The Markets
The equities market has
been volatile thus far this year. Following last week's gains, the
indexes listed here all closed the week in negative territory. Both the
Dow and the S&P 500 fell 1.21% for the week--this following a rally
last Friday after gains in the price of oil. Uncertainty over whether
continued austerity would hasten global growth was felt in the foreign
markets, as the Global Dow fell more than half a point and is over 2.0%
behind its year-end closing price. Money moved into long-term bonds as
increasing prices drove 10-year Treasuries down 6 basis points from the
prior week.
The price of crude oil
(WTI) closed the week at $39.66 a barrel, up $3.03 over the prior week's
closing price. The price of gold (COMEX) rose by last week's end,
selling at $1,240.10 by late Friday afternoon, up from the prior week's
closing price of $1,223.60. The national average retail regular gasoline
price increased for the seventh week in a row, selling at $2.083 per
gallon on April 4, 2016, $0.017 over the prior week's price but $0.330
under a year ago.
Last Week's Headlines
- Reversing what had been a favorable
report in January, factory orders decreased $8.0 billion, or 1.7%,
following a 1.2% increase in January, according to the Commerce
Department's full report on manufacturers' shipments, inventories, and
orders for February. Shipments, down 10 of the last 11 months, once
again decreased, falling $3.4 billion, or 0.7%. Unfilled orders for
manufactured durable goods decreased $4.1 billion, or 0.3%, following a
0.1% increase in January. Inventories, down 8 consecutive months,
continued that trend, dropping $2.6 billion, or 0.4%. This report once
again highlights the continuing weakness in the manufacturing sector.
- The Institute for Supply Management®
Non-Manufacturing Index for March, at 54.5%, is 1.1 percentage points
higher than February. Based on surveys from firms involved in services,
construction, mining, agriculture, forestry, and fishing and hunting,
index readings of 50% and above are indicative of growth. According to
the ISM® report, respondents felt that business conditions are mostly
positive and that the economy is stable and will continue on a course of
slow, steady growth.
- The trade deficit increased from $45.9
billion in January to $47.1 billion in February. The deficit is
reflective of a greater increase in imports over exports. February
imports were $225.1 billion, $3.0 billion more than January imports,
while February exports were $178.1 billion, $1.8 billion more than
January exports. Year-to-date, the goods and services deficit increased
$10.8 billion, or 13.1%, from the same period in 2015. February's trade
deficit is the highest in the last six months as the ongoing strength of
the dollar overseas continues to cut into exports, curtailing overall
U.S. economic growth.
- The latest job openings and labor
turnover (JOLTS) report reveals that the number of job openings
decreased from 5.6 million in January to 5.4 million on the last day of
February. The job openings rate was 3.7%. The number of hires (5.4
million) and total separations (5.0 million) also increased over
January's figures. Over the 12 months ended in February, hires totaled
62.1 million and separations totaled 59.4 million, yielding a net
employment gain of 2.7 million.
- The Federal Open Market Committee
(FOMC) minutes from its March meeting indicate that, while some positive
economic trends were noted, many Committee members expressed a view
that "the global economic and financial situation still posed
appreciable downside risks to the domestic economic outlook." As to the
prospect of raising interest rates in the near term, "many participants
expressed the view that a somewhat lower path for the federal funds rate
than they had projected in December now seemed most likely to be
appropriate for achieving the Committee's dual mandate." It is
interesting to note that not all members of the Committee shared this
view--some thought it was appropriate to raise rates in March, and will
likely suggest raising rates in April unless economic conditions
deteriorate.
- For the week ended April 2, there were
267,000 claims for unemployment insurance, an increase of 9,000 from
the previous week's revised level. The advance seasonally adjusted
insured unemployment rate remained at 1.6%. The advance number for
continuing unemployment insurance claims for the week ended March 26 was
2,191,000, an increase of 19,000 from the prior week's revised level.
Eye on the Week Ahead
Inflation indicators are front and center this week as the latest
figures on producer prices, retail sales, and consumer prices are
available. The week closes with an important report from the Federal
Reserve on industrial production, which has been sagging for quite some
time.
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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