Market Month Review

• Concerns about the possibility of default on sovereign debt by several European countries brought the euro to its lowest level against the dollar ($1.35) since last May. Other European nations pledged to assist Greece, which faces a severe budget deficit and high debt-to-GDP ratio, but were vague about how any aid might be provided.
• The Bureau of Labor Statistics announced a drop in the unemployment rate from 10% to 9.7%--the lowest rate since August. However, at the same time, 20,000 jobs were cut from nonfarm payrolls.
• The Federal Reserve Board raised the interest rate it charges banks for short-term emergency loans from 0.5% to 0.75%. However, Chairman Ben Bernanke reiterated that the economy is not yet strong enough to raise the target rate, which affects consumer interest rates.
• Consumer inflation remained moderate at a 2.6% annual rate. However, the Bureau of Labor Statistics said wholesale prices were up 1.4% for the third consecutive month, putting the annual wholesale inflation rate at 4.6%.
• Sales of both new and existing homes slowed substantially from the previous month. New home sales fell 11.2% to their lowest monthly level since the Commerce Department began keeping records in 1963. Home resales dropped 7.2%, but housing starts were up.
• Gross Domestic Product (GDP) actually grew 0.2% more in Q4 2009 than the original estimate of 5.7%.
• The SEC voted to adopt an alternative uptick rule, which would curb short selling in a stock once it has fallen 10% in intraday trading. The new rule, which will go into effect 60 days after publication in the Federal Register, requires that once that circuit breaker has been tripped, any short sales for the rest of that day and the next must be executed at a price above the current highest national bid.