Stocks declined modestly this week despite generally good economic news and good earnings reports. Uncertainty over the outcome of the presidential election weighed on markets Friday following an announcement from the FBI that it is reopening an investigation into Hillary Clinton’s emails. Treasury yields have risen all month with the 10-year treasury now yielding 1.85% in anticipation of a FED rate hike in December. Commodity prices rose even though oil prices ended lower. The dollar gave back some ground this week after gains the previous week.
In the numbers this week:
- Factset reported with 58% of S&P 500 companies reporting the blended earnings growth rate is 1.6% above the previous quarter. This follows four quarters of earnings declines.
- The S&P CoreLogic Case-Shiller home price index rose 5.3% in the 12 months ending in August. This is up from the 5% year over year price increase in July.
- The National Association of Realtors reported that its pending home sales index rose 1.5% in September.
- The U.S. Energy Information Administration reported:
- Crude oil inventories fell 600,000 barrels.
- Gasoline inventories fell 2MM barrels.
- Crude oil production rose 40,000 barrels per day.
- Baker Hughes reported that oil drilling rigs fell by 2 to 441 and gas drilling rigs rose six to 114.
- The Labor Department reported
- Initial jobless claims fell 3,000 in the prior week to a seasonally adjusted 258,000. The four-week moving average of claims rose 1,000 to 253,000.
- The employment-cost index rose a seasonally adjusted 0.6% during the quarter. Wages and salaries rose 0.5% and benefits rose 0.7%. From a year earlier employment costs are up 2.3%.
- The Commerce Department reported
- Gross domestic product grew at a 2.9% annual rate in the third quarter, the best quarter in two years. The gain was attributed to increased exports and a build of inventories. Exports rose at a 10% rate in the quarter mainly due to agricultural exports, especially soybeans. Net trade contributed 0.83% to the growth. Business investment rose at a 1.2% rate.
- Durable goods orders fell 0.1% in September. Excluding volatile defense and transportation durable goods orders rose. For the first nine months of the year durable goods orders were down 0.4% from the same period last year.
- The Census Bureau reported that home ownership rose sharply in the third quarter to 63.5% from 62.9% in the second quarter. The second quarter’s homeownership rate was the lowest in 51 years.
- The Commerce Department reported that purchases of new single-family homes rose a seasonally adjusted 3.1% in September. August sales were revised down to an 8.6% decline following July’s sales which were the best month since 2007. For the first nine months of 2016 new home sales were 13% above the same period in 2015. Keeping this in perspective the rate of new home sales is about half of what we experienced in 2005.
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.