Market Week: February 24, 2015

February 23rd, 2015

The Markets

Reprieve relief: Even a temporary agreement about Greek debt helped equities edge upward. Friday’s relief rally gave the S&P 500 its third straight week of gains, though the Nasdaq continued to lead the pack. Meanwhile, as oil prices remained relatively stable at roughly $50 a barrel, the benchmark 10-year Treasury yield rose.

Market/Index

2014 Close

Prior Week

As of 2/20

Weekly Change

YTD Change

DJIA

17823.07

18019.35

18140.44

.67%

1.78%

Nasdaq

4736.05

4893.84

4955.97

1.27%

4.64%

S&P 500

2058.90

2096.99

2110.30

.63%

2.50%

Russell 2000

1204.70

1223.13

1231.79

.71%

2.25%

Global Dow

2501.66

2555.19

2579.92

.97%

3.13%

Fed. Funds

.25%

.25%

.25%

0%

0%

10-year Treasuries

2.17%

2.02%

2.13%

11 bps

-4 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 eurozone’s finance ministers agreed to a four-month extension of Greece’s current bailout, but gave Greece the weekend to produce a menu of proposed budget cuts and other economic reforms. Those proposals will be reviewed by the so-called troika that oversees the bailout (the European Commission, the International Monetary Fund, and the European Central Bank).

· Manufacturing data was mixed. According to the Federal Reserve, industrial production rose 0.2% in January and increased at an annual rate of 4.3% in Q4. However, both the Empire State and Philly Fed manufacturing surveys showed growth slowing slightly in February.

· Minutes of the most recent meeting of the Federal Reserve’s monetary policy committee showed the Fed is trying to balance international economic weakness with slow but steady domestic growth. It was the first time in nearly two years that the official statement about the meeting had mentioned problems abroad as a factor in any rate increase decision.

· A 6.7% cutback in construction of single-family homes led to a 2% decline in housing starts in January, according to the Commerce Department. However, housing starts were still 18.7% higher than a year earlier.

· Wholesale prices plummeted 0.8% in January, largely because of the 10.3% drop in energy costs. The Bureau of Labor Statistics said the decline in the wholesale inflation rate was its single biggest monthly drop since November 2009. That left the Producer Price Index roughly where it was 12 months ago.

Eye on the Week Ahead

With creditors scheduled to begin to review proposals for Greek budgetary reform, investors will watch to see how the country’s leaders attempt to navigate a tightrope between the anti-austerity sentiment that brought them to power and the eurozone’s demands. Housing data and revised numbers on U.S. Q4 economic growth also are due.

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.

Market Week: February 19, 2015

February 19th, 2015

The Markets

Domestic equities continued to shake off their winter chill as the S&P 500 and Russell 2000 squeaked into record territory once again. The Dow industrials rose above 18,000 for the first time since New Year’s Eve, and the Nasdaq’s 3% gain put the index at its highest level since March 2000. Meanwhile, oil prices that remained above $50 a barrel and not-terrible European economic data provided some reassurance about the state of global growth.

Market/Index

2014 Close

Prior Week

As of 2/13

Weekly Change

YTD Change

DJIA

17823.07

17824.29

18019.35

1.09%

1.10%

Nasdaq

4736.05

4744.40

4893.84

3.15%

3.33%

S&P 500

2058.90

2055.47

2096.99

2.02%

1.85%

Russell 2000

1204.70

1205.46

1223.13

1.47%

1.53%

Global Dow

2501.66

2506.99

2555.19

1.92%

2.14%

Fed. Funds

.25%

.25%

.25%

0%

0%

10-year Treasuries

2.17%

1.95%

2.02%

7 bps

-15 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

· Greece’s relationship with the rest of the eurozone remained a source of uncertainty after a meeting of finance ministers on Monday. Greece’s newly elected government, which promised to ease austerity measures, reportedly rejected a joint statement announcing a six-month extension of the existing bailout agreement, which is set to expire on February 28.

· A 0.7% increase in German economic growth helped the eurozone’s gross domestic product rise 0.3% (0.4% for the full 28-member European Union) during Q4 of 2014. Both were improvements from Q3, and represented annual growth of 0.9% for the eurozone and 1.4% for the EU.

· Germany, Russia, France, and Ukraine appeared to have reached a cease-fire agreement designed to end the struggle for control over eastern Ukraine. However, reports of fresh equipment and fighting immediately afterwards raised questions about whether the EU would impose additional economic sanctions against Russia next week.

· U.S. job openings in December finally surpassed their prerecession high. According to the Bureau of Labor Statistics’ Job Openings and Labor Turnover Survey, there were 5 million openings and 5.1 million new hires (the most since November 2007). Higher turnover and a willingness to change jobs suggests that workers are increasingly confident about the economy.

· After a strong Q4, retail sales dropped off in January. However, the Commerce Department said that some of the 0.8% decline was the result of lower gas prices cutting into total sales at gas stations. Excluding gas, sales were basically flat.

Eye on the Week Ahead

In a holiday-shortened week, reaction to the showdown between Greece and the rest of the eurozone is likely to remain a focus. U.S. manufacturing and housing data as well as minutes of the most recent Federal Open Market Committee meeting also are on tap.

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.

Market Week: February 10, 2015

February 10th, 2015

The Markets

Hit the reset button: A rebound in the price of oil and some promising economic data helped equities recoup their losses of the week before, returning them to roughly even for the year. As oil rose above $50 a barrel once again and investors regained confidence in equities, the yield of the benchmark 10-year Treasury note rose as prices fell.

Market/Index

2014 Close

Prior Week

As of 2/6

Weekly Change

YTD Change

DJIA

17823.07

17164.95

17824.29

3.84%

.01%

Nasdaq

4736.05

4635.24

4744.40

2.36%

.18%

S&P 500

2058.90

1994.99

2055.47

3.03%

-.17%

Russell 2000

1204.70

1165.39

1205.46

3.44%

.06%

Global Dow

2501.66

2441.41

2506.99

2.69%

.21%

Fed. Funds

.25%

.25%

.25%

0%

0%

10-year Treasuries

2.17%

1.68%

1.95%

27 bps

-22 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 added 257,000 jobs in January, and the Bureau of Labor Statistics figures for jobs created in November and December were revised upward substantially. Even more encouraging, average hourly earnings rose 12 cents to $24.75. However, because more jobs drew more workers back into the workforce, the unemployment rate was little changed at 5.7%; it has been within 0.1% of that level since October.

· The Federal Communications Commission announced proposed regulations that would treat Internet service providers much like telecommunications companies. The regulations, which would prevent providers from varying service speeds based on how much a customer paid for service, are scheduled to be voted on by the full commission at its February 26 meeting.

· More signs of slowing growth prompted China’s central bank to ease its reserve requirements for the country’s commercial banks, which should make more money available for lending. HSBC’s China Services PMI–a key measure of non-manufacturing activity–showed that growth had fallen in January to 51.8%, its lowest level in six months and just barely in expansion territory. The official National Bureau of Statistics’ non-manufacturing PMI index hit 53.4%, also indicating slower growth, while the NBS’s equivalent gauge for the manufacturing sector actually showed a slight contraction with a reading of 49.8%.

· Personal income rose 0.3% in December, according to the Bureau of Economic Analysis; adjusted for inflation, the increase was 0.5%. Meanwhile, personal consumption was down 0.3%.

· During a tour aimed at convincing European leaders to modify the terms of its bailout agreements, Greek Finance Minister Yanis Varoufakis proposed a “bridge agreement” until a more lasting solution to restructuring the country’s debt can be crafted. The European Central Bank said it would not allow Greek sovereign debt to be used as collateral for loans from the bank, but investors were partly reassured by the ECB’s authorization of emergency liquidity assistance for Greece’s central bank in case of a run on Greek banks.

· U.S. manufacturing growth slowed slightly in January, according to the Institute for Supply Management, but growth in the services sector accelerated by 0.2% during the month.

· The Commerce Department said construction spending was up 0.4% in December, with residential building accounting for most of the increase. For all of 2014, construction was 5.6% higher than in 2013, driven largely by a 10.5% increase in nonresidential construction.

· The Commerce Department said new orders at U.S. manufacturers fell 3.4% in January–the fifth straight monthly decline–but that business orders for capital equipment slipped only 0.1%.

· A 17.1% jump in the U.S. trade deficit in December put it at $46.6 billion, its highest level since November 2012, according to the Commerce Department. In part, the increase was due to a 2.2% increase in imports, which economists said resulted from strength in both the dollar and the U.S. economy as a whole.

Eye on the Week Ahead

Investors are likely to keep an eye on oil prices and the unfolding situation in Greece. Also, they may watch to see whether additional economic sanctions are in store if Russia ignores German Prime Minister Angela Merkel’s Wednesday deadline to present a plan for resolving the conflict in Ukraine.

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.

Merv’s word: Februay 1st, 2015

February 4th, 2015