The Markets
Boosted by a jump in oil prices and a rally in the European markets,
U.S. stocks enjoyed their first week of gains in a month. Global stocks
responded favorably to news from the European Central Bank that more
stimulus could be forthcoming. Colder weather may have led to an
increase in demand for oil, shooting prices above $30, closing at $32.13
(WTI) a barrel. On the whole, each of the indexes listed here showed
gains week-on-week, although each index remains in negative territory
year-to-date. Bond yields for 10-year Treasuries, which had dropped
below 2.0% earlier in the week, climbed to a little over 2% as prices
dipped toward the end of the week.
The price of gold (COMEX) fell from last week's close, selling at
$1,098.50 by late Friday afternoon, down from the prior week's closing
price of $1,104.10. The national average retail regular gasoline price
decreased to $1.914 per gallon on January 18, 2016, $0.082 below the
prior week's price and $0.152 under a year ago.
Last Week's Headlines
- Home builders maintained confidence in
the new home market, according to January's preliminary Housing Market
Index from the National Association of Home Builders. The index for
January, at 60, is unchanged from December's downwardly revised reading.
An index reading above 50 represents improvement, and a reading in the
low 60s is indicative of gradual improvement.
- Both housing starts and building
permits for privately owned housing units dipped in December following
November's surge, according to the latest report from the Census Bureau.
Housing starts (marked by the actual beginning of construction) fell
2.5% below November's figure, while the number of building permits
issued dropped 3.9%. Nevertheless, both housing starts (6.4%) and
permits (14.4%) are ahead of their respective numbers for December 2014.
And housing completions in December were 5.6% above the revised
November estimate and 7.9% ahead of December 2014.
- Existing home sales rebounded in
December, according to the latest information from the National
Association of Realtors®, which saw the index jump to a seasonally
adjusted annual rate of 5.46 million--an increase of 700,000 over
November. Lawrence Yun, chief economist for the NAR notes that
December's sales figures close the best year of existing home sales
since 2006. The median existing-home price for all housing types in
December was $224,100, up 7.6% from December 2014 ($208,200). Last
month's price increase marks the 46th consecutive month of
year-over-year gains.
- Falling prices in energy (-2.4%) and
food (-0.2%) led to an overall decline in the Consumer Price Index,
which fell 0.1% in December. The index for all items less food and
energy rose 0.1% in December, its smallest increase since August. The
all items index rose 0.7% over the last 12 months, compared to the 0.5%
12-month increase for the period ending November. The latest figures
highlight the continuing lack of inflationary pressure--something the
FOMC may consider when it meets later this month.
- U.S. manufacturers started the year
with a rebound in output and new business growth from the lows seen
during December, resulting in Purchasing Managers' Index™ (PMI) of 52.7
in January--up from December's PMI of 51.2. While the latest index
signals moderate improvement in overall business conditions, it is still
the second-lowest index since October 2013.
- For the week ended January 16, there
were 293,000 initial claims for unemployment insurance, an increase of
10,000 from the prior week's revised total. For the week ended January
9, the advance number for continuing unemployment insurance claims was
2,208,000, a decrease of 56,000 from the previous week's revised level.
The advance seasonally adjusted insured unemployment rate remained at
1.6% for the week ended January 9.
Eye on the Week Ahead
So far, 2016 has been anything but kind to market investors. This
week's reports on new home sales, durable goods, and the GDP, as well as
updates from the latest FOMC meeting, could offer some indication as to
the direction of the economy in general, and equities markets in
particular for the weeks ahead.
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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