The irrational behavior of the markets at times astounds me. We have a steadily improving US economy, a Federal Reserve that is indicating a slow approach to any interest rate increases due to slower growth overseas and generally better than expected earnings. We have a stronger dollar that is resulting in lower import prices which should help limit inflation. We have lower and falling gasoline prices that should help to fuel consumer spending on other things. Yet, we saw the most volatile week in the markets since 2011. Tuesday saw a big drop as the markets were concerned about stresses in the European economy. Wednesday saw the biggest one day gain of the year due to Federal Reserve comments showing caution on raising rates due to concern over weak overseas growth and a strengthening US dollar affecting US exports. Stocks fell again sharply on Thursday as the fear of a stronger dollar and a slowdown overseas could hurt exports.
In particular news this week:
- On Tuesday the Labor Department reported that employers had 4.84 million job openings in August, the highest since 2001.
- On Thursday the Labor Department reported that First Time Claims for unemployment fell to 287,000 in the prior week better than forecast. The four week moving average of claims also fell by 7,250 to 287,750 an 8 year low.
- Import prices fell in September by 0.5%, the third month in a row. From a year ago, import prices are down 0.9%. Excluding petroleum, in September import prices fell 0.2%. Imported petroleum prices fell 2%, automobiles 0.1% and food prices rose 0.2%.
- The Institute for Supply Management’s manufacturing purchasing managers index fell in September to 56.6 from 59.0 in August. The non-manufacturing purchasing manager’s index also fell from an upwardly revised August figure of 59.5 to 58.9. Keep in mind that anything over 50 represents expansion and that these are still considered very strong numbers.