![\"Weekly](\"http:\/\/www.clarksvilleonline.com\/wp-content\/uploads\/2010\/08\/weekly-market-snapshot.jpg\" "\\"Weekly")
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Market Commentary by Scott J. Brown, Ph.D., Chief Economist<\/span><\/em><\/strong><\/p>\n Scott J. Brown Ph.D., Chief Economist Raymond James Investment Services<\/p><\/div>\n Acting after Standard and Poor\u2019s decision to downgrade U.S. debt and a subsequent 635-point drop in the Dow Industrials on Monday, August 8th, the Federal Reserve announced on Tuesday the 9th that it was freezing short-term interest rates for at least two years. The Fed also said it was discussing a “range of policy tools” that it was “prepared to employ,” which some investors interpreted as meaning additional monetary stimulus might be forthcoming if the economy remains weak.<\/p>\n Yields on short-term Treasury debt fell after the Fed announcement, with two-year notes offering just 17 basis points and yields on the benchmark 10-year Treasury notes dropping to levels last seen during the 2008 financial crisis. Noting that economic growth this year has been “considerably slower” than it had expected, the Fed also said it expects “a somewhat slower pace of recovery over coming quarters”.<\/p>\n Markets have been extraordinarily volatile, with stocks swinging more than 4% in alternate directions during the first four days of the week. After plummeting 6.7% on Monday, August 8, the S&P 500 jumped 4.7% on the 9th, dropped 4.4% on the 10th and soared 4.6% on the 11th. The struggle between those who fear renewed recession and widening European debt problems versus those focused on robust corporate profits left the S&P down about 2% going into Friday\u2019s session. Stocks were then hit by news of a sharp drop in consumer confidence, with the consumer sentiment index from Reuters\/University of Michigan sliding to 54.9 in mid-August from 63.7 in late July. On the plus side, retail sales rose in July, giving ammunition to those who believe that consumer spending, a major economic driver, is holding up.<\/p>\n Next week, the mid-month economic data could generate some reactions in the financial markets, but aren\u2019t expected to add much to the overall economic picture. Residential construction figures may have softened a bit further in July, reflecting the usual volatility in the multi-family sector (keep an eye on single-family permits, which are the most important). Industrial production should get a boost from the hot weather in July (increased output from utilities), with a moderate July gain (but a lackluster trend). Retail gasoline prices edged up in July and the seasonal adjustment expects a relatively large decline \u2013 hence, seasonally-adjusted gasoline prices are expected to increase significantly, adding to the headline CPI figure. Ex-food & energy, the CPI is likely to post a more modest gain, reflecting a rollback in apparel prices (which uncharacteristically jumped in both May and June).<\/p>\n![\"Scott](\"http:\/\/www.clarksvilleonline.com\/wp-content\/uploads\/2010\/05\/scottjbrown-159x200.jpg\" "\\"Scott")
Indices<\/h3>\n
![\"Treasury](\"http:\/\/www.clarksvilleonline.com\/wp-content\/uploads\/2011\/08\/treasury-curve-081211.gif\" "\\"Treasury")
<\/div>\n![\"S&P](\"http:\/\/www.clarksvilleonline.com\/wp-content\/uploads\/2011\/08\/sp-sector-performance-081211.gif\" "\\"S&P")
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<\/a>Material prepared by Raymond James for use by its financial advisors.<\/p>\n