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Market Week: October 12, 2015

Key Dates/Data Releases

10/13: Treasury budget

10/14: Producer Price Index, retail sales, business inventories

10/15: Consumer Price Index, jobless claims

10/16: Industrial production, Job Openings and Labor Turnover Survey (JOLTS)

The Markets (as of market close October 9, 2015)

Investors, possibly feeling comfortable that interest rates will not be raised in the near future, kicked back into the equities markets as each of the indexes listed here posted gains over the prior week. The minutes from the last Fed meeting confirmed that interest rates would remain at their current levels for the near term due to concern over persistently low inflation figures. Equity gains this past week also pushed the indexes listed here (excluding Nasdaq, which is ahead of last year) closer to their 2014 year-end levels. The yield on U.S. 10-year Treasury bonds increased over the prior week as investors undoubtedly shifted their investment dollars to equities causing bond prices to fall.

The price of gold (COMEX) increased, selling at $1,155.60 by late Friday afternoon compared to $1,137.60 a week earlier. Crude oil (WTI) prices made a noticeable jump, selling at $49.49 per barrel by week’s end. For the seventh week in a row, the national average retail regular gasoline price decreased, dropping to $2.318 per gallon on October 5, 2015, $0.004 under the previous week’s price of $2.322 per gallon and $0.981 below a year ago.

Market/Index 2014 Close Prior Week As of 10/9 Weekly Change YTD Change
DJIA 17823.07 16472.37 17084.49 3.72% -4.14%
Nasdaq 4736.05 4707.78 4830.47 2.61% 1.99%
S&P 500 2058.90 1951.36 2014.89 3.26% -2.14%
Russell 2000 1204.70 1114.12 1165.36 4.60% -3.27%
Global Dow 2501.66 2279.08 2414.33 5.93% -3.49%
Fed. Funds 0.25% 0.25% 0.25% 0% 0%
10-year Treasuries 2.17% 1.99% 2.08% 9 bps -9 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

  • This past Monday, the U.S., Japan, and 10 other countries reached a trade accord known as the Trans-Pacific Partnership. In theory, the agreement seeks to remove trade barriers to some goods and services, which are otherwise advantageous to domestic industries, by allowing for more trade among the participating nations. Included in the agreement are provisions aimed at enhancing worker conditions, protecting property rights to benefit drug and technology companies, and defining automotive-assembly rules. However, before becoming official, the deal must be ratified by the governing bodies of the participating nations.
  • In addition to a monthly manufacturing index, the Institute for Supply Management (ISM) also publishes a monthly non-manufacturing index based on data compiled from purchasing and supply executives from industries including services, construction, mining, agriculture, forestry, fishing and hunting, wholesale and retail trade, transportation, finance and insurance, and real estate. According to the latest report, the non-manufacturing index registered 56.9% for September, 2.1% lower than August. While a reading of 50% or higher is considered expansion in the non-manufacturing sector, the lower reading indicates a “cooling off” in the rate of growth during the month of September.
  • As expected, the U.S. trade deficit for goods and services expanded by $6.5 billion to $48.3 billion in August. Compared to July, exports decreased by $3.7 billion, while imports grew by only $2.8 billion. Year-to-date, the goods and services deficit increased $17.6 billion, or 5.2%, from the same period in 2014. During this period, exports have decreased $58.9 billion or 3.8%, while imports decreased $41.3 billion, or 2.2%. Decreasing exports reflects weakness in foreign demand for U.S. goods and services, coupled with a strong dollar.
  • Prices for U.S. imports edged down 0.1% in September, after a 1.6% decrease in August, according to the latest report from the U.S. Bureau of Labor Statistics. The continued downward trend in nonfuel import prices more than offset an advance in fuel prices. The price index for U.S. exports declined 0.7% in September, following a 1.4% drop the previous month. Year-on-year export prices are down 7.4%, while import prices have contracted 10.7%.
  • Jobless claims decreased by 13,000 for the week ended October 3, to close at 263,000. The advance seasonally adjusted insured unemployment rate was unchanged at 1.6% for the week ended September 26, while the advance number for continuing unemployment insurance claims increased 9,000 to 2,204,000.

Eye on the Week Ahead

Several reports on tap for next week serve as useful economic indicators. The Producer Price Index and Consumer Price Index track prices at the producer and consumer levels, while the retail sales report is a major indicator of consumer spending.

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.