Market volatility is constant and inescapable. Unlike portfolio volatility, you cannot plan to try and control it. So, embrace it, and the opportunities it may present to you.
YELLEN HINTS STRONGLY AT A RATE HIKE
Thursday, Federal Reserve chair Janet Yellen told Congress that the central bank could raise the benchmark interest rate “relatively soon,” calling current monetary policy merely “moderately accommodative.” She added that Fed officials envision “only gradual increases in the federal funds rate over time to achieve and maintain maximum employment and price stability.” Friday, the Fed Rate Monitor Tool at Investing.com put the possibility of a December rate hike at 91%.1,2
FRESH SIGNS OF A HEALTHY ECONOMY
Two economic indicators really stood out last week. Headline and core retail sales increased 0.8% in October, according to the Census Bureau (which also revised the September retail sales gain north to 1.0%). Housing starts advanced 25.5% last month, the Bureau also noted; this more than offset a 9.5% September dip.3
CONSUMER PRICES ROSE 0.4% IN OCTOBER
This change in the Consumer Price Index took its year-over-year increase to 1.6%. A mere 0.1% monthly gain in the core CPI left its 12-month advance at 2.1%. Producer prices were flat last month, with core prices retreating 0.2%; in the year ending in October, the headline Producer Price Index rose only 0.8% with the core PPI advancing 1.2%.3
BIG THREE SEE ANOTHER WEEK OF GAINS
Wall Street was still very bullish last week, and the Nasdaq Composite set the pace among the three major indices. The tech benchmark added 1.61% in five days to settle at 5,321.51 Friday. Smaller weekly gains came for the Dow Jones Industrial Average (0.11% to 18,867.93) and S&P 500 (0.81% to 2,181.90). WTI crude ended the week at $45.56 on the NYMEX; gold, at $1,208.50 on the COMEX.4
On Monday, Jack in the Box, Palo Alto Networks, Tyson Foods, and Weibo present earnings. October existing home sales figures are out Tuesday, along with earnings from Barnes & Noble, Burlington Stores, Campbell Soup, Chico’s FAS, Cracker Barrel Old Country Store, Dollar Tree, DSW, GameStop, Hormel Foods, Hewlett Packard Enterprise, Kirkland’s, Medtronic, Urban Outfitters, and Valspar. Wednesday is filled with major reports: Wall Street looks at October new home sales and capital goods orders, initial jobless claims, the final November household sentiment index from the University of Michigan and the minutes from the November Federal Reserve policy meeting, along with Q3 results from Deere & Co. On Thursday, U.S. stock and bond markets are closed for Thanksgiving. Friday, Wall Street returns for a half-day of trading with no major earnings reports or news releases scheduled.
Sources: wsj.com, bigcharts.com, treasury.gov – 11/18/164,5,6,7
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.
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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.
1 – marketwatch.com/story/yellen-says-fed-may-hike-interest-rates-relatively-soon-2016-11-17 [11/17/16]
2 – nasdaq.com/article/us-stocks-slip-as-investors-contemplate-future-fed-rate-hikes-cm711485 [11/18/16]
3 – investing.com/economic-calendar/ [11/18/16]
4 – markets.wsj.com/us [11/18/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=11%2F18%2F15&x=0&y=0 [11/18/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=11%2F18%2F15&x=0&y=0 [11/18/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=11%2F18%2F15&x=0&y=0 [11/18/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=11%2F18%2F11&x=0&y=0 [11/18/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=11%2F18%2F11&x=0&y=0 [11/18/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=11%2F18%2F11&x=0&y=0 [11/18/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=11%2F17%2F06&x=0&y=0 [11/18/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=11%2F17%2F06&x=0&y=0 [11/18/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=11%2F17%2F06&x=0&y=0 [11/18/16]
6 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [11/18/16]
7 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [11/18/16]
Topics: Weekly Economic Update