Stocks were modestly higher in this holiday shortened week. There was positive news on the US Gross Domestic Product but disappointment in the failure for the negotiations with Iran on its nuclear program to meet the Monday deadline. Now we are looking at a July 2015 deadline. Also, OPEC announced on Thanksgiving Day that it is not decreasing the cartel’s production cap but merely trying to do a better job of limiting production to the 30MM barrels a day cap. This caused oil prices to fall further. In the US, NYMEX crude oil fell to $7.70 on Friday to $65.99. We are now at prices where production of energy in the US and Canada will be effected. The Bank of Nova Scotia reports that the cost to produce oil from new oil sands mines is $85 per barrel. The Texas Oil and Gas Association said that current prices will affect some US and foreign production.
In particular this week:
- The Commerce Department revised up the Gross Domestic Product growth rate to a 3.9% annualized pace in the third quarter up from the previous estimate of 3.5%. Year over year GDP had risen 2.4% due to the severe winter weather’s effect on the first quarter. However, Residential investment, which measures home building and improvements, only increased 0.8% from a year ago.
- The S&P/Case-Shiller Home Price showed home prices rose 4.8% from a year ago in September down from 5.1% in August.
- The Commerce Department reported that US Consumer Spending rose 0.2% in October, less than expected. September was revised upwards to 0% from -.2%. Personal income rose 0.2%. The price index for personal consumption expenditures rose 0.1% in October and 1.4% above the previous year.
- The Labor Department reported the initial jobless claims rose 21,000 in the prior week to a seasonally adjust 313,000, more than expected. The week before that was revised up from 291,000 to 292,000. This was the first week since early September that total initial claims were above 300,000. The four week moving average of claims also rose 6,250 to 294,000.