Market Week: November 30, 2015

The Markets (as of market close November 27, 2015)

The major benchmark indexes listed here remained relatively stable for the holiday-shortened week. Mixed economic data, the Thanksgiving holiday, plus heavy consumer shopping may have slowed trading. The Dow lost about 25 points, while the S&P 500 gained almost 23 points. The Nasdaq and Russell 2000 posted gains week-on-week, while the Global Dow dropped a little over 18 points.

The price of gold (COMEX) continued to fall, selling at $1,056.10 by late Friday afternoon compared to $1,077.30 a week earlier. Crude oil (WTI) prices remained virtually the same, selling at $41.77 per barrel by week’s end. The national average retail regular gasoline price decreased to $2.094 per gallon on November 23, 2015, $0.084 below the previous week’s price of $2.178 per gallon, and $0.727 below a year ago.

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

• The “second” estimate of the gross domestic product showed the U.S. economy advanced 2.1% in the third quarter of 2015, up from an initial estimate of 1.5%. The second quarter GDP increased 3.9%. According to the Bureau of Economic Analysis, the revised gain in the third quarter is reflective of increases in personal consumption expenditures, nonresidential fixed investment, state and local government spending, residential fixed investment, and exports. Imports, which are a subtraction in the calculation of GDP, increased.
• On the heels of the GDP report came another important inflation indicator relied upon by the Fed–the core personal consumption expenditures (PCE) reading. And the latest figures from the Bureau of Economic Analysis show very little upward inflationary movement, as the PCE increased $15.2 billion, or 0.1%, in October. This follows a 0.1% PCE increase in September. Overall, personal income increased$68.1 billion, or 0.4%, while disposable personal income also increased 0.4% at $56.8 billion. Despite increases in disposable income, consumers aren’t spending commensurate with the added income, keeping inflationary trends stagnant. Unless November’s numbers reflect otherwise, October’s results do not readily support an interest rate hike in December.
• New orders for durable goods placed with U.S. manufacturers are an indication of how busy factories will be in the coming months. According to the latest advance report from the Census Bureau, new orders for manufactured durable goods in October increased $6.9 billion, or 3.0%, to $239.0 billion. This increase follows a 0.8% revised September decrease.
• However, manufacturing growth in November is slowing, according to the Markit Flash U.S. Manufacturing Purchasing Managers’ Index™ (PMI™). At 52.6, the index is still above 50, indicating monthly growth, but at a much slower pace, as the index for October was 54.1. Survey respondents indicated that growth in new orders is the slowest it’s been in over two years, citing cyclical slowdown in demand patterns and ongoing weakness in export sales.
• Home prices for September were up, according to the latest S&P/Case-Shiller Home Price Indices. The National Home Price Index, covering the entire nation, recorded a year-over-year gain with a 4.9% annual increase in September compared to a 4.6% increase in August. Before seasonal adjustment, the National Index posted a gain of 0.2% in September over August.
• The inventory of existing homes for sale is down, resulting in a drop in the sale of single-family homes, townhomes, condominiums, and co-ops for October, according to the latest figures from the National Association of Realtors®. Total existing home sales fell 3.4% to a seasonally adjusted annual rate of 5.36 million in October from 5.55 million in September. Total housing inventory at the end of October decreased 2.3% to 2.14 million existing homes available for sale, and is now 4.5% lower than a year ago (2.24 million).
• According to the Census Bureau, sales of new single-family homes in October were at a seasonally adjusted annual rate of 495,000–10.7% above the revised September rate of 447,000, and 4.9% above October 2014. The median sales price of new houses sold in October was $281,500; the average sales price was $366,000 with an estimated 226,000 new homes for sale at the end of October (a supply of about 5.5 months).
• The Conference Board Consumer Confidence Index®, which had decreased moderately in October, declined further in November. The index now stands at 90.4, down from 99.1 in October. The decline was attributable to consumers’ less favorable view of the job market and business conditions.
• Another indicator of consumer sentiment in the economy, the University of Michigan’s Surveys of Consumers Index of Consumer Sentiment, came in at 91.3 for November, somewhat ahead of October’s 90.0 reading. Consumer sentiment waned toward the latter part of November however, possibly reflective of the Paris attacks and further terrorist threats.
• In the week ended November 21, there were 260,000 initial claims for unemployment insurance, a decrease of 12,000 from the prior week’s revised level. The advance seasonally adjusted insured unemployment rate was unchanged at 1.6% for the week ended November 14, while the advance number for continuing unemployment insurance claims was 2,207,000, an increase of 34,000 from the previous week’s revised level.

Eye on the Week Ahead

Several important economic indicators are highlighted in reports during the week of November 23. Reports on existing home sales and new home sales may reveal the direction of the housing market heading to the end of the year. Imports and exports have generally been lagging for much of this year, and the latest figures are expected to reveal more of the same. The report on gross domestic product is the final take on overall economic activity available to the FOMC before its December meeting.

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/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK); www.goldprice.org (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

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