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Economics

Weekly Economic Update

 December 21, 2015

8622634_l (1)TIGHTENING BEGINS As anticipated, the Federal Reserve raised the benchmark in
terest rate by 0.25% last weekThe Federal Open Market Committee voted 10-0 to make the move. Its latest dot-plot forecast projects four rate hikes during 2016, which would put the federal funds rate above 1% by the end of next year. The Fed also adjusted the discount rate charged to commercial banks, raising it a quarter-point to 1.0%.1,

ANOTHER TOUGH WEEK FOR OIL

Baker Hughes data showed a gain in the number of active U.S. oil rigs last week, the first since mid-November. Light sweet crude slipped 0.6% Friday, settling at $34.73 on the NYMEX and losing 2.5% in five days.3

 

CORE CONSUMER PRICES RISE 0.2%

The core Consumer Price Index matched its October advance in November, taking its year-over-year gain to 2.0%. As for the headline CPI, it was flat in the eleventh month of the year and up just 0.5% in 12 months.4

BUILDERS WERE BUSY LAST MONTH

Housing starts climbed 10.5% in November according to the Census Bureau, nearly reversing the (revised) 12.0% decline in October. Building permits surged by 11.0% last month, following a 4.1% October rise.4

 

CRUDE WEIGHS DOWN EQUITIES AGAIN

Aside from a Wednesday rally following the Federal Reserve decision to raise interest rates, investors had little to cheer last week. During five days, the S&P 500 declined 0.34% to 2,005.55, the Nasdaq 0.21% to 4,923.08, and the Dow 0.79% t0 17,128.55.3

 

THIS WEEK: Cintas and Steelcase report quarterly results Monday. On Tuesday, Wall Street reacts to November existing home sales figures, the final Q3 GDP number from the federal government, and earnings from ConAgra Foods, Micron, Nike, and Paychex. Wednesday’s important items include reports on November personal spending, new home sales, and capital goods orders and the final December consumer sentiment index from the University of Michigan. Thursday is Christmas Eve, with the NYSE and NASDAQ closing at 1:00pm EST; earlier, the Labor Department will present its usual weekly initial claims report. Friday is Christmas Day; all U.S. financial markets will be closed.

% CHANGE Y-T-D 1-YR CHG 5-YR AVG 10-YR AVG
DJIA -3.90 -3.65 +9.81 +5.81
NASDAQ +3.95 +3.68 +17.25 +12.15
S&P 500 -2.59 -2.70 +12.25 +5.92
REAL YIELD 12/18 RATE 1 YR AGO 5 YRS AGO 10 YRS AGO
10 YR TIPS 0.73% 0.57% 1.05% 2.11%

Sources: wsj.com, bigcharts.com, finance.yahoo.com, treasury.gov – 12/18/155,6,7,8,9

Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends. 10-year TIPS real yield = projected return at maturity given expected inflation.

 

 

 

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. It is not possible to invest directly in an index. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world’s largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. All economic and performance data is historical and not indicative of future results. Market indices discussed are unmanaged. Investors cannot invest in unmanaged indices. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.

 

Citations.

1 – marketwatch.com/story/federal-reserve-lifts-interest-rates-for-first-time-since-2006-2015-12-16 [12/16/15]

2 – marketwatch.com/story/federal-reserve-dot-plot-still-signals-4-interest-rate-hikes-in-2016-2015-12-16 [12/16/15]

3 – cnbc.com/2015/12/18/us-markets.html [12/18/15]

4 – tradingeconomics.com/united-states/calendar [12/18/15]

5 – markets.wsj.com/us [12/18/15]

6 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=12%2F18%2F14&x=0&y=0 [12/18/15]

6 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=12%2F18%2F14&x=0&y=0 [12/18/15]

6 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=12%2F18%2F14&x=0&y=0 [12/18/15]

6 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=12%2F17%2F10&x=0&y=0 [12/18/15]

6 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=12%2F17%2F10&x=0&y=0 [12/18/15]

6 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=12%2F19%2F05&x=0&y=0 [12/18/15]

6 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=12%2F19%2F05&x=0&y=0 [12/18/15]

6 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=12%2F19%2F05&x=0&y=0 [12/18/15]      

7 – finance.yahoo.com/q/hp?s=^DJI&a=11&b=8&c=2010&d=11&e=11&f=2010&g=d [12/18/15]

8 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [12/18/15]

9 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [12/18/15]

 

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