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Market Week: September 28, 2015

Key Dates/Data Releases

9/28: Personal income and outlays, pending home sales

9/29: S&P Case-Shiller home price index, Conference Board consumer confidence

9/30: Fed Chairman remarks

10/1: Jobless claims, ISM Manufacturing Index, PMI Manufacturing Index

10/2: Employment

The Markets (as of market close September 25, 2015)

Like an early fall flu, investor anxiety continued to spread last week as uncertainty around the future of interest rates continued to drag down markets. Even a Friday rally in blue chips spurred by Federal Reserve Chair Janet Yellen’s most recent comments couldn’t cure the malaise. All indexes tracked here posted losses, with the Russell 2000 dropping nearly 3.5%.

Gold rose to $1,145.50, compared to $1,139.10 a week earlier, while crude oil ended the week at $45.34 a barrel. The national average regular gasoline price declined for the fifth week in a row to $2.327 per gallon on September 21, down $0.048 from the previous week and $1.285 lower than a year prior.

Market/Index 2014 Close Prior Week As of 9/25 Weekly Change YTD Change
DJIA 17823.07 16384.58 16314.67 -0.43% -8.46%
Nasdaq 4736.05 4827.23 4686.50 -2.92% -1.05%
S&P 500 2058.90 1958.03 1931.34 -1.36% -6.20%
Russell 2000 1204.70 1163.35 1122.79 -3.49% -6.80%
Global Dow 2501.66 2326.45 2259.74 -2.87% -9.67%
Fed. Funds 0.25% 0.25% 0.25% 0% 0%
10-year Treasuries 2.17% 2.13% 2.17% 4 bps 0 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

  • In a speech at the University of Massachusetts, Fed Chair Janet Yellen seemed to quell some uncertainty about the U.S. economy, saying she expects the Fed to raise interest rates “sometime later this year.” Of course, she qualified the prediction by saying the organization would continue to rely on economic data.
  • In an announcement that came as a surprise to even some of his closest congressional colleagues last Friday, John Boehner (R-OH) announced his resignation as House Speaker and congressman, effective October 30. The announcement follows long-term criticism by members of his own party that the Speaker was not strong enough in supporting GOP principles, and comes amid heated negotiations over a bill that is needed to extend federal funding beyond September 30.
  • The third estimate for second-quarter gross domestic product (GDP) was revised upward to 3.9% from the previous estimate of 3.7%, according to the Bureau of Economic Analysis. The growth is primarily due to accelerations in consumer spending, exports, nonresidential fixed investment, and state and local government spending. The upward revision was largely attributed to positive revisions in consumer spending, and nonresidential and residential fixed investment, partially offset by a downward revision in private inventory investment.
  • After three months of gains, total existing home sales fell 4.8% in August to 5.31 million. Moreover, July figures were revised downward to 5.58 million, reported the National Association of Realtors┬« (NAR). Despite the drop, sales are 6.2% higher than one year ago, and have risen year-over-year for 11 consecutive months. The median existing-home price for August was $228,700, 4.7% higher than in August 2014. Lawrence Yun, NAR’s chief economist, attributed the decrease to tight inventories.
  • On the other hand, sales of new homes continue to be an economic bright spot, rising 5.7% in August, to 552,000, according to the U.S. Census Bureau and the U.S. Department of Housing and Urban Development. The figure is nearly 22% above the August 2014 estimate. The median sales price of new homes in August was $292,700, while the average was $353,400.
  • The September reading from the Markit Flash U.S. Manufacturing Purchasing Managers’ Index remained unchanged from its August 22-month low. At 53.0, the reading is one of the slowest rates of overall manufacturing expansion in nearly two years and is lower than the post-financial-crisis average of 54.3. While output rose at a faster pace in September, the increase was offset by a softening in new business and employment growth.
  • After two months of increases, durable goods orders declined by 2% in August. Excluding transportation, which fell by 5.8%, orders were virtually unchanged.
  • Jobless claims rose by 3,000 for the week ended September 19, to close at 267,000. The advance seasonally adjusted insured unemployment rate remained unchanged at 1.7%.
  • The University of Michigan’s final reading on consumer sentiment for September was 87.2, compared to August’s 91.9. Although at its lowest level in 11 months, the reading is 3% higher than it was a year ago. It is also higher than the mid-September figure reported earlier this month. “The decline in optimism continued to narrow in late September as consumers increasingly concluded that the stock market declines had more to do with the international conditions than the domestic economy,” said Surveys of Consumers chief economist Richard Curtin.

Eye on the Week Ahead

Eyes will be on Washington this week, to see if lawmakers can agree on a measure to continue funding the federal government through early December. Investors will monitor whether Boehner’s resignation announcement will affect the negotiation process. Also on tap are more housing market and manufacturing data, as well as information on personal income and expenditures and the overall job picture.

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.