Market Week: April 28, 2015

April 27th, 2015

The Markets

At long last: Proverbial corks were flying last week as the Nasdaq finally broke its 15-year-old record, set in March 2000, to close the week at 5092.08. The 3.25% weekly jump was driven largely by earnings reports from several large technology stalwarts. The S&P 500 also posted a new high, as indexes other than the Nasdaq posted weekly gains ranging from 1.25% to 1.75%.

Market/Index

2014 Close

Prior Week

As of 4/24

Weekly Change

YTD Change

DJIA

17823.07

17826.30

18080.14

1.42%

1.44%

Nasdaq

4736.05

4931.81

5092.08

3.25%

7.52%

S&P 500

2058.90

2081.18

2117.69

1.75%

2.86%

Russell 2000

1204.70

1251.86

1267.54

1.25%

5.22%

Global Dow

2501.66

2578.82

2623.79

1.74%

4.88%

Fed. Funds

.25%

.25%

.25%

0%

0%

10-year Treasuries

2.17%

1.87%

1.93%

6 bps

-24 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

· Existing home sales jumped 6.1% in March to their highest level in 18 months, reported the National Association of Realtors®. Sales rose to a seasonally adjusted 5.19 million homes, up from 4.89 million homes in February. Sales in March were 10.4% higher than a year prior, and March’s jump was the largest monthly increase since December 2010.

· Sales of new single-family homes dropped 11.4% in March, to a seasonally adjusted 481,000 units, according to estimates reported by the U.S. Census Bureau and the Department of Housing and Urban Development. The median sales price of new homes sold in March was $277,400, while the average price was $343,300.

· Durable goods orders increased 4% in March to $240.2 billion, reported the Commerce Department. Transportation equipment, up 13.5% to $80.3 billion, led the increase. Within the transportation category, nondefense aircraft and parts drove the increase, up 30.6% from February. Excluding transportation, orders fell 0.2% for the month.

Eye on the Week Ahead

As investors monitor the Nasdaq and S&P 500 to see if their lofty levels can be sustained, markets may respond to several key economic news items, including a Federal Open Market Committee announcement, the advance estimate of the Q1 gross domestic product (GDP) numbers, pending home sales, personal income and outlays figures, and the ISM Manufacturing Index reading.

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: April 20, 2015

April 20th, 2015

The Markets

Investor fears returned with a vengeance on Friday, as markets tumbled across the globe. Domestic indexes were down 1% or more for the week, while the Global Dow fell nearly a quarter percent. The yield on the 10-year Treasury fell to 1.87%. Observers attributed Friday’s stock market losses to a series of lackluster earnings reports in the United States, combined with jitters associated with a possible Greek debt default and China’s issuance of new stock trading regulations. Despite the drops, stocks are still in positive territory for the year.

Market/Index

2014 Close

Prior Week

As of 4/17

Weekly Change

YTD Change

DJIA

17823.07

18057.65

17826.30

-1.28%

0.02%

Nasdaq

4736.05

4995.98

4931.81

-1.28%

4.13%

S&P 500

2058.90

2102.06

2081.18

-0.99%

1.08%

Russell 2000

1204.70

1264.77

1251.86

-1.02%

3.91%

Global Dow

2501.66

2584.38

2578.82

-0.22%

3.08%

Fed. Funds

.25%

.25%

.25%

0%

0%

10-year Treasuries

2.17%

1.96%

1.87%

-9 bps

-30 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

· Retail sales saw a monthly gain of 0.9% in March, and were 1.3% higher than a year prior, the Commerce Department reported. Sales for the first quarter of 2015 were 2.2% higher than the same period a year ago. March’s largest jumps were seen in motor vehicle and parts dealers (+2.7%) and building material and garden equipment and supplies dealers (+2.1%). Year-over-year, the biggest gainers were food services and drinking places (+7.7%) and building material and garden equipment and supplies dealers (+6.3%).

· According to the Bureau of Labor Statistics (BLS), the Producer Price Index rose a seasonally adjusted 0.2% in March from February, the first monthly increase since October. The majority of the rise was due to a 0.3% gain in prices of final demand goods. Final demand services were up 0.1% for the month. In the 12 months ended in March, the PPI is down 0.8% on an unadjusted basis.

· In its semiannual World Economic Outlook Report, the International Monetary Fund projected global economic growth to be 3.5% in 2015, up 0.1% from 2014’s 3.4%. The organization expects growth in advanced economies to be 2.4% in 2015 vs. 1.8% last year, while emerging markets would see lower growth in 2015 (4.3% vs. 4.6% in 2014). Calling expectations “moderate and uneven,” Olivier Blanchard, IMF Economic Counsellor and Director of Research, attributed these figures to a “complex set of forces shaping the world economy,” including lower oil prices, evolving exchange rates, lower potential growth (defined as the way at which the economy can grow if the factors of production are fully employed) and prolonged challenges from the financial crisis and the euro crisis (or “crisis legacies”).

· Industrial production fell 0.6% in March, the largest monthly decline since October. The index also marked the first quarterly drop since Q2 2009, falling 1% for the three months ended in March. The quarterly result was attributed to a 60% (annualized) decrease in oil and gas well drilling and servicing, as well as a 1.2% decline in manufacturing production.

· The Philly Fed reported modest manufacturing growth in April. By contrast, the Empire State Manufacturing Survey reported that business activity in New York was flat for the month.

· The Commerce Department reported that housing starts rose at a tepid 2% rate in March to 926,000 units–2.5% lower than the March 2014 figure. While the number of structures that broke ground in the Northeast more than doubled, and the figure in the Midwest also grew by a healthy margin, starts in the South and West fell during the month.

· Inflation, as measured by the Consumer Price Index (CPI), ticked up 0.2% in March, matching February’s rise, reported the BLS. The increase was driven by rises in the energy and shelter indexes, which offset a dip in the food index. Excluding food and energy, the CPI rose 0.2% for the third consecutive month.

· Meanwhile, consumers seem to be getting more confident in their buying power, as the University of Michigan’s Index of Consumer Sentiment rose 3.1% between March and April–14% higher than the same period a year ago and the second highest reading since 2007. Moreover, the average over the past five months was higher than at any time since May 2004.

· By midweek, oil prices reached their highest level so far in 2015, after the International Energy Agency forecast increasing demand for oil worldwide. The IEA attributed its revised figures to a cold winter and a “steadily improving global economic backdrop.”

Eye on the Week Ahead

Investors will keep a close eye on proceedings in Europe as Greece continues to negotiate with its creditors, particularly during a key meeting at week’s end. On the domestic front, reports on existing and new home sales and orders for durable goods 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: April 15, 2015

April 15th, 2015

The Markets

Despite a weaker-than-expected jobs report released on Good Friday, a day when markets were closed, last week proved to be a positive one for stocks. Driven in part by a major strategic announcement released by General Electric (GE) on Friday, large caps ended the week up more than 1.5%, while a 2.23% gain propelled the Nasdaq to retake the year-to-date top spot. The dollar, which had been falling in recent weeks, rebounded after Federal Open Market Committee (FOMC) meeting minutes and a strong unemployment claims report reinvigorated speculation surrounding a potential interest rate hike in the coming months.

Market/Index

2014 Close

Prior Week

As of 4/10

Weekly Change

YTD Change

DJIA

17823.07

17763.24

18057.65

1.66%

1.32%

Nasdaq

4736.05

4886.94

4995.98

2.23%

5.49%

S&P 500

2058.90

2066.96

2102.06

1.70%

2.10%

Russell 2000

1204.70

1255.66

1264.77

0.73%

4.99%

Global Dow

2501.66

2547.25

2584.38

1.46%

3.31%

Fed. Funds

.25%

.25%

.25%

0%

0%

10-year Treasuries

2.17%

1.85%

1.96%

11 bps

-21 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

· On Friday, GE announced that it would sell off nearly all of its GE Capital division. The news helped spur large-cap indices to a tidy gain for the week.

· The Institute for Supply Management reported continued growth in the non-manufacturing (services) sector in March, albeit at a slower rate than in the previous month. The Non-Manufacturing ISM® Report on Business® registered 56.5% in March, 0.4% lower than February’s reading of 56.9%. Readings above 50 indicate growth. Fourteen of 18 industries reported expansion in March.

· Job openings reached the highest level in 14 years in February, reported the Bureau of Labor Statistics (BLS). At 5.1 million job openings, the number represented a modest increase over January’s 5.0 million figure. Hires fell slightly, to 4.9 million in February from January’s 5.0 million. Separations also declined modestly, to 4.6 million from the previous month’s 4.8 million. All numbers were reported in the BLS’s “Job Openings and Labor Turnover Report” for February 2015.

· The BLS also reported that weekly unemployment insurance claims totaled 281,000, resulting in a four-week moving average of 282,250–the lowest four-week average in nearly 15 years.

· Minutes from the March meeting of the Federal Open Market Committee summarized members’ assessment that economic growth has moderated somewhat. Noting improvements in the labor market between the January and March meetings, the Committee also indicated that household spending is on the rise, due in part to stronger purchasing power attributed to declining energy prices. Reiterating a position to hold off on interest rate hikes for the time being, the statement noted, “The Committee anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen further improvement in the labor market and is reasonably confident that inflation will move back to its 2% objective over the medium term. This change in the forward guidance does not indicate that the Committee has decided on the timing of the initial increase in the target range.”

· There was a collective sigh of relief heard across the Atlantic toward week’s end, as Greece met an important deadline in repaying part of its International Monetary Fund debt. The payment, made last Thursday, was worth approximately €450 million.

· Import prices fell 0.3% in March, following a 0.2% increase in February, reported the Bureau of Labor Statistics. Import prices are down 10.5% year over year, the largest 12-month decline since prices fell 12% in the year ended September 2009. After declining 47.6% between June 2014 and January 2015, fuel import prices rose for the second consecutive month in March, posting an increase of 0.4%. Export prices rose 0.1% after a decline of 0.2% in February.

Eye on the Week Ahead

As earnings season kicks into high gear, investors will be measuring market response amidst a torrent of economic data, including reports on retail sales, inflation, housing, consumer sentiment, and manufacturing.

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: April 9, 2015

April 8th, 2015

The Markets

The Russell 2000 continued to be more resilient than its domestic large-cap brethren, which ended the week little changed. The small caps even managed to steal the year-to-date lead from the Nasdaq, which had the week’s weakest performance. The benchmark 10-year Treasury yield fell as prices rose after a disappointing jobs report spurred hopes that it might encourage the Fed to postpone rate hikes.

Market/Index

2014 Close

Prior Week

As of 4/3

Weekly Change

YTD Change

DJIA

17823.07

17712.66

17763.24

.29%

-.34%

Nasdaq

4736.05

4891.22

4886.94

-.09%

3.19%

S&P 500

2058.90

2061.02

2066.96

.29%

.39%

Russell 2000

1204.70

1240.41

1255.66

1.23%

4.23%

Global Dow

2501.66

2520.49

2547.25

1.06%

1.82%

Fed. Funds

.25%

.25%

.25%

0%

0%

10-year Treasuries

2.17%

1.95%

1.85%

-10 bps

-32 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 addition of 126,000 jobs to the U.S. economy–the weakest monthly gain since December 2013–left the unemployment rate unchanged in March at 5.5%. The gain was far below the 197,000 average for 2015’s first three months, though how much winter weather affected the numbers was unclear.

· The U.S. trade deficit has hit its lowest level since the aftermath of the financial crisis in 2009, according to the Bureau of Economic Analysis. February’s nearly 17% drop to $35.4 billion resulted from declines in both imports (down 1.7%) and exports (down 1.4%). Some observers had forecast that the trade deficit might be cut by the stronger dollar and lower oil prices as well as a lingering labor dispute that slowed operations at West Coast ports and was not settled in late February.

· Though the Institute for Supply Management’s manufacturing index still indicated expansion, growth in the U.S. manufacturing sector slowed for the fifth straight month. The 51.5 reading was the lowest since May 2013; falling below 50 would mean actual contraction.

· China’s manufacturing sector, often viewed as an important global economic indicator, inched upward in March, but the 50.1 reading on the National Bureau of Statistics Purchasing Managers’ Index was only barely in expansion territory.

·
An agreement with Iran was announced that would loosen economic sanctions there and potentially increase oil exports in return for cuts in Iran’s uranium stores, the dismantling of most existing centrifuges, and international inspections. However, the agreement is not final until at least June, when details of the agreement are scheduled to be fleshed out. In addition to the United States, the nations joining in the agreement are Britain, France, Germany, Russia, and China.

· Personal income rose faster than personal consumption in February. The Bureau of Economic Analysis said U.S. income was up 0.4% (0.2% when adjusted for inflation), while spending rose 0.1%. As a result, the personal saving rate rose from 5.5% to 5.8% during the month. After adjusting for inflation, the 2.5% increase in consumption for all of 2014 ate up the 2.5% increase in personal income during the year.

· Home prices in the cities of the S&P/Case-Shiller 20-City Composite Index were essentially flat in January, though they were still 4.6% ahead of the previous January. However, that annual growth rate continued to slow compared to the rapid increases seen in 2014. Monthly gains were strongest in the West and Southwest, while those in the Northeast and Midwest were weaker. The report warned that because home prices have been increasing faster than wages, an increase in interest rates could be “a major setback.”

Eye on the Week Ahead

Alcoa’s announcement on Wednesday marks the unofficial kickoff to the Q1 earnings season, when investors will be watching to see how overseas profits–and equally important, forward guidance–may be affected by the dollar’s strength, and how struggling energy companies’ performances might affect benchmark indices’ returns. With markets closed last Friday, Monday will be the first chance to see whether investors will view the weak March jobs data as a negative (signaling a slower economy) or a positive that might help postpone a Fed rate hike. And with the potential for a cash crisis in Greece increasing daily unless a fresh injection of financial support is released, any hint of a breakthrough in negotiations with creditors would be welcomed.

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.