US stocks were little changed this week as economic data was mixed and the traders pondered a possible Fed rate hike in December. Treasury yields rose slightly as prices fell. Commodity prices in general were unchanged with the exception of oil gaining after a smaller than expected inventory increase. Growth slowed in the third quarter as the initial measure of gross domestic product rose only 1.5%. The US dollar declined slightly on the news.
In economic news this week:
- Factset reported that so far this quarter earnings have dropped 2.3%. Prior to earnings being released estimates were running for a 5.2% decline.
- The Commerce Department reported:
- New home sales fell 11.5% in September. Sales were 2% higher than last September 2014. Supply issues were blamed for the slowdown. Homebuilders are finding it hard to hire skilled workers that left for other careers during the financial crisis.
- Gross domestic product rose 1.5% on a seasonally and inflation adjusted basis in the third quarter. This is down from 3.9% in the second quarter. This first reading of GDP is subject to two revisions and historically changes significantly when revised. The decline in growth was mainly attributed to a reduction in inventories. Falling inventories may cause businesses to produce more to catch up or it may indicate falling confidence in demand. Falling commodity prices were attributed in part due to the declining value of inventories as oil and raw material prices fell. International trade was surprisingly a very small factor in the slowdown and business spending on equipment actually accelerated in the third quarter. Consumer spending rose 3.2% in the third quarter down from a 3.6% gain in the second quarter. From a year ago, the economy expanded 2%.
- Consumer spending rose a paltry 0.1% in September following a 0.4% rise in August and a 0.3% rise in July.
- Personal income also rose 0.1% in September.
- The Energy Information Administration reported
- US imports of crude oil rose and domestic production rose in the second quarter after years of declines as low global prices hurt domestic production. US production peaked in April at about 9.6MM barrels per day and now are about 9.0 MM barrels. In the week ending October 16th imports rose 156,000 barrels.
- Crude oil inventories rose 3.4MM barrels to 480MM barrels in the prior week, the fifth straight week of increases.
- The Labor Department reported
- Initial jobless claims rose by 1,000 in the prior week to 260,000, better than expected. The four week moving average of claims fell 4,000 to 259,250 the lowest since 1973.
- Employment costs including wages and benefits rose 0.6% in the third quarter.
Please call us if you have any questions.
Loren C. Rex, CFP®, AIF® 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.