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Markets had their first gain in seven weeks, albeit a modest one.  Over the past few weeks, we have experienced high levels of uncertainty as many investors are digesting both domestic and foreign economic issues that have resulted in low conviction and high volatility.  The congressional debate on where and how to cut the U.S. budget and whether or not the $14.26 trillion debt ceiling should be raised remained a focus point last week, adding to low investor sentiment.

The equity markets we track were flat-to-mixed last week.  The Dow Jones Industrial Average (DJIA) gained 0.44% to finish at 12,004, the Standard & Poor’s 500 Index moved 0.04% to finish at 1,272 and the Nasdaq Composite Index lost -1.03% to finish at 2,616.  The Russell 2000 index, which tracks the performance of small capitalization stocks, gained 0.28% to finish at 782.

Over the last several weeks, the U.S. economy has been absorbing significant headwinds that have caused the recovery to be lethargic.  In spite of the recent negatives (U.S. debt ceiling, unemployment levels, Greek debt), we see this pull-back and market weakness as a potential buying opportunity.  The second half of the year is days away, and we feel that global industrial activity is positioned for a rebound. In support of this sentiment, we point to corporate balance sheets that remain healthy, a consumer that remains resilient, constructive household saving rates, and banks continuing to ease lending standards.  Although job growth has been disappointing as of late, we believe the employment trend will become more consistent as we move through this economic rough patch.  Overall, we think there will be a modest acceleration in economic growth for the second half of 2011 and we are expecting to see GDP growth of around 3%.

With much of the downside risk reflected in the 2 month pull back, we are holding a measured outlook for the markets and economy and see opportunity in the current environment.

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Securities and Financial Planning offered through LPL Financial, a Registered Investment Advisor.  Member FINRA/SIPC

**Standard Compliance Disclosures
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.  To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing.  All performance referenced is historical and is no guarantee of future results.  All indices are unmanaged and cannot be invested into directly.  Stock investing involves risk including loss of principal.  The Dow Jones Industrial Average is comprised of 30 stocks that are major factors in their industries, and widely held by individuals and institutional investors. The Standard & Poor’s 500 Stock Index (S&P 500) is an unmanaged capitalization weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. The NASDAQ Composite Index measures all domestic and non-U.S. based common stocks listed on The NASDAQ Stock Market. The market value, the last sale price multiplied by total shares outstanding, is calculated throughout the trading day, and is related to the total value of the Index. The Russell 2000 Small Stock Index is an unmanaged index generally representative of the 2000 smallest companies in the Russell 3000 Index.  The Russell 2000 companies with lower price-to-book ratios and lower forecasted growth values.