Weekly Economic Update 5/9/2016

Weekly Economic Update 5/9/2016

APRIL JOBS REPORT RAISES QUESTIONS

Employers hired 160,000 more workers than they let go last month, and that net job gain was the smallest since September. Does this suggest a job market losing steam, or does it hint at an economy nearing full employment? The hiring number may make the Federal Reserve reconsider the possibility of a June interest rate hike. Average hourly wages improved to $25.53 in April, up 2.5% year-over-year. While the main jobless rate remained at 5.0%, the U-6 rate, counting both the unemployed and underemployed, declined 0.1% to 9.7%.1

MORE EXPANSION IN FACTORY & SERVICE SECTORS

Both of the Institute for Supply Management’s purchasing manager indices were above the critical 50 level (indicating growth) in April. ISM’s manufacturing index came in at 50.8, its non-manufacturing index at 55.7. Economists surveyed by MarketWatch expected a 51.4 reading for the factory PMI and a 54.7 reading for the services PMI.2

OIL SETTLES UNDER $45

Light sweet crude closed at $44.66 Friday on the NYMEX, down 2.7% for the week on perceptions that near-term supply was exceeding demand. Gold got a boost from the disappointing jobs data, settling at $1,294.00 Friday to go up 0.3% for the week.3,4

 WALL STREET SEES A MINOR WEEKLY RETREAT

Across May 2-6, the S&P 500 lost 0.40% to 2,057.14; the Nasdaq Composite, 0.82% to 4,736.16; and the Dow Jones Industrial Average, 0.19% to 17,740.63. Headwinds included the underwhelming jobs report, the weaker-than-expected ISM factory PMI and the week’s dip in oil prices.5

THIS WEEK: On Monday, earnings from Chimerix, Hertz Global, Nautilus, Novatel Wireless, TeamHealth, and Tyson Foods arrive. Dean Foods, Electronic Arts, Norwegian Cruise Line, Planet Fitness, Tribune Media, and Walt Disney Co. present earnings Tuesday. Wednesday, the earnings parade includes announcements from Aramark, Jack in the Box, Macy’s, NetEase, Weibo, and Wendy’s. Thursday, the latest initial claims figures complement earnings news from Dillard’s, Kohl’s, Nordstrom, Ralph Lauren, Shake Shack, and Symantec. April retail sales data, the April Producer Price Index, and the initial May consumer sentiment index from the University of Michigan all appear Friday, along with Q1 results from J.C. Penney.

% CHANGE Y-T-D 1-YR CHG 5-YR AVG 10-YR AVG
DJIA +1.81 -0.57 +8.07 +5.32
NASDAQ -5.42 -3.73 +13.50 +10.22
S&P 500 +0.65 -1.11 +10.70 +5.52
REAL YIELD 5/6 RATE 1 YR AGO 5 YRS AGO 10 YRS AGO
10 YR TIPS 0.18% 0.34% 0.71% 2.45%

Sources: wsj.com, bigcharts.com, treasury.gov – 5/6/166,7,8,9

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.

WEEKLY QUOTE

“He not busy being born is busy dying.”

     – Bob Dylan

WEEKLY TIP

In your business budget, think of your marketing costs as a percentage of sales, somewhere between 2-10%. If you are building a brand, those costs might need to approach or exceed 20% of sales.

WEEKLY RIDDLE

I can easily be divided. Within me, you will notice 13 hearts, but no organs. What am I?

Last week’s riddle:

It cannot see and it feels no pain, despite matter constantly going through its eye. What is it?

Last week’s answer:

A sewing needle.

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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.

Citations.

1 – forbes.com/sites/samanthasharf/2016/05/06/jobs-report-u-s-adds-160000-jobs-in-april-unemployment-rate-steady-at-5/ [5/6/16]

2 – marketwatch.com/economy-politics/calendars/economic [5/6/16]

3 – marketwatch.com/story/oil-prices-dip-as-focus-returns-to-global-supply-glut-2016-05-06/ [5/6/16]

4 – marketwatch.com/story/gold-stocks-step-higher-ahead-of-jobs-report-2016-05-06 [5/6/16]

5 – markets.on.nytimes.com/research/markets/usmarkets/usmarkets.asp [5/6/16]

6 – markets.wsj.com/us [5/6/16]

7 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=5%2F6%2F15&x=0&y=0 [5/6/16]

7 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=5%2F6%2F15&x=0&y=0 [5/6/16]

7 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=5%2F6%2F15&x=0&y=0 [5/6/16]

7 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=5%2F6%2F11&x=0&y=0 [5/6/16]

7 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=5%2F6%2F11&x=0&y=0 [5/6/16]

7 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=5%2F6%2F11&x=0&y=0 [5/6/16]

7 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=5%2F5%2F06&x=0&y=0 [5/6/16]

7 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=5%2F5%2F06&x=0&y=0 [5/6/16]

7 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=5%2F5%2F06&x=0&y=0 [5/6/16]

8 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [5/6/16]

9 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [5/6/16]

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