The Markets
Bulls and bears duked it out last week, with the Dow experiencing multiple triple-digit intraday swings. In the end, the bears prevailed as the Dow and S&P 500 had their third straight week of losses, which sent both back into negative territory for the year. The dollar continued to gain strength, hitting $1.06 against the euro (its highest level since January 2003), while the price of oil, which had been above $50 a barrel at the beginning of the month, fell to roughly $45. Coupled with the start of quantitative easing by the European Central Bank, that raised concerns about how U.S. multinational companies' sales overseas would fare going forward. The small caps of the Russell 2000, which are seen as having less international exposure, had the week's only gains.
Last Week's Headlines
- Wholesale prices in the United States fell 0.5% in February, mostly because of the eighth straight monthly decline in costs for final-demand goods such as fuel/lubricants, machinery/equipment, and apparel. The Bureau of Labor Statistics said wholesale prices overall have now fallen 0.6% over the last 12 months.
- Retail sales fell for the third straight month as February's harsh winter weather helped cut spending by 0.6%. The Commerce Department said declines were seen in virtually all segments of the retail sector. However, retail sales as a whole were 1.7% ahead of February 2014.
- Job openings (sometimes seen as a proxy for workers' willingness to risk changing jobs) continued to rise, reaching 5 million in January. The Bureau of Labor Statistics said openings have now risen above their March 2007 peak. The number of people quitting their jobs in January was 3% higher than in December, according to the BLS's Job Openings and Labor Turnover Survey, and has now increased 17% over the last year.
- The recent slight bump in oil prices is probably temporary, according to the International Energy Agency's monthly report. The IEA warned that increased U.S. oil production could soon exceed storage capacity, which could renew downward pressure on prices. Financial markets have been concerned that falling oil prices might hit energy stocks hard and lead to production cutbacks and layoffs. While that might help stabilize oil prices, it could take a toll on the rest of the economy as well as stock indices that include a large energy component.
Eye on the Week Ahead
All eyes will be on the statement to be issued Wednesday by the Federal Open Market Committee. Any change in language--for example, not continuing to say that the committee will be "patient" about interest rates--could unleash more speculation about a June rate hike. Conversely, retention of the p-word might fuel speculation about a possible delay.
Data sources: Economic: Based on data from U.S. Bureau of Labor Statistics (unemployment, inflation); U.S. Department of Commerce (GDP, corporate profits, retail sales, housing); S&P/Case-Shiller 20-City Composite Index (home prices); Institute for Supply Management (manufacturing/services). Performance: Based on data reported in WSJ Market Data Center (indexes); U.S. Treasury (Treasury yields); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK); www.goldprice.org (spot gold/silver); Oanda/FX Street (currency exchange rates). All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results. All investing involves risk, including the potential loss of principal, and there can be no guarantee that any investing strategy will be successful.
The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indices listed are unmanaged and are not available for direct investment.
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