The Markets
Investors,
possibly feeling comfortable that interest rates will not be raised in
the near future, kicked back into the equities markets as each of the
indexes listed here posted gains over the prior week. The minutes from
the last Fed meeting confirmed that interest rates would remain at their
current levels for the near term due to concern over persistently low
inflation figures. Equity gains this past week also pushed the indexes
listed here (excluding Nasdaq, which is ahead of last year) closer to
their 2014 year-end levels. The yield on U.S. 10-year Treasury bonds
increased over the prior week as investors undoubtedly shifted their
investment dollars to equities causing bond prices to fall.
The
price of gold (COMEX) increased, selling at $1,155.60 by late Friday
afternoon compared to $1,137.60 a week earlier. Crude oil (WTI) prices
made a noticeable jump, selling at $49.49 per barrel by week's end. For
the seventh week in a row, the national average retail regular gasoline
price decreased, dropping to $2.318 per gallon on October 5, 2015,
$0.004 under the previous week's price of $2.322 per gallon and $0.981
below a year ago.
Last Week's Headlines
- This
past Monday, the U.S., Japan, and 10 other countries reached a trade
accord known as the Trans-Pacific Partnership. In theory, the agreement
seeks to remove trade barriers to some goods and services, which are
otherwise advantageous to domestic industries, by allowing for more
trade among the participating nations. Included in the agreement are
provisions aimed at enhancing worker conditions, protecting property
rights to benefit drug and technology companies, and defining
automotive-assembly rules. However, before becoming official, the deal
must be ratified by the governing bodies of the participating nations.
- In
addition to a monthly manufacturing index, the Institute for Supply
Management (ISM) also publishes a monthly non-manufacturing index based
on data compiled from purchasing and supply executives from industries
including services, construction, mining, agriculture, forestry, fishing
and hunting, wholesale and retail trade, transportation, finance and
insurance, and real estate. According to the latest report, the
non-manufacturing index registered 56.9% for September, 2.1% lower than
August. While a reading of 50% or higher is considered expansion in the
non-manufacturing sector, the lower reading indicates a "cooling off" in
the rate of growth during the month of September.
- As
expected, the U.S. trade deficit for goods and services expanded by $6.5
billion to $48.3 billion in August. Compared to July, exports decreased
by $3.7 billion, while imports grew by only $2.8 billion. Year-to-date,
the goods and services deficit increased $17.6 billion, or 5.2%, from
the same period in 2014. During this period, exports have decreased
$58.9 billion or 3.8%, while imports decreased $41.3 billion, or 2.2%.
Decreasing exports reflects weakness in foreign demand for U.S. goods
and services, coupled with a strong dollar.
- Prices
for U.S. imports edged down 0.1% in September, after a 1.6% decrease in
August, according to the latest report from the U.S. Bureau of Labor
Statistics. The continued downward trend in nonfuel import prices more
than offset an advance in fuel prices. The price index for U.S. exports
declined 0.7% in September, following a 1.4% drop the previous month.
Year-on-year export prices are down 7.4%, while import prices have
contracted 10.7%.
- Jobless
claims decreased by 13,000 for the week ended October 3, to close at
263,000. The advance seasonally adjusted insured unemployment rate was
unchanged at 1.6% for the week ended September 26, while the advance
number for continuing unemployment insurance claims increased 9,000 to
2,204,000.
Eye on the Week Ahead
Several
reports on tap for next week serve as useful economic indicators. The
Producer Price Index and Consumer Price Index track prices at the
producer and consumer levels, while the retail sales report is a major
indicator of consumer spending.
Data sources: News items are based
on reports from multiple commonly available international news sources
(i.e. wire services) and are independently verified when necessary with
secondary sources such as government agencies, corporate press releases,
or trade organizations. Market data: 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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