The Markets
Stocks fell sharply this week, possibly in anticipation of the
Federal Reserve's impending interest rate hike, maybe as soon as next
month. The Dow lost a little over 665 points, or 3.71%, closing the week
at 17245.24. The S&P 500 fell 3.63%, and the Nasdaq, which had been
a consistent gainer, dropped over 4%. Last week's declines follow an
October during which equities climbed out of a summer slump to register
positive gains year-to-date. Those gains have dissipated for the most
part, with only the Nasdaq ahead of last year.
The price of gold (COMEX) decreased, selling at $1,083.20 by late
Friday afternoon compared to $1,088.90 a week earlier. Crude oil (WTI)
prices fell, selling at $40.73 per barrel by week's end. The national
average retail regular gasoline price increased to $2.235 per gallon on
November 9, 2015, $0.011 over the previous week's price of $2.224 per
gallon, but still $0.706 below a year ago.
Last Week's Headlines
- The latest report from the Bureau of Labor Statistics reveals that
the Producer Price Index (PPI) decreased 0.4% in October. The PPI
measures the average change over time in the prices domestic producers
receive for goods and services. Final demand prices moved down 0.5% in
September and were unchanged in August. On an unadjusted basis, the
final demand index fell 1.6% for the 12 months ended in October, a
record 12-month decline for this index, which was introduced in November
2009.
- Retail sales and services, on the other hand, increased 0.1% from
the previous month to $447.3 billion in October, according to the latest
report from the Department of Commerce. This also marks an increase of
1.7% from October 2014.
- Business inventories for September increased 0.3% from the prior
month, according to the latest figures from the Census Bureau. The
inventories-to-sales ratio was 1.38 for September--up 0.01 from August
and 0.07 ahead of September 2014. Rising inventories may reflect
business optimism that sales will be growing in the coming months.
- U.S. import prices fell 0.5% in October, after falling 0.6% in
September, according to the latest figures from the Bureau of Labor
Statistics. Lower prices for both fuel and nonfuel imports contributed
to the October decrease. Prices for U.S. exports fell 0.2% in October,
following a 0.6% drop the previous month.
- The U.S. budget deficit increased to $137 billion in October--the
first month of the government's 2016 fiscal year. Total receipts for the
month were $211 billion, while outlays reached $348 billion. The
deficit for October 2015 is 12.2% higher than October 2014. Part of the
recently passed Bipartisan Budget Act of 2015 includes increases in the
federal debt limit and discretionary spending levels. As such, the
deficit could continue to expand as government spending increases.
- The number of job openings was little changed at 5.5 million on the
last business day of September, according to the Job Openings and Labor
Turnover (JOLTS) report from the U.S. Bureau of Labor Statistics. Hires
and separations were little changed at 5.0 million and 4.8 million,
respectively. Within separations, the quits rate was 1.9% for the sixth
consecutive month, and the layoffs and discharges rate remained
unchanged at 1.2%. So while the number of job openings increased, the
rate of hires didn't, possibly indicating a lack of interest on the part
of those unemployed, or a potential cutback on employer hires.
- According to the latest report on consumer sentiment from the
University of Michigan, consumer confidence rose in early November,
coming in with an index reading of 93.1 compared to 90.0 in October.
Consumers showed growing confidence in the overall economy, as evidenced
by the Current Economic Conditions index, which rose to 104.8 in
November from 102.3 in October.
- nitial claims for unemployment insurance were unchanged from the
prior week, closing at 276,000 for the week ended November 7. The
advance seasonally adjusted insured unemployment rate was unchanged at
1.6% for the week ended October 31, while the advance number for
continuing unemployment insurance claims increased 5,000 to 2,174,000.
Eye on the Week Ahead
A few important economic indicators are highlighted in reports this
week. The Consumer Price Index, a monthly indicator of inflation, has
not shown signs of significant upward movement, but October's report may
reveal increasing consumer prices, further bolstering the likelihood of
an interest rate hike by the Fed. Reports on industrial production and
housing starts are also on tap.
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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