FED WAITS TO RAISE INTEREST RATES
Federal Reserve officials decided against a rate hike last week, but two details in the central bank’s latest policy statement suggested an upward move was near. One, the Federal Open Market Committee voted 7-3 against raising the federal funds rate – an unusually close margin. Two, the Fed’s new dot-plot forecast showed consensus for a rate increase before the end of 2016. “Our decision [to wait] does not reflect a lack of confidence in the economy,” Fed chair Janet Yellen told the media after the announcement. “We’re generally pleased with how the U.S. economy is doing.”1
FEWER HOUSING STARTS, LESS HOMEBUYING
August saw existing home sales dip 0.9%; as the National Association of Realtors delivered that news, it also revised its July sales calculation to a decline of 3.4%. A Census Bureau report showed housing starts falling 5.8% last month, and building permits decreasing 0.4% following an 0.8% retreat in July.2
OIL GAINS FOR WEEK, EVEN WITH 4% FRIDAY FALL
WTI crude settled Friday at $44.48 on the NYMEX, even after the price slipped 4% in one trading day. The worst daily drop for the commodity since July 13 did not stop crude from posting a 2% weekly gain.3
TURBULENCE, BUT ALSO AN ADVANCE
Stocks pushed through volatility and gained ground last week. Across five trading days, the Dow Jones Industrial Average rose 0.76%; the Nasdaq Composite, 1.17%; and the S&P 500, 1.19%. The three indices closed, as follows, Friday: Dow, 18,261.45; Nasdaq, 5,305.75; S&P, 2,164.69. Incidentally, the Dow Jones Utility Average ended the week at +20.15% YTD.4
THIS WEEK: Monday brings August new home sales data, earnings from Carnival and Thor Industries, and the first presidential debate. The Conference Board’s September consumer confidence index and the July Case-Shiller home price index arrive Tuesday, plus quarterly results from Cintas and Nike. On Wednesday, Fed chair Janet Yellen testifies on bank supervision and regulation before the House Financial Services Committee, the latest durable goods orders report appears, and Paychex and Pier 1 present quarterly results. Thursday, Janet Yellen speaks at a Kansas City Fed conference, NAR issues its August pending home sales report, the final number on Q2 GDP comes out of Washington, and new initial claims figures appear, along with earnings from ConAgra Foods, Costco, and PepsiCo. August personal spending data and the final September consumer sentiment index from the University of Michigan take the spotlight Friday.
|% CHANGE||Y-T-D||1-YR CHG||5-YR AVG||10-YR AVG|
|REAL YIELD||9/23 RATE||1 YR AGO||5 YRS AGO||10 YRS AGO|
|10 YR TIPS||0.05%||0.64%||0.10%||2.27%|
Sources: wsj.com, bigcharts.com, treasury.gov – 9/23/164,5,6,7
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.
“Learning is not attained by chance. It must be sought for with ardor and attended to with diligence.”
– Abigail Adams
By tracking a company’s typical month-to-month sales cycle, a business owner can identify when to put money into reserve to see a business through leaner months on the way to boom times.
How can you take three toothpicks and make them into the number nine?
Last week’s riddle:
I am soft and seldom upright. I lose a head in the morning, but I get it back at night. What am I?
Last week’s answer:
Please feel free to forward this article to family, friends or colleagues. If you would like us to add them to our distribution list, please reply with their address. We will contact them first and request their permission to add them to our list.
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 – latimes.com/business/la-fi-federal-reserve-meeting-20160921-snap-story.html [9/21/16]
2 – investing.com/economic-calendar/ [9/23/16]
3 – marketwatch.com/story/oil-prices-fall-as-investors-cash-in-on-gains-ahead-of-next-weeks-opec-meeting-2016-09-23/ [9/23/16]
4 – markets.wsj.com/us [9/23/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=9%2F23%2F15&x=0&y=0 [9/23/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=9%2F23%2F15&x=0&y=0 [9/23/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=9%2F23%2F15&x=0&y=0 [9/23/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=9%2F23%2F11&x=0&y=0 [9/23/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=9%2F23%2F11&x=0&y=0 [9/23/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=9%2F23%2F11&x=0&y=0 [9/23/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=9%2F22%2F06&x=0&y=0 [9/23/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=9%2F22%2F06&x=0&y=0 [9/23/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=9%2F22%2F06&x=0&y=0 [9/23/16]
6 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [9/23/16]
7 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [9/23/16]