What I’m Watching This Week – 29 December 2014

The Markets

Grinches were few and far between on Wall Street last week as the Dow industrials topped 18,000 for the first time and the S&P 500 also set yet another new record. Even the small caps of the Russell 2000 participated in the merriment, turning in the best performance of the week. The price of the benchmark 10-year Treasury slipped a bit as the yield rose.

Market/Index 2013 Close Prior Week As of 12/26 Weekly Change YTD Change
DJIA 16576.66 17804.80 18053.71 1.40% 8.91%
Nasdaq 4176.59 4765.38 4806.86 .87% 15.09%
S&P 500 1848.36 2070.65 2088.77 .88% 13.01%
Russell 2000 1163.64 1195.96 1215.21 1.61% 4.43%
Global Dow 2484.10 2508.43 2529.85 .85% 1.84%
Fed. Funds .25% .25% .25% 0% 0%
10-year Treasuries 3.04% 2.17% 2.25% 8 bps -79 bps

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Headlines

  • The U.S. economy grew at its fastest pace in 11 years during the third quarter. The Bureau of Economic Analysis said the 5% annualized growth of gross domestic product outpaced Q2’s 4.6% and represented the strongest growth since Q3 2003’s 6.9%. Health care and business investment in buildings and equipment were a large part of the increase. After-tax corporate profits also were up, rising 2.8% from Q2.
  • Personal income rose 0.4% in November, but consumer spending rose even more. According to the Commerce Department, consumer expenditures were up 0.6% as falling gas prices left consumers with more money to spend. Meanwhile, disposable income was up 0.5% after adjusting for taxes and inflation.
  • Existing home sales slowed a bit in November as the number of homes available for sale fell almost 7%. The National Association of Realtors® said total sales were down 6.1% for the month, but were 2.1% higher than the previous November. The Commerce Department said new sales of single-family homes also fell 1.6% during the month, and were down 1.6% from a year ago.
  • An 8.1% drop in military spending helped cut orders for durable goods 0.7% in November, according to the Commerce Department. It was the third straight month of declines in orders for goods intended to last three years or more. Also, business spending on equipment was basically flat.

Eye on the Week Ahead

As the year winds down in yet another abbreviated week of trading, volumes are likely to continue to be light. A few economic reports are due out, but many traders will be off toasting 2014’s string of record highs and hoping 2015 will bring more of them.

What I’m Watching This Week – 22 December 2014

The Markets

Patience is a virtue: The Federal Reserve’s announcement that it would be “patient” with interest rate hikes was Santa’s cue to drop off gifts a little early. Equities regained much of what they had lost the week before. The Dow industrials’ 288-point gain on Wednesday was its best day of 2014–that is, until Thursday’s eye-popping 421-point increase left it in the dust. The Russell 2000 had its best week of the year, and the S&P is less than 5 points from the all-time high set two weeks earlier. Meanwhile, oil prices continued to fall, ending the week at roughly $57 a barrel.

Market/Index 2013 Close Prior Week As of 12/19 Weekly Change YTD Change
DJIA 16576.66 17280.83 17804.80 3.03% 7.41%
Nasdaq 4176.59 4653.60 4765.38 2.40% 14.10%
S&P 500 1848.36 2002.33 2070.65 3.41% 12.03%
Russell 2000 1163.64 1152.45 1195.96 3.78% 2.78%
Global Dow 2484.10 2459.30 2508.43 2.00% .98%
Fed. Funds .25% .25% .25% 0% 0%
10-year Treasuries 3.04% 2.10% 2.17% 7 bps -87 bps

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Headlines

    • The Federal Reserve’s monetary policy committee replaced its promise to wait “a considerable time” before raising interest rates with a promise to be “patient” before doing so. Almost all committee members expect higher rates to hit in 2015, but investors paid more attention to members’ belief that rates may rise more slowly than previously thought. The committee’s median forecast for the fed funds rate at the end of 2015 is now 1.125%, while the median expectation for December 2016 is now 2.5%.
    • The Russian ruble plunged 20% on Tuesday, prompting the country’s Central Bank to hike its key interest rate from 10.5% to 17% to try to support the currency. Concerns about the currency accelerated after bonds issued by Russia’s largest oil company received favorable treatment from the Central Bank; that raised questions about whether the action was essentially a government bailout of the company, which has been hard-hit by both economic sanctions and lower oil prices.
    • Plummeting oil prices were good news for U.S. consumers in November. The 0.3% drop in the Consumer Price Index was fueled largely by the 6.6% decline in gas prices, which the Bureau of Labor Statistics called the sharpest decline since December 2008. Lower energy costs more than offset the 0.2% increase in food and 0.3% rise in housing, and helped cut the inflation rate for the previous 12 months to 1.3% from 1.7% a month earlier. Meanwhile, November’s 0.6% increase in inflation-adjusted hourly wages accounted for almost all of the 0.8% increase in wages over the last 12 months.
    • President Obama announced that the United States will move to re-establish diplomatic relations with Cuba, which were cut off in 1961. However, congressional action would be needed to lift the decades-old trade embargo against Cuba.
    • Both housing starts and building permits slipped in November, by 1.6% and 5.2% respectively. According to the Commerce Department, single-family housing was responsible for most of the decline in housing starts, while multi-unit buildings caused most of the decline in permits.
    • U.S. industrial production rose 1.3% in November, helped by cold weather that pushed up heating demand and thus output from utilities. The Federal Reserve also said that industrial output from June through October was stronger than previously reported, and usage of the nation’s industrial capacity finally reached its long-term average of 80.1%. However, manufacturing growth measured by the Philly Fed survey slipped slightly, while the Empire State survey showed its first negative reading in nearly two years.

Eye on the Week Ahead

With a holiday-shortened week ahead, it might be difficult for equities to match last week’s blockbuster performance. The final Q3 GDP number and data on housing as well as consumer income and spending are on tap.

Revised One-Rollover-Per-Year Limit Applies in 2015–IRS Clarifies Rules

Background

The Internal Revenue Code says that if you receive a distribution from an IRA, you can’t make a tax-free (60-day) rollover into another IRA if you’ve already completed a tax-free rollover within the previous one-year (12-month) period. The long-standing position of the IRS was that this rule applied separately to each IRA someone owns. Earlier this year, however, the Tax Court, in the case of Bobrow v. Commissioner, held that, regardless of how many IRAs he or she maintains, a taxpayer may make only one nontaxable 60-day rollover within each 12-month period.

The IRS response to Bobrow

The IRS, in Announcement 2014-15, indicated that it would follow the Tax Court’s Bobrow decision and apply the one-rollover-per-year limit on an aggregate basis, instead of separately to each IRA you own. However, in order to give IRA trustees and custodians time to make changes in their IRA rollover procedures and disclosure documents, the IRS indicated that the revised rule would not apply to any rollover that involved an IRA distribution that occurred before January 1, 2015.

IRS further clarifies the new one-rollover-per-year limit

In November, the IRS issued Announcement 2014-32, providing further guidance on how the revised one-rollover-per-year limit is to be applied. Most importantly, the IRS has now clarified that:
1.All IRAs, including traditional, Roth, SEP, and SIMPLE IRAs, are aggregated and treated as one IRA when applying the new rule. For example, if you make a 60-day rollover from a Roth IRA to the same or another Roth IRA, you will be precluded from making a 60-day rollover from any other IRA–including traditional IRAs–within 12 months. The converse is also true–a 60-day rollover from a traditional IRA to the same or another traditional IRA will preclude you from making a 60-day rollover from one Roth IRA to another Roth IRA.
2.The exclusion for 2014 distributions is not absolute. While generally you can ignore rollovers of 2014 distributions when determining whether a 2015 rollover violates the new one-rollover-per-year limit, this special transition rule will NOT apply if the 2015 rollover is from the same IRA that either made, or received, the 2014 rollover.

The one-rollover-per-year limit does not apply to direct transfers between IRA trustees and custodians, rollovers from qualified plans to IRAs, or conversions of traditional IRAs to Roth IRAs.

What this means to you

In general, it’s best to avoid 60-day rollovers whenever possible. Use direct transfers (as opposed to 60-day rollovers) between IRAs, as these direct transfers aren’t subject to the one-rollover-per-year limit. The tax consequences of making a mistake can be significant–a failed rollover will be treated as a taxable distribution (with potential early-distribution penalties if you’re not yet 59½) and a potential excess contribution to the receiving IRA.

What I’m Watching This Week – 15 December 2014

The Markets

Concerns about the global economic impact of the ongoing turmoil in oil helped prompt a sharp drop in equities. The decline in oil prices, which accelerated last week, has left crude down more than 45% from its mid-June high. After seven straight weeks of gains in the S&P 500, equities investors took some money off the table, handing both the S&P 500 and Dow industrials their worst weekly point losses since 2011 and dragging the Russell 2000 small caps back into negative year-to-date territory. The Global Dow also suffered because of lower oil prices’ potential ramifications for emerging markets and their currencies. The turbulence renewed demand for the security of the benchmark 10-year U.S. Treasury note; its yield plunged as prices rose.

Market/Index 2013 Close Prior Week As of 12/12 Weekly Change YTD Change
DJIA 16576.66 17958.79 17280.83 -3.78% 4.25%
Nasdaq 4176.59 4780.76 4653.60 -2.66% 11.42%
S&P 500 1848.36 2075.36 2002.33 -3.52% 8.33%
Russell 2000 1163.64 1182.43 1152.45 -2.54% -.96%
Global Dow 2484.10 2565.63 2459.30 -4.14% -1.00%
Fed. Funds .25% .25% .25% 0% 0%
10-year Treasuries 3.04% 2.31% 2.10% -21 bps -94 bps

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Headlines

  • The International Energy Agency forecast that increased oil supplies and continued weak global growth would mean higher oil inventories during the first half of next year. Coupled with an announcement that Saudi production levels will remain at current levels, that helped cut oil prices to less than $60 a barrel; as recently as mid-June it was roughly $107. Those losses in turn prompted Russia and Norway to take measures to support their respective oil-dependent economies. Russia’s central bank raised its key interest rate to try to support the ruble while Norway’s central bank cut rates to try to stimulate domestic growth.
  • Despite a lackluster Black Friday weekend, retail sales shot up 0.7% in November, and the Commerce Department said they were 5.1% higher than in November 2013. Auto sales were almost 10% higher than a year earlier, and nonstore retail sales rose 8.7% in the same time.
  • Wholesale prices fell an average of 0.2% in November; a 3% drop in energy costs during the month was responsible for most of the decline. November’s lower prices left the annual inflation rate at 1.4% for the last 12 months; according to Bureau of Labor Statistics records, that’s the lowest annual rate since February. Even aside from the volatile food and energy sectors, producer prices were down 0.1% for the month.
  • The U.S. Congress passed a spending bill for the next fiscal year, eliminating the threat of a government shutdown. Conflicts over the bill’s rollback of some Dodd-Frank banking regulations, higher limits on donations to political parties, and funding for the Homeland Security Department threatened to derail the legislation, which the White House has said the president will sign.
  • Japanese Prime Minister Shinzo Abe received a vote of confidence for his so-called “Abenomics” fiscal policies; despite Japan’s recent slide into recession, voters once again gave Abe’s Liberal Democratic Party a majority in the country’s parliament.

Eye on the Week Ahead

Investors are likely to focus on crude and “considerable time”: whether oil prices are likely to stabilize, even temporarily, and whether the Federal Reserve will drop its “considerable time” estimate of how long it might preserve current interest rates. And as the end of 2014 draws closer, year-end tax-related profit-taking and/or tax-loss harvesting also could play an increasing role in market movements.

What I’m Watching This Week – 8 December 2014

The Markets

An unexpectedly strong jobs report on top of generally positive U.S. housing and manufacturing numbers helped nudge the Dow and S&P to new records yet again at the end of the week. However, the report also may have helped bring on a dip in the price of the benchmark 10-year Treasury by raising questions about whether the employment gains would bolster the case for a Federal Reserve rate hike in the first half of 2015.

Market/Index 2013 Close Prior Week As of 12/5 Weekly Change YTD Change
DJIA 16576.66 17828.24 17958.79 .73% 8.34%
Nasdaq 4176.59 4791.63 4780.76 -.23% 14.47%
S&P 500 1848.36 2067.56 2075.36 .38% 12.28%
Russell 2000 1163.64 1173.23 1182.43 .78% 1.61%
Global Dow 2484.10 2571.40 2565.63 -.22% 3.28%
Fed. Funds .25% .25% .25% 0% 0%
10-year Treasuries 3.04% 2.18% 2.31% 13 bps -73 bps

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Headlines

  • The U.S. economy created 321,000 new jobs in November, and the Bureau of Labor Statistics said the prior two months’ gains were higher than previously thought. November’s gains also surpassed the 241,000 monthly average so far this year. Job increases were widespread, led by professional/business services, retail, health care, and manufacturing. However, the unemployment rate remained at 5.8%. Hourly wages were up 0.4% during the month and have grown 2.1% over the last year.
  • Accelerated promotions may have lured shoppers out early and cut into Black Friday retail sales. The National Retail Federation said sales over the Thanksgiving weekend were down 11% from 2013, but the trade group said it still anticipates total holiday sales to be up more than 4% by the end of the year.
  • The latest data from the International Monetary Fund showed that China is expected to be the world’s largest economy as of this year. The country’s anticipated $17.6 trillion in real GDP edged out the United States’ $17.4 trillion.
  • A 1.8% increase in construction of single-family homes in October helped send total construction spending up 1.1% for the month, according to the Commerce Department. However, total spending was up just 1.9% over the last 12 months.
  • The Institute for Supply Management’s gauge of activity in the U.S. services sector showed growth accelerating in November. The 59.3% reading was 2.2% higher than in October. However, the Commerce Department said orders at U.S. manufacturers slid 0.7% in October and would have been worse if not for a 21.2% jump in orders for military equipment, especially aircraft.
  • The U.S. trade deficit saw little change in October, edging downward to $43.4 billion from $43.6 billion in September as exports increased more than imports.
  • European Central Bank President Mario Draghi said the ECB expects Europe’s slow growth to slump even further next year and that opposition from some of the eurozone’s stronger members (i.e., Germany) would not keep the ECB from adopting supportive measures.

Eye on the Week Ahead

In a data-light week, the Commerce Department’s retail sales report could help clarify interpretations of last week’s Black Friday sales data. The results of an upcoming auction of loans to European banks could influence whether the ECB eventually adds corporate and sovereign bond purchases to its current bond-buying activities.

What is the charitable deduction?

What is the charitable deduction?

The charitable deduction allows you to deduct the value of property you give to charity from your estate and may reduce any federal gift and estate tax that may be owed. Charitable gifting allows you to satisfy your personal philanthropic desires and fulfill your estate planning objectives.

You may wish to give to the charitable community out of devotion, moral obligation, altruism, generosity, or a sense of responsibility. Or you may want to give because you believe you will do a better job of distributing your wealth than Uncle Sam. Whatever your motivation, charitable giving should be gratifying.

Gifts to charity can also fulfill your estate planning objectives. There are no limits on the amount that you can pass to charity. It is possible to transfer your entire estate to charity, tax free. Gifts to charity allow you to:

  • Distribute your property tax free
  • Potentially put the amount subject to estate taxes into a lower bracket

Caution: However, remember that property you give to charity is property that does not go to your heirs. Don’t let your attempt to save taxes have the unintended effect of depriving your heirs.

Tip:  Charitable gifts are also deductible for income tax purposes for taxpayers who itemize. However, there is a limit imposed on the amount that can be deducted, and other adjustments may be required.

How does a gift or bequest of property qualify for the charitable deduction?

Certain conditions and requirements must be met to qualify for this deduction:

  • You must make the transfer, either during life or at death by will, rather than your executor or heirs
  • The property must be transferred to a qualified charity for a charitable purpose. A qualified charity includes:
  1. The United States, any state, the District of Columbia, and any local government
  2. Certain religious, scientific, or charitable organizations
  3. Certain veterans organizations
  4. Certain fraternal organizations
  5. An employee stock ownership plan if the transfer is a qualified gratuitous transfer of qualified employer securities

Caution: Gifts or bequests to individuals, no matter how needy or worthy the individuals are, cannot qualify for the charitable deduction.

Tip: The IRS publishes a list of charitable organizations (the Cumulative List) to which gifts or bequests will qualify for this deduction. The IRS does not define what a qualifying charitable purpose is. However, it has issued Letter Rulings that discuss what has been allowed or disallowed, and it has privately ruled that charitable purpose means the same for gift tax and estate tax purposes as it does for income tax purposes. Generally, a charitable purpose means a public purpose, as opposed to a private purpose.

  • Depending on the year in which you die, the gift or bequest must be included in your estate for estate tax purposes. The amount of the deduction is the value of the property transferred, but the amount cannot exceed the value of the property that is required to be included in your estate.
  • You must be a U.S. citizen or resident at the time you make the gift.

Tip: A charitable deduction is allowed for nonresident noncitizens, but only certain types of charities qualify.

  • Generally, the gift must be a present interest–A present interest means that the donee (the person or organization you give to) has the unrestricted right to the immediate use, possession, or enjoyment of the property, or the income from the property, from the moment you make the gift. The deduction is not available to gifts of future interests in property.

Technical Note: “Future interests” is a legal term and includes reversions, remainders, and any other delayed interest that postpones the commencement of the use, possession, or enjoyment of the property, or income from the property.

Tip: Gifts of future interests may qualify for the deduction if the gift is structured as a partial interest gift. Partial interest gifts (property rights given to both charitable and noncharitable interests, e.g., a trust paying income to charity, with the remainder going to noncharitable beneficiaries) may qualify for the deduction if the donated property is transferred to an IRS-approved form of charitable trust, such as a charitable lead trust, charitable remainder trust, or pooled income fund.

How do you use the charitable deduction?

For lifetime gifts, the charitable deduction is allowed for the year in which the gift is made for federal gift tax purposes. You don’t need to file an annual gift tax return if all gifts made for a given year fully qualify for the charitable deduction.

Special rules regarding the charitable deduction

The amount of the charitable deduction is limited to the amount of the transfer actually made. Special rules apply if the transfer to charity first must bear a portion of any estate taxes because of the calculation difficulties that arise. Estate taxes are a function of the charitable deduction and the charitable deduction is a function of the estate taxes.

Tip: The interrelated computation can be avoided by providing a specific bequest to the charity, instead of a gift from the residuary estate.

An example of the use of the charitable deduction

Example(s): Ron is a small-business owner in the town where he was born and raised. He is a well-liked and respected member of the community. Ron feels he should give back to his community and donates money every year to support the town’s zoo, hospital, library, children’s center, church, and other local charities.

Example(s): During the years 2007 through 2011, Ron gave $500,000 in total to different charities. Each year, Ron filed a gift tax return but paid no gift tax because the gift tax charitable deduction offsets his taxable gifts. Each year, Ron also filed an income tax return, reducing his taxable income by the amount of income tax charitable deduction allowed. Say Ron dies in 2013 and that his will provides for a charitable bequest in the amount of $100,000, with the residuary estate passing to his only nephew, James. Ron’s executor reduces Ron’s taxable estate by $100,000 (allowed by the estate tax charitable deduction), which then reduces the estate tax owed. Ron’s executor pays the estate tax owed and then distributes the residuary estate to James.

Charitable IRA rollover gifts

The Pension Protection Act of 2006, the Emergency Economic Stabilization Act of 2008, the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, and the American Taxpayer Relief Act of 2012 permit donors over the age of 70½ to make tax-free charitable distributions of up to $100,000 directly from their IRAs.

Donors who have reached age 70½ can direct amounts (subject to the aforementioned $100,000 limit) to charity in satisfaction of their minimum required distribution as long as the following requirements were met:

  • The donor is age 70½ at the time the gift is made.
  • The charitable gift is made directly from an IRA to the charity.
  • An individual can give a maximum of $100,000 in 2013. A spouse can give an equal amount from his/her IRA.
  • Individuals can make as many gifts in any amount to as many charities as desired as long as the total does not exceed $100,000 for 2013.
  • The gift cannot be made in exchange for a charitable gift annuity or to a charitable remainder trust.
  • The gift cannot be made to a private foundation, donor-advised fund, or supporting organization (as described in IRC Section 509(a)(3)).

Tip: At the election of the taxpayer, charitable IRA rollover gifts made in January 2013 can be treated as made on December 31, 2012. Also, certain IRA distributions made in December 2012 can be treated as charitable IRA rollover gifts if transferred in cash to the charitable organization after the distribution and before February 2013. A person can make a charitable IRA rollover gift for 2012 using these provisions and a charitable IRA rollover gift for 2013.

Monthly Market Review – November 2014

The Markets

Equities generally continued to push upward in November. The small caps of the Russell 2000 were the exception; they ended the month flat and were up less than 1% for the year. However, the S&P 500 and the Dow industrials once again hit new record levels, while the Nasdaq increased its year-to-date lead. Meanwhile, the Global Dow had its best month since February.

Oil prices already on the decline continued to fall, especially after members of the Organization of the Petroleum Exporting Countries (OPEC) decided not to cut oil production levels, sending the price plummeting to roughly $66 a barrel. The price of gold continued its year-long downward trend despite a partial rebound from a dip in early November; it ended the month down roughly 4% at approximately $1,175 an ounce. Meanwhile, low yields overseas continued to lure investors to U.S. Treasuries, sending yields down as prices rose despite the prospect of an eventual Fed rate hike.

 

Market/Index 2013 Close Prior Month As of 11/28 Month Change YTD Change
DJIA 16576.66 17390.52 17828.24 2.52% 7.55%
Nasdaq 4176.59 4630.74 4791.63 3.47% 14.73%
S&P 500 1848.36 2018.05 2067.56 2.45% 11.86%
Russell 2000 1163.64 1173.51 1173.23 -.02% .82%
Global Dow 2484.10 2527.85 2571.40 1.72% 3.51%
Fed. Funds .25% .25% .25% 0 bps 0 bps
10-year Treasuries 3.04% 2.35% 2.18% -17 bps -86 bps

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

The Month in Review

  • U.S. gross domestic product grew during the third quarter at a slightly faster rate than the Bureau of Economic Analysis had previously estimated. However, the 3.9% increase in GDP was less than Q2’s 4.6%.
  • The U.S. unemployment rate edged down 0.1% to 5.8%, according to the Bureau of Labor Statistics. The economy added 214,000 jobs, most of them in restaurants, retail, and health care. The new jobs figure was slightly lower than the 222,000 monthly average so far this year. Meanwhile, a 3-cent increase during the month brought the average hourly wage to $24.57; that average is up just under 2% over the last 12 months.
  • Members of OPEC decided to maintain current production levels to try to maintain market share in the face of U.S. competition. The decision hurt oil prices around the world and raised concerns about whether oil companies would curtail investments in future energy development projects.
  • In domestic politics, midterm elections gave Republicans control of both houses of Congress. Also, President Obama announced a program that will temporarily defer deportation for undocumented immigrants and allow them to receive work permits if they have been in the country for at least five years, have no criminal record, and/or have children who are American citizens.
  • Despite growth in some of the eurozone’s weakest members, the region as a whole was hampered by sluggishness in the larger economies, such as Germany and Italy. The eurozone grew 0.2% during the third quarter, according to the European Union’s statistical agency. The European Central Bank continued to say it is ready to adopt additional stimulus measures if necessary to fight the twin threats of low inflation and stagnant growth.
  • China’s central bank unexpectedly cut two key interest rates to try to stimulate domestic consumption. China and the United States also announced an agreement to take steps to combat climate change by controlling greenhouse gases.
  • After a second quarter of contraction, Japan officially fell into recession as gross domestic product fell at an annualized rate of 1.6% during the third quarter. That put pressure on Prime Minister Shinzo Abe, who postponed for 18 months a planned second round of sales tax increases and called for a new parliamentary election.
  • U.S. home prices in cities measured by the S&P/Case-Shiller 20-City Composite Index were flat in September. Also, the year-over-year increase continued to show a downward trend; September’s 4.9% annual gain was lower than the 5.6% seen a month earlier. Also, the Commerce Department said housing starts slipped 2.8% in October. However, sales of new homes were up 0.7% during the month, and the National Association of Realtors® said home resales rose 1.5%.
  • U.S. inflation was low enough to prompt the Fed’s monetary policy committee to say it will keep an eye out for signs of falling inflation, which could potentially delay any rate increase. Lower gas prices helped offset increases in housing costs; that left the Consumer Price Index unchanged for the month and the annual rate at 1.7%, while the Bureau of Labor Statistics said the 1.5% annualized wholesale inflation rate was the lowest since February.
  • Manufacturing data was mixed. Though U.S. manufacturers saw a 0.4% increase in durable goods orders, according to the Commerce Department, the Federal Reserve said industrial production slumped 0.1% because of strong declines in mining and utilities. However, both the Empire State and Philly Fed manufacturing surveys showed business activity accelerating.

Eye on the Month Ahead

As a strong year for equities draws to a close, some investors may begin assessing whether to take some profits off the table or harvest any losses to offset realized capital gains. And all economic data is likely to be viewed through the prism of how it might affect Fed thinking about potential rate increases next year.