7% for July.

US EQUITIES POSTED positive results in recent weeks as uncertainty continued to ease in the markets. Funding conditions in the euro’s non-core countries have improved, activity out of the European economies has been better than expected, US earnings reports have been strong and we have seen the passage of the European bank stress tests. Overall, the Dow Jones Industrial Average gained 3.24% for the week ended July 23 to close at 10,425, while the Standard & Poor’s 500 Index advanced 3.55% to 1,103 and the Nasdaq Composite Index rose 4.15% to 2,269. Factoring in these results, US equity markets extended their gains for July to more than 7%.