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Market Week: June 15, 2015

Key Dates/Data Releases6/15: Federal Reserve’s monthly index of industrial production, housing market index6/16: Housing starts

6/17: EIA petroleum status report, FOMC meeting, Federal Reserve Chair press conference

6/18: Consumer Price Index, jobless claims

The Markets

Reports from this past week revealed that the number of job openings is increasing, and the federal deficit and crude oil inventories are shrinking, while consumers are spending more of their hard-earned money. Unfortunately, news out of Europe is that negotiations between Greece and its creditors are regressing with default seemingly inevitable. The Dow, which had crept above 18000 during the week, closed at 17898.84, while the S&P 500 moved very little from last week’s close. The Nasdaq lost 0.34%, but remains ahead of the major indexes year-to-date. The Global Dow closed the week ahead of last week, while the euro remained relatively stable against the dollar, finishing the week at $1.1268. Crude oil closed ahead of last week at $59.94 as did gold, which reached $1180.50 as of the end of trading on Friday.

Market/Index 2014 Close Prior Week As of 6/12 Weekly Change YTD Change
DJIA 17823.07 17849.46 17898.84 0.28% 0.43%
Nasdaq 4736.05 5068.46 5051.10 -0.34% 6.65%
S&P 500 2058.90 2092.83 2094.11 0.06% 1.71%
Russell 2000 1204.70 1261.01 1265.02 0.32% 5.01%
Global Dow 2501.66 2556.18 2566.43 0.40% 2.59%
Fed. Funds 0.25% 0.25% 0.25% 0% 0%
10-year Treasuries 2.17% 2.41% 2.39% -2 bps 22 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

  • The number of job openings rose to 5.376 million on the last business day of April, the highest since December 2000, the U.S. Bureau of Labor Statistics reported. The job openings rate for April 2015 was 3.7%, up from 3.5% in March. Open jobs could mean a spike in wages as employers look to fill those positions.
  • According to the U.S. Energy and Information Administration for the June 5 week, crude oil inventories dropped 6.8 million barrels, while crude oil imports were down by 750,000 barrels per day. However, refineries increased production, averaging 10 million barrels per day. At the pumps, the national average retail regular gasoline price remained about the same at $2.78 per gallon, $0.894 lower than this time last year.
  • Through May the federal deficit for fiscal 2015 was $365.2 billion, which is about 16.3% lower compared to the same period last year ($436.4 billion) according to the monthly Treasury statement. Government receipts are running 9% ahead of last year, although government spending is up about 6% as well.
  • Consumers are spending more according to the U.S. Census Bureau, which announced that advance estimates of sales of U.S. retail and food services for May increased 1.2% from April, and 2.7% above May 2014. Big movers were motor vehicle and parts dealers and food services and drinking places, each of which experienced increased sales over May 2014.
  • In the week ending June 6, the advance figure for seasonally adjusted initial claims for unemployment benefits was 279,000, an increase of 2,000 from the previous week’s revised level of 277,000, according to the Department of Labor. Yet, this is a far cry from March 2009, when initial claims peaked at 665,000.
  • Reflective of higher oil prices, the costs for imported goods increased 1.3% in May following declines in each of the previous 10 months. The Bureau of Labor Statistics also reported that the price of U.S. exports rose 0.6% in May, the largest increase since March 2014. Still, import prices dropped 9.6% on the year. Overall, the strong dollar is making imports cheaper while softness in foreign economies is keeping down export prices.
  • In May, the prices producers received for their goods and services increased a seasonally adjusted 0.5% from April according to Friday’s Labor Department report. Still, compared to a year earlier, producer prices are down 1.1%. Next week’s consumer price report may shed more light on inflationary trends.

Eye on the Week Ahead

Housing starts, business production, and jobs reports will be available next week. But most of the attention will be focused on Wednesday’s Federal Open Market Committee announcements and forecasts, along with the Federal Reserve Chair’s press conference. We may have a better idea of when interest rates will increase by the end of the week.

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.