The Markets
Investors appeared to be in a selling mood this past week as each of
the indexes listed here fell by more than 3.0%. The S&P 500 dropped
over 79 points, closing down 3.79%, while the Dow lost over 580 points,
finishing 3.26% below the prior week's close. The Nasdaq closed down
4.06%, while the Russell 2000 suffered the largest decline for the week,
finishing a little over 5.0% behind its December 4 closing value.
Plunging oil prices and the expectation of a possible interest rate hike
were key factors in last week's volatility. Of the major indexes listed
here, only the Nasdaq remains in positive territory year-to-date, as
each of the other indexes are below their respective 2014 closing
values.
The price of gold (COMEX) rebounded after several weeks of trending
downward, selling at $1,073.70 by late Friday afternoon compared to
$1,085.80 a week earlier. Crude oil (WTI) prices fell again, selling at
$35.36 per barrel by week's end. The national average retail regular
gasoline price decreased for the fourth week in a row to $2.053 per
gallon on December 7, 2015, $0.006 below last week's price and $0.626
under a year ago.
Last Week's Headlines
- The latest report from the Bureau of Labor Statistics shows the
Producer Price Index for final demand increased 0.3% in November. This
increase follows decreases of 0.4% in October and 0.5% in September. The
November rise in the final demand index can be traced to prices for
final demand services, which advanced 0.5%. In contrast, the index for
final demand goods moved down 0.1%.
- Retail food and services sales in November were up 0.2% from
October 2015, but 1.4% above November 2014, according to the Census
Bureau's latest figures. Showing marked growth were nonstore retailers,
up 7.3% from November 2014, and food services and drinking places, which
were up 6.5% from last year.
- While the combined value of distributive trade sales and
manufacturers' shipments for October fell 0.2% from September,
manufacturers' and trade inventories were virtually unchanged from
September, but were up 2.0% from October 2014. The total business
inventories/sales ratio based on seasonally adjusted data at the end of
October was 1.38. The October 2014 ratio was 1.31.
- According to the Labor Department's Job Openings and Labor Turnover
Survey (JOLTS), the number of job openings was little changed at 5.4
million on the last business day of October (5.5 million in September).
Hires and separations were little changed at 5.1 million and 4.9
million, respectively. Employment rises when the number of hires exceeds
the number of separations. Over the 12 months ended in October 2015,
hires totaled 61.0 million and separations totaled 58.3 million,
yielding a net employment gain of 2.7 million.
- Heading into the second month of the U.S. government's 2016 fiscal
year, the deficit for November came in at $64.5 billion. This follows
October's deficit of $136.5 billion. The deficit is 12.6% higher than
this time last year. Spending for Medicare and Social Security is up, as
is defense spending, adding to the increased deficit.
- Consumer sentiment was up slightly in December (91.8) from November
(91.3), according to the preliminary report from the University of
Michigan's Surveys of Consumers.
- Claims for unemployment insurance jumped during the past few weeks.
For the week ended December 5, there were 282,000 initial claims for
unemployment insurance, an increase of 13,000 from the prior week's
level. For the week ended November 28, the advance number for continuing
unemployment insurance claims was 2,243,000, an increase of 82,000 from
the previous week's revised level of 2,161,000. The advance seasonally
adjusted insured unemployment rate increased from 1.6% for the week
ended November 21 to 1.7% for the following week.
- Prices for U.S. imports fell 0.4% in
November following a 0.3% decline in October, the Bureau of Labor
Statistics reported last week. A decrease in import fuel prices drove
the November decline in the price index for overall imports. U.S. export
prices declined 0.6% in November, after a 0.2% decrease the previous
month. Lower prices for both agricultural and nonagricultural exports
contributed to the November decline in overall export prices.
Eye on the Week Ahead
When the Federal Open Market Committee meets this week, the hot topic
will certainly be whether to raise interest rates, and if so, by how
much and when. If the committee announces a rate hike, how will the
equities markets respond?
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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