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.