Market Week: November 26, 2014

November 25th, 2014

The Markets

Unexpected changes in monetary policy in China and support for additional stimulus in Europe helped propel the Dow industrials and S&P 500 to fresh record highs on Friday. Large caps, many of which earn a substantial portion of their revenues overseas, benefitted most, while the Nasdaq and Russell 2000 small caps ended with little changed.

Market/Index

2013 Close

Prior Week

As of 11/21

Weekly Change

YTD Change

DJIA

16576.66

17634.74

17810.06

.99%

7.44%

Nasdaq

4176.59

4688.54

4712.97

.52%

12.84%

S&P 500

1848.36

2039.82

2063.50

1.16%

11.64%

Russell 2000

1163.64

1173.80

1172.42

-.12%

.75%

Global Dow

2484.10

2529.28

2559.75

1.20%

3.05%

Fed. Funds

.25%

.25%

.25%

0%

0%

10-year Treasuries

3.04%

2.32%

2.31%

-1 bps

-73 bps

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

· Tacitly acknowledging signs of slowing growth, China’s central bank unexpectedly cut two key interest rates to try to stimulate domestic consumption. Meanwhile, European
Central Bank President Mario Draghi once again said the ECB is ready to adopt additional stimulus measures if necessary to fight the threat of low inflation.

· President Obama announced a program that will defer deportation for undocumented immigrants and allow them to receive work permits if they have been in the country for
at least five years, have no criminal record, and/or have children who are American citizens. The program would not grant permanent resident status or provide for coverage under the Affordable Care Act. However, those affected would receive Social Security
cards and would have to pass background checks and pay taxes. Republican congressional leaders criticized the action and said they plan to address immigration policy in 2015. House Republicans also filed suit against the Obama administration, seeking to overturn
two provisions of the Affordable Care Act.

· After a second quarter of contraction, Japan is now officially in recession. The country’s Cabinet Office announced that gross domestic product fell at an annualized rate
of 1.6% in the third quarter. Though that was better than Q2’s annualized 7.3% decline, it put pressure on Prime Minister Shinzo Abe to consider postponing a second round of sales tax increases scheduled for October. The higher taxes were designed to attack
Japan’s high sovereign debt.

· Minutes of the Federal Reserve’s monetary policy committee’s most recent meeting showed that last month’s end to bond-buying efforts came about despite concerns about
the potential impact of slowing growth overseas on the U.S. economy. The committee also will watch for signs of falling inflation, which could potentially delay any rate increase.

·
After a strong increase in September, industrial production slumped 0.1% in October. The Federal Reserve Board said that though manufacturing output was up, strong declines
in mining and utilities offset it. Meanwhile, both the Empire State and Philly Fed manufacturing surveys showed business activity accelerating in November.

· Falling gas prices helped offset increases in housing costs, leaving the Consumer Price Index relatively unchanged in October. That put the inflation rate for the last
12 months at 1.7%, according to the Bureau of Labor Statistics. Meanwhile, wholesale prices rose 0.2% during the month, putting the wholesale inflation rate for the last 12 months at 1.5%–the lowest annualized rate since February.

· Housing starts slipped 2.8% during October. However, the Commerce Department said they were 7.8% higher than the previous October, and building permits were up 4.8% for
the month. Meanwhile, existing home sales were not only up 1.5% in October, but the year-over-year gain was at its highest level since October 2013. The National Association of Realtors® said the median home-resale price–$208,300–is 5.5% higher
than it was in October 2013.

Eye on the Week Ahead

With many traders heading out for the Thanksgiving holiday, light trading volumes could exaggerate any market movements during the holiday-shortened week ahead, which includes revisions to U.S. GDP.

Data sources: Economic: Based on data from U.S. Bureau of Labor Statistics (unemployment, inflation); U.S. Department of Commerce (GDP, corporate profits, retail sales, housing); S&P/Case-Shiller
20-City Composite Index (home prices); Institute for Supply Management (manufacturing/services). Performance: 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.

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.

Market Week: November 19, 2014

November 18th, 2014

The Markets

Though trading remained within a relatively narrow range, especially compared with recent weeks, the S&P 500 nevertheless managed to hit a new record high, while the Nasdaq’s weekly gain kept it in the lead year-to-date. A fresh drop in oil prices brought the price of West Texas Intermediate crude to roughly $75 a barrel.

Market/Index

2013 Close

Prior Week

As of 11/14

Weekly Change

YTD Change

DJIA

16576.66

17573.93

17634.74

.35%

6.38%

Nasdaq

4176.59

4632.53

4688.54

1.21%

12.26%

S&P 500

1848.36

2031.89

2039.82

.39%

10.36%

Russell 2000

1163.64

1173.32

1173.80

.04%

.87%

Global Dow

2484.10

2516.73

2529.28

.50%

1.82%

Fed. Funds

.25%

.25%

.25%

0%

0%

10-year Treasuries

3.04%

2.32%

2.32%

0 bps

-72 bps

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 United States and China agreed to take steps to combat climate change. For the first time, China agreed to cap its output of greenhouse gases no later
than 2030 and increase its reliance on zero-emission energy sources to 20% by the same deadline. The United States will cut emissions by 17% by 2020 and by 28% by 2025, which would double the current pace at which it is reducing carbon emissions.

·
Despite growth in some of the eurozone’s weakest members, the region as a whole was hampered by sluggishness in the larger economies. The eurozone as a
whole grew 0.2% during the third quarter, according to the European Union’s statistical agency. Germany expanded just 0.1%, while Italy’s economy contracted for the 11th time in the last 13 quarters. However, Spain’s GDP was up 0.5% and Greece’s increased
by 0.7%–the eurozone’s highest Q3 growth rate.

·
President Obama urged the Federal Communications Commission to regulate the Internet as a public utility and adopt rules supporting so-called “net neutrality,”
which would prevent broadband companies from manipulating transmission speeds or offering a so-called “fast lane” for customers willing to pay more.

·
A dispute in the publishing world between Amazon and publisher Hachette ended a months-long dispute over who would set prices for books sold through Amazon.
The agreement reportedly would allow Hachette to control the price of its books but give the publisher an incentive to keep prices low.

·
Lower gas prices may have helped U.S. retail sales rise 0.3% in September. According to the Commerce Department, sales were up 4.1% from a year ago.

·
The Bureau of Labor Statistics’ Job Openings and Labor Turnover Survey showed that the number of both new hires and people quitting their jobs increased
in September. The number of new hires hit its highest level since December 2007 and the quits rate–seen as an indicator of workers’ confidence in their ability to get another job– was higher than it’s been since April 2008.

Eye on the Week Ahead

In the wake of the end of quantitative easing, minutes of the most recent Federal Open Market Committee meeting will be of interest,
especially if there are any clues to committee members’ thinking about future interest rate increases. Also on tap are data on the manufacturing sector and inflation.

Data sources: Economic: Based on data from U.S. Bureau of Labor Statistics (unemployment, inflation); U.S. Department of Commerce
(GDP, corporate profits, retail sales, housing); S&P/Case-Shiller 20-City Composite Index (home prices); Institute for Supply Management (manufacturing/services). Performance: 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.

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.

Market Week: November 11, 2014

November 10th, 2014

The Markets

In the wake of the midterm election results that gave Republicans control of both houses of Congress, domestic equities took a break from their recent volatility. Though the S&P 500’s increase was relatively
modest, it still managed to regain the 2,000 level and go on to set three fresh record highs in the process. The Dow industrials not only set their own new record but also had the week’s biggest gain, while the Nasdaq and Russell 2000 ended the week basically
flat. Declines in oil prices continued to make headlines as the price of West Texas Intermediate crude fell below $80 a barrel.

Market/Index

2013 Close

Prior Week

As of 11/7

Weekly Change

YTD Change

DJIA

16576.66

17390.52

17573.93

1.05%

6.02%

Nasdaq

4176.59

4630.74

4632.53

.04%

10.92%

S&P 500

1848.36

2018.05

2031.89

.69%

9.93%

Russell 2000

1163.64

1173.51

1173.32

-.02%

.83%

Global Dow

2484.10

2527.85

2516.73

-.44%

1.31%

Fed. Funds

.25%

.25%

.25%

0%

0%

10-year Treasuries

3.04%

2.35%

2.32%

-3 bps

-72 bps

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 U.S. unemployment rate edged down 0.1% to 5.8% in October, according to the Bureau of Labor Statistics. The economy added 214,000 jobs, most of them in restaurants,
retail, and health care. The new jobs figure was slightly lower than the 222,000 monthly average so far this year. Meanwhile, October’s 3-cent increase brought the average hourly wage to $24.57; that average is up just under 2% over the last 12 months.

·
Saudi Arabia announced it would cut its price for oil sold to U.S. customers and raise prices for Asian customers. On top of increased Alaskan oil production during October,
that caused the price of crude oil to drop to its lowest level in more than two years. The Organization of the Petroleum Exporting Countries said it expects demand for OPEC crude oil to fall nearly 2 million barrels a day to 28.2 million barrels a day by the
end of 2017.

·
Lower than expected growth in Germany, France, and Italy led the European Commission to cut its growth forecast for next year. The commission said it now sees the eurozone’s
2014 GDP increasing by 0.8% rather than the 1.2% forecast last spring, while the 28-member EU as a whole is now expected to grow 1.3%. The forecast for 2015 is 1.1% growth for the eurozone and 1.5% for the EU. Eurozone inflation is seen stalling at 0.5% this
year and 0.8% next year–far below the European Central Bank’s target 2%. Nevertheless, the European Central Bank left its key interest rate unchanged, though ECB President Mario Draghi once again said fresh stimulus measures will be adopted if necessary.

·
A sluggish global economy also affected the U.S. trade deficit, according to the Bureau of Economic Analysis. A 1.5% decline in exports to the rest of the world was a
major reason for September’s nearly 7% increase in the trade gap.

·
U.S. manufacturing activity declined 0.6% in September, according to the Commerce Department. However, the Institute for Supply Management’s manufacturing index suggested
a course reversal in October; the index rose 2.4%, and the 59% reading represented the 65th straight month of expansion.

·
U.S. construction spending was down 0.4% in September as private and public construction fell 0.1% and 1.3% respectively. The Commerce Department said it was the fourth
straight monthly decline in private construction spending.

Eye on the Week Ahead

Data from the retail sector will dominate what little economic information is on tap next week. The Job Openings and Labor Turnover Survey report also may get extra attention for its implications for
the employment picture.

Data sources: Economic: Based on data from U.S. Bureau of Labor Statistics (unemployment, inflation); U.S. Department of Commerce (GDP, corporate profits, retail sales, housing); S&P/Case-Shiller
20-City Composite Index (home prices); Institute for Supply Management (manufacturing/services). Performance: 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.

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.

Market Week: November 4, 2014

November 3rd, 2014

The Markets

A robust U.S. GDP reading coupled with the prospect of greater economic stimulus in Japan and additional positive corporate earnings reports helped drive both the Dow industrials and the S&P 500 to new record highs. The small caps of the Russell 2000 saw their third straight week of solid gains, which gave the index a positive year-to-date return once again.

Gold tumbled nearly $60 an ounce, hurt in part by the promise of additional monetary stimulus by the Bank of Japan. And the benchmark 10-year Treasury retreated as investors regained an appetite for equities risk.

Market/Index

2013 Close

Prior Week

As of 10/31

Weekly Change

YTD Change

DJIA

16576.66

16805.41

17390.52

3.48%

4.91%

Nasdaq

4176.59

4483.72

4630.74

3.28%

10.87%

S&P 500

1848.36

1964.58

2018.05

2.72%

9.18%

Russell 2000

1163.64

1118.82

1173.51

4.89%

.85%

Global Dow

2484.10

2470.50

2527.85

2.32%

1.76%

Fed. Funds

.25%

.25%

.25%

0%

0%

10-year Treasuries

3.04%

2.29%

2.35%

6 bps

-69 bps

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 U.S. economy grew at an annualized rate of 3.5% during the third quarter, according to the initial estimate by the Bureau of Economic Analysis. That was slightly less than Q2’s 4.6%, but still much stronger than during 2014’s first quarter.

· As expected, the Federal Reserve’s monetary policy committee finally called a halt to new bond purchases, which have helped support the economy for the last six years by making credit easier to get. The statement said that despite improvements in the labor market and general economy, the committee sees inflation being held in check by lower energy prices. Therefore, it still anticipates the Fed funds interest rate will remain at its current level for “a considerable time.” However, that timetable could be accelerated by unanticipated upticks in inflation and/or employment (or pushed back if either declines).

· As Fed bond purchases came to an end, the Bank of Japan went in the opposite direction, unexpectedly announcing it will expand its securities purchases. The move is designed to try to reduce the potential for deflation (Japan’s 1% annual inflation rate is far below the central bank’s 2% target). The added buying could make Japanese exports cheaper and help the country’s economy recover from the effects of a sales tax increase in the spring.

· Durable goods orders fell 1.3% in September, according to the Commerce Department. However, much of that was due to a 3.7% decline in the typically volatile transportation sector; excluding transportation, new orders were down 0.2%.

· Home prices rose in August, but the annual growth rate was the slowest in almost two years. The 0.2% increase in the S&P/Case-Shiller 20-City Composite Index represented a 5.6% annual increase from the previous August, down from July’s 6.7%.

· Despite a 0.2% increase in personal income in the United States during September, personal consumption fell by an equal amount, according to the Bureau of Economic Analysis. The drop in personal consumption was the first monthly decline since January.

Eye on the Week Ahead

With quantitative easing officially at an end, what’s left of the Q3 corporate earnings season could receive more attention. And as the Fed watches the labor market closely to determine the timing of rate increases, investors will do the same with Friday’s jobs report. The results of Tuesday’s midterm elections also could influence the mood of the markets.

Data sources: Economic: Based on data from U.S. Bureau of Labor Statistics (unemployment, inflation); U.S. Department of Commerce (GDP, corporate profits, retail sales, housing); S&P/Case-Shiller 20-City Composite Index (home prices); Institute for Supply Management (manufacturing/services). Performance: 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.

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.