February 2010

The stock market performed well in February, with the major market indexes returning approximately 3.0%. As a result of this positive monthly advance, year to date returns are only slightly negative, exhibiting a recovery from January's sharp downturn. Bond prices were relatively flat in February, as interest rates budged little during the month. In general, the stock market seems to be digesting last year's solid upturn, which likely presaged improved economic conditions for 2010. While there are some signs that business conditions have stabilized, including positive fourth quarter GDP and stronger industrial production, other indicators remain weak, particularly those tied to real estate and strained household finances. As has been well publicized, the soft employment picture remains a key impediment to a sustainable recovery. Furthermore, uncertainty regarding large government initiatives (i.e. health care and energy policies) and potential changes to income tax rates will cloud the business landscape until resolution on these fronts becomes clear.