The Markets
A solid jobs report for
March, coupled with continued strength in the housing sector, may have
influenced equities as each of the indexes listed here posted gains
week-over-week. Following the prior week's sell-off, gains in the
large-cap indexes have moved the S&P 500 and Dow solidly into
positive territory for the year. The biggest gainer, however, was the
Russell 2000, which jumped 3.53% by week's end and is closing in on its
2015 year-end value. Long-term bonds continue to attract investor money,
driving prices higher as yields on the U.S. 10-year Treasuries fell 21
points over the prior week's closing price.
The price of crude oil
(WTI) continued to be volatile, closing at $36.63 a barrel, $2.96 less
than the prior week's closing price. The price of gold (COMEX) rose by
last week's end, selling at $1,223.60 by late Friday afternoon, up from
the prior week's closing price of $1,218.70. The national average retail
regular gasoline price increased for the sixth week in a row, selling
at $2.066 per gallon on March 28, 2016, $0.059 over the prior week's
price but $0.382 under a year ago.
Last Week's Headlines
- Labor continues its relatively strong run as the latest information
from the Bureau of Labor Statistics shows 215,000 new jobs were created
in March. The labor force participation rate also increased slightly to
63% from 62.9% in February, and is up 0.6% since September. The
unemployment rate increased marginally to 5.0% in March from 4.9% in
February, with roughly 8.0 million unemployed persons. Employment
increased in retail trade, construction, and health care. Job losses
occurred in manufacturing and mining. Average hourly earnings rose $0.07
to $25.43 from February--an increase of 2.3% from a year ago.
- Essentially reiterating what had been said following the December
and subsequent FOMC meetings, Chair Janet Yellen suggested the Fed needs
to proceed cautiously with respect to raising interest rates. In a
speech before the Economic Club of New York, Yellen noted that ongoing
global economic and financial uncertainty, impacted by the economic
slowdown in China and falling oil prices, has heightened the risk to the
U.S. economy.
- While consumer income has grown over the first two months of 2016,
personal spending has increased, but at a much slower pace, according to
the Bureau of Economic Analysis. For February, both personal income and
disposable personal income (personal income less taxes) increased $23.7
billion, or 0.2%, compared to January. Personal consumption
expenditures (PCE), or what consumers are spending on durable goods,
nondurable goods, and services, increased $11.0 billion, or 0.1% in
February. On the other hand, consumers are saving at a higher rate as
the personal saving rate increased 0.1% from January to 5.4% in
February. The core PCE (excluding food and energy) increased 0.1% from
January, while the PCE price index, which measures the increase in
prices for consumer goods and services, fell 0.1% from January and is up
only 1.0% from February 2015.
- The Census Bureau's advance report on U.S. International Trade in
Goods for February has both exports (+2.0%) and imports (+1.6%) ahead of
their January levels. However, the gap between imports and exports also
expanded to an advance balance deficit of $62,864 in February from
January's final seasonally adjusted deficit figure of $62,398.
- Pending home sales, those in which a contract has been signed but
the transaction has not yet closed, rose 3.5% in February to 109.1,
according to the National Association of Realtors®. Led by a sizable
increase in the Midwest, all major regions except for the Northeast saw
an increase in contract activity in February.
- The S&P/Case-Shiller U.S. National Home Price Index showed home
prices slightly increased in January, as the seasonally adjusted index
gained 0.5% over December. The index recorded a higher year-over-year
gain with a 5.4% annual increase in January.
- According to the Census Bureau, construction spending in February
was 0.5% below the revised January estimate but 10.3% above the February
2015 estimate. On the plus side, residential construction was up 0.9%
over January. However, for February, nonresidential construction
spending (-1.3%) and public construction spending (-1.7%) were below
their respective January totals.
- Purchasing managers' manufacturing index (PMI) is based on a
monthly survey of selected companies relative to the current and
expected trends in the manufacturing sector. The Markit U.S.
Manufacturing Purchasing Managers' Index™ (PMI™) for March, at 51.5, is
only slightly ahead of February's 51.3. For the first quarter of 2016,
the average reading of 51.7 is the weakest quarterly upturn since the
third quarter of 2012. A reading of 50 or above signifies some overall
growth in this sector. The Institute for Supply Management PMI for March
was 51.8% (49.5% in February), which showed expansion in the
manufacturing sector for the first time in the last six months.
- The Conference Board Consumer Confidence Index®, which had
decreased in February, improved in March. The index now stands at 96.2,
up from 94.0 in February. Consumers surveyed expressed favorable
outlooks for the labor market and business conditions, but they did not
foresee the economy gaining any significant momentum in the near term.
Conversely, the University of Michigan's Index of Consumer Sentiment
fell slightly in March to 91.0 from February's reading of 91.7. The
Sentiment Index in the first quarter of 2016 averaged 91.6, barely
different from the 91.3 in the fourth quarter or the 90.7 in the third
quarter of 2015.
- For the week ended March 26, there were 276,000 claims for
unemployment insurance, an increase of 11,000 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 19 was 2,173,000, a decrease
of 7,000 from the prior week's revised level.
Eye on the Week Ahead
This week reveals the latest information on the international trade
balance on goods and services for February, which is a major indicator
of foreign trade--an economic sector that has been lagging. The FOMC
also releases the minutes from its March meeting, which may shed some
light on the Committee's intentions with respect to interest rates going
forward.
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.
|
|
|
|
|
