A weekly update from Jeff Mitchell, your Trusted Advisor.
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The Markets
Equities finished last week on a high note following a strong finish
in the technology sector, while China cut interest rates once again in
an attempt to spur its waning economy. The European Central Bank hinted
that it could scale up its bond-buying stimulus program, further
boosting stock markets around the globe. Each of the indexes listed here
improved by last week's end with the large cap-Dow rising over 430
points for an increase of 2.50%, while the S&P 500 improved over 40
points, gaining a little over 2%. Bond prices fell as the 10-year
Treasury yield rose about 5 basis points.
The price of gold (COMEX) decreased, selling at $1,164.00 by late
Friday afternoon compared to $1,177.30 a week earlier. Crude oil (WTI)
prices fell back further, selling at $44.73 per barrel by week's end.
The national average retail regular gasoline price decreased to $2.277
per gallon on October 19, 2015, $0.060 under the previous week's price
of $2.337 per gallon, and $0.852 below a year ago.
Last Week's Headlines
- The National Association of Home
Builders Housing Market Index attempts to gauge home builders'
perception of the general economy and housing market conditions based on
a survey of its members. According to its most recent report, builders
gained confidence in the market for newly constructed single-family
homes in October as the index rose 3 points to 64. The index for current
sales also gained 3 points to 70 in anticipation of favorable new home
sales. Expected sales over the next six months increased 7 points to an
index reading of 75--all indications of continuing strength in the
housing sector.
- New residential construction picked up
in September, according to the U.S. Census Bureau's latest figures.
Privately owned housing starts (beginning of the construction phase)
were at an annual rate of 1,206,000, or 6.5% above the revised August
estimate, and 17.5% over the September 2014 rate. Looking forward,
residential building permits fell off by 5% in September compared to
August, indicative of a possible slowdown in residential construction in
the months ahead.
- Following last month's decline in
existing home sales, the National Association of Realtors® reports that
existing home sales increased 4.7% for September to a seasonally
adjusted annual rate of 5.55 million. Total existing home sales are 8.8%
above a year ago (5.10 million). However, the median existing home
price for all housing types fell in September to $221,900, which is down
from August's median price of $228,500. Nevertheless, the housing
market, in general, continues to be a positive economic sector.
- Manufacturing, which has been a
relatively weak sector this year, may be showing signs of an uptick.
October's Purchasing Managers' Manufacturing Index increased to 54, up
from 53.1 in September. The companies surveyed for the index indicated
that improving demand from domestic markets and competitive pricing
strategies have led to accelerated production levels. While this is a
preliminary report, any favorable news on the manufacturing front is
welcome.
- Initial claims for unemployment
insurance increased by 3,000 for the week ended October 17, to close at
259,000, up from the previous week's revised level of 256,000. The
advance seasonally adjusted insured unemployment rate was unchanged at
1.6% for the week ended October 10, while the advance number for
continuing unemployment insurance claims increased 6,000 to 2,170,000.
Eye on the Week Ahead
Much of next week's focus will be on the Federal Reserve's meeting,
which again will raise the question of whether, or when, interest rates
will be raised. The first preliminary report on the gross domestic
product for the third quarter is also scheduled for next week.
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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