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Market Week: April 13, 2015

Key Dates/Data Releases

4/14: Retail sales, Producer Price Index (PPI)

4/15: International capital flows, Empire State manufacturing, industrial production

4/16: Housing starts, Philadelphia Fed manufacturing

4/17: Consumer Price Index (CPI), consumer sentiment, leading economic indicators, options expiration

The Markets

Despite a weaker-than-expected jobs report released on Good Friday, a day when markets were closed, last week proved to be a positive one for stocks. Driven in part by a major strategic announcement released by General Electric (GE) on Friday, large caps ended the week up more than 1.5%, while a 2.23% gain propelled the Nasdaq to retake the year-to-date top spot. The dollar, which had been falling in recent weeks, rebounded after Federal Open Market Committee (FOMC) meeting minutes and a strong unemployment claims report reinvigorated speculation surrounding a potential interest rate hike in the coming months.

Market/Index 2014 Close Prior Week As of 4/10 Weekly Change YTD Change
DJIA 17823.07 17763.24 18057.65 1.66% 1.32%
Nasdaq 4736.05 4886.94 4995.98 2.23% 5.49%
S&P 500 2058.90 2066.96 2102.06 1.70% 2.10%
Russell 2000 1204.70 1255.66 1264.77 0.73% 4.99%
Global Dow 2501.66 2547.25 2584.38 1.46% 3.31%
Fed. Funds .25% .25% .25% 0% 0%
10-year Treasuries 2.17% 1.85% 1.96% 11 bps -21 bps

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Headlines

  • On Friday, GE announced that it would sell off nearly all of its GE Capital division. The news helped spur large-cap indices to a tidy gain for the week.
  • The Institute for Supply Management reported continued growth in the non-manufacturing (services) sector in March, albeit at a slower rate than in the previous month. The Non-Manufacturing ISM® Report on Business® registered 56.5% in March, 0.4% lower than February’s reading of 56.9%. Readings above 50 indicate growth. Fourteen of 18 industries reported expansion in March.
  • Job openings reached the highest level in 14 years in February, reported the Bureau of Labor Statistics (BLS). At 5.1 million job openings, the number represented a modest increase over January’s 5.0 million figure. Hires fell slightly, to 4.9 million in February from January’s 5.0 million. Separations also declined modestly, to 4.6 million from the previous month’s 4.8 million. All numbers were reported in the BLS’s “Job Openings and Labor Turnover Report” for February 2015.
  • The BLS also reported that weekly unemployment insurance claims totaled 281,000, resulting in a four-week moving average of 282,250–the lowest four-week average in nearly 15 years.
  • Minutes from the March meeting of the Federal Open Market Committee summarized members’ assessment that economic growth has moderated somewhat. Noting improvements in the labor market between the January and March meetings, the Committee also indicated that household spending is on the rise, due in part to stronger purchasing power attributed to declining energy prices. Reiterating a position to hold off on interest rate hikes for the time being, the statement noted, “The Committee anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen further improvement in the labor market and is reasonably confident that inflation will move back to its 2% objective over the medium term. This change in the forward guidance does not indicate that the Committee has decided on the timing of the initial increase in the target range.”
  • There was a collective sigh of relief heard across the Atlantic toward week’s end, as Greece met an important deadline in repaying part of its International Monetary Fund debt. The payment, made last Thursday, was worth approximately €450 million.
  • Import prices fell 0.3% in March, following a 0.2% increase in February, reported the Bureau of Labor Statistics. Import prices are down 10.5% year over year, the largest 12-month decline since prices fell 12% in the year ended September 2009. After declining 47.6% between June 2014 and January 2015, fuel import prices rose for the second consecutive month in March, posting an increase of 0.4%. Export prices rose 0.1% after a decline of 0.2% in February.

Eye on the Week Ahead

As earnings season kicks into high gear, investors will be measuring market response amidst a torrent of economic data, including reports on retail sales, inflation, housing, consumer sentiment, and manufacturing.

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/ Market Data (oil spot price, WTI Cushing, OK); (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.