Stocks ended the week modestly higher with the Dow Jones 30 Industrial average far outpacing the broader S&P500 and Nasdaq indexes. Janet Yellen addressed Congress and indicated that improvements in the U.S. economy is strengthening the case for a rate increase in December. U.S. retail sales were especially strong. U.S. stocks outperformed foreign stocks. Treasury yields continue to soar on speculation for higher growth, higher inflation and tighter monetary policy. The 10-year treasury yield has now risen in the past month from 1.738% to 2.357%. Oil prices eked out a gain but precious metals prices continued to fall. The dollar continued to rise against a basket of foreign currencies. Factset reported with 95% of S&P 500 companies reporting, 3rd quarter earnings are up 3%. I should note at this point; the rising dollar will hurt the earnings of multinational companies going forward. Domestic companies, usually smaller companies may benefit.
In the numbers this week:
- The Commerce Department reported
- Retail sales rose a seasonally adjusted 0.8% in October. September was revised up to a 1.0% gain.
- Housing starts rose a seasonally adjusted 25.5% in October to the highest pace since August 2007. However, building permits rose only 0.3% indicating growth in starts is likely to slow in coming months.
- The Federal Reserve reported that industrial production on a seasonally adjusted basis was unchanged in October. Factory output rose modestly and mining production (including oil and gas) rose at its fastest pace in 2.5 years. Utility production dropped sharply due to the warmer than normal fall weather. From a year ago, industrial production was down 0.9%.
- The U.S. Energy Information Administration reported:
- Crude oil inventories rose 5.3MM barrels.
- Gasoline inventories rose 0.7MM barrels.
- Crude oil production fell 11,000 barrels per day.
- Baker Hughes reported that oil drilling rigs rose by 19 to 471 and gas drilling rigs rose 2 to 116.
- The Labor Department reported
- Import prices rose 0.5% in October. However, from a year earlier import prices were down 0.2%. The October rise was due to imported oil prices. Excluding petroleum import prices fell 0.1% in October.
- Export prices rose 0.2% in October but were down 1.1% from a year ago.
- Producer prices were unchanged in October. Excluding volatile food, energy and trade services, producer prices were down 0.1% in October. Prices for consumer loans, hospital outpatient care and airfare all fell.
- Consumer prices rose a seasonally adjusted 0.4% in October. Excluding volatile food and energy, consumer prices rose 0.1%. Gasoline and electricity saw the largest increases.
- Initial jobless claims fell 19,000 in the prior week to a seasonally adjusted 235,000. This was the lowest number of new claims since November 1973 when the workforce was smaller. The four-week moving average of claims rose 6,500 to 253,500.
Please call us if you have any questions.
Loren C. Rex, CFP®, AIF®, MA Erik Smith
Generations Financial Planning & Wealth Management 269-441-4143
77 E. Michigan Ave, Suite 140
Battle Creek, MI 49017
Carrie Fuce, Assistant 269-441-4091
Toll Free: 800-513-8180
Visit our Website: www.genfinplan.com
Registered Representative of and securities offered through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. Investment Advisor Representative, Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Cambridge and Generations Financial Planning & Wealth Management are separate companies and are not affiliated.
These are the opinions of Loren Rex and Erik Smith and are not necessarily those of Cambridge, are for informational purposes only, and should not be construed or acted upon as individualized investment advice.