A weekly update from Jeff Mitchell, your Trusted Advisor.
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The Markets
Despite the terrorist attacks in Paris and Mali, stocks climbed
higher by the close of last week. Investors may have been influenced by
favorable earnings reports from some large companies and the feeling
that the impending Fed interest rate hike may be a sign the government
believes the economy is on a definite upswing. The S&P 500 and the
Dow saw significant gains, rising 3.27% and 3.35%, respectively. Nasdaq
continues to be a consistent performer, closing last week up almost 8%
year-to-date.
The price of gold (COMEX) decreased, selling at $1,077.30 by late
Friday afternoon compared to $1,083.20 a week earlier. Crude oil (WTI)
prices gained, selling at $41.46 per barrel by week's end. The national
average retail regular gasoline price decreased to $2.178 per gallon on
November 16, 2015, $0.057 below the previous week's price of $2.235 per
gallon, and $0.716 below a year ago.
Last Week's Headlines
- The Consumer Price Index (CPI) experienced a modest monthly gain in
October, increasing 0.2%. This follows two consecutive months of
decline. According to the Bureau of Labor Statistics report, the index
has increased 0.2% over the last 12 months. The core CPI, less the
volatile food and energy segment, sits at 1.9%--right at the Fed's
general 2% inflation target. Stronger inflationary trends could be a
sign of economic strength sufficient enough to absorb an interest rate
hike.
- The Federal Reserve puts out a monthly index of industrial
production covering manufacturing, mining, and electric and gas
utilities. The latest figures show that industrial production fell once
again, declining 0.2% in October. Indexes for utilities (-2.5%) and
mining (-1.5%) decreased, while the index for manufacturing actually
moved up 0.4% for the month. Also on the plus side, at 107.2% of its
2012 average, total industrial production in October was 0.3% above its
year-earlier level.
- The Housing Market Index, which is based on a survey of National
Association of Home Builders members, seeks to rate the single-family
housing market. The preliminary report for November shows the index
dipped to 62 compared to October's revised reading of 65. A reading over
50 denotes general builder confidence. While enthusiasm in the market
for single-family home sales may have softened a bit, November's
preliminary reading reveals continuing optimism in the market.
- Housing starts--marked by the actual start of new residential
construction--fell 11% in October compared to September's revised
figures. According to the latest Census Bureau report, there were about
1,060,000 housing starts in October--131,000 fewer than the prior
month's total. Builders cut back on construction of apartments and
condominiums to the tune of 25.1%, while starts of single-family
residences fell 2.4%. On the other hand, builders showed confidence in
future residential sales, as applications for building permits rose
4.1%.
- In the week ended November 14, there were 271,000 initial claims
for unemployment insurance, a decrease of 5,000 from the prior week. The
advance seasonally adjusted insured unemployment rate was unchanged at
1.6% for the week ended November 7, while the advance number for
continuing unemployment insurance claims was 2,175,000, a decrease of
2,000 from the previous week's revised level.
Eye on the Week Ahead
Several important economic indicators are highlighted in reports
during the week of November 23. Reports on existing home sales and new
home sales may reveal the direction of the housing market heading to the
end of the year. Imports and exports have generally been lagging for
much of this year, and the latest figures are expected to reveal more of
the same. The report on gross domestic product is the final take on
overall economic activity available to the FOMC before its December
meeting.
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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