Tag: unemployment claims

The Markets (as of market close November 30, 2016)

The economy picked up the pace in November, as did the stock market. After getting off to a sluggish start during the early part of the month, equities soared following the results of the presidential election. Each of the indexes listed here reached record highs during the month. The Russell 2000 posted the largest monthly gain, reaching double digits. Energy stocks jumped at the end of the month following OPEC’s agreement to cut production. Investors seemed willing to sell bonds and buy stocks as evidenced by the yield on 10-year Treasuries, which jumped 56 basis points by the end of the month and now exceeds their 2015 closing yield. Gold lost value, closing November at $1,174.80, down $103 from its October closing value of $1,277.80.

Market/Index	2015 Close	Prior Month	As of November 30	Month Change	YTD Change
DJIA	17425.03	18142.42	19123.58	5.41%	9.75%
NASDAQ	5007.41	5189.13	5323.68	2.59%	6.32%
S&P 500	2043.94	2126.15	2198.81	3.42%	7.58%
Russell 2000	1135.89	1191.39	1322.34	10.99%	16.41%
Global Dow	2336.45	2445.57	2454.12	0.35%	5.04%
Fed. Funds	0.25%-0.50%	0.25%-0.50%	0.25%-0.50%	0 bps	0 bps
10-year Treasuries	2.26%	1.82%	2.38%	56 bps	12 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.

October’s Economy in Review

• Employment: Once again, the employment sector remained steady during October. According to the Bureau of Labor Statistics, there were 161,000 new jobs added in October, down from a revised September total of 191,000. In October, employment continued to trend up in health care, professional and business services, and financial activities. Thus far this year, job growth has averaged 181,000 per month, compared with an average of 229,000 per month in 2015. The unemployment rate was unchanged at 4.9%. There were 7.8 million unemployed persons in October. Both the unemployment rate and the number of unemployed persons have changed little since August of last year. The labor force participation rate was 62.8% and the employment/population ratio came in at 59.7%. The average workweek was unchanged at 34.4 hours (the workweek in manufacturing was 40.8 hours compared to 33.6 workweek hours for private service-providing employees). Average hourly earnings rose by $0.10 to $25.92 following an $0.08 increase in September. Over the year, average hourly earnings have risen by 2.8%.
• FOMC/interest rates:The FOMC did not raise interest rates in November, keeping the federal funds target rate at the 0.25%-0.50% range. However, minutes from its November meeting indicate several Committee members are of the opinion that the time is right for another rate hike, which is likely to occur when the Committee next convenes in December.
• Oil: Oil prices soared on the last day of the month following OPEC’s agreement to cut production significantly. In an apparent effort to boost the sagging economies of small, petroleum-dependent nations, oil prices could reach $60 per barrel soon. Prices for the year have remained below $50 per barrel for the most part. But by the close of trading on November 30, the price of crude oil (WTI) had reached $48.98 per barrel. The national average retail regular gasoline price was $2.154 per gallon on November 28, down from the October 31 selling price of $2.230. It is expected that retail gas prices will surge in the coming weeks as the prices of oil and petroleum products increase.
• GDP/budget: According to the “second” estimate of the GDP from the Bureau of Economic Analysis, the third-quarter 2016 gross domestic product grew at an annualized rate of 3.2% (the first estimate of the third-quarter growth rate was 2.9%). The growth rate for the second-quarter GDP was 1.4%. Factors driving the upward movement of the GDP include increases in consumer spending (personal consumption expenditures), government spending, exports, and nonresidential (e.g., business) fixed investment. Corporate profits increased $133.8 billion in the third quarter, in contrast to a decrease of $12.5 billion in the second quarter. As to the government’s budget, October marks the start of the government’s 2017 fiscal year. The federal deficit for the first month of FY 2017 was $44.19 billion following September’s budget surplus of $33.45 billion. Total receipts for October were $221.7 billion (down from September’s $356.6 billion), while total outlays were $265.9 billion (down from $323.2 billion in September). Comparatively, the budget deficit for October 2015 was $136.6 billion.
• Inflation/consumer spending: Consumer spending increased in October as inflation continues to slowly, but discernibly, trend upward. Personal income (pre-tax earnings) and disposable personal income (income less taxes) each rose 0.6%, while personal spending, as measured by personal consumption expenditures, increased 0.3% for the month. The personal consumption expenditures price index increased 0.2% for the month, and is up 1.4% for the year. Core personal consumption expenditures (personal spending excluding volatile food and energy costs) rose 0.1% in October, the same increase as in September. The core PCE index is up 1.7% year-over-year. The Producer Price Index, which measures the prices companies receive for goods and services, was unchanged in October from September, but is up 0.8% year-over-year — the largest 12-month increase since December 2014. Excluding food, trade services, and energy, prices fell 0.1% for the month, following a 0.3% gain in September. For the 12 months ended in October, the index for final demand less foods, energy, and trade services decreased 0.1%. The Consumer Price Index, which measures what consumers pay for both goods and services, increased 0.4% in October after climbing 0.3% in September. Over the last 12 months, the CPI has risen 1.6%. As in September, increases in the shelter and gasoline indexes were the main causes for the rise in the CPI. The gasoline index rose 7.0% in October, while the shelter index increased 0.4% for the second straight month. Retail and food services sales jumped 0.8% in October from the previous month. Retail trade sales were up 1.0% from September and 4.3% from last October. Sales for nonstore (online) retailers were up 12.9% from October 2015.
• Housing: Sales of existing homes increased in October, while new home sales fell. Existing home sales increased for the second consecutive month, growing 2.0% to an annual rate of 5.60 million, up from 5.49 million homes for sale in September. October’s sales pace is 5.9% above October 2015 and is at its highest annual rate since February 2007. The median sales price for existing homes in October was $232,200, down slightly from the $235,200 median sales price in September but up 6.0% from last October. Total housing inventory at the end of October decreased 0.5% to 2.02 million existing homes available for sale, which is 4.3% lower than a year ago (2.11 million). The Census Bureau’s latest report reveals sales of new single-family homes dropped 1.9% in October to an annual rate of 563,000 — down from September’s rate of 574,000. The median sales price of new houses sold in October was $304,500, while the average sales price was $354,900. The seasonally adjusted estimate of new houses for sale at the end of October was 246,000. This represents a supply of 5.2 months at the current sales rate.
• Manufacturing:The Federal Reserve’s monthly index of industrial production (which includes factories, mines, and utilities) was unchanged in October after decreasing 0.2% in September. On the plus side, manufacturing output increased 0.2% and mining posted a gain of 2.1%. However, production was pulled down by a drop in utilities (2.6%). At 104.3% of its 2012 average, total industrial production in October was 0.9% lower than its year-earlier level. Capacity utilization for the industrial sector edged down 0.1 percentage point in September to 75.3%, a rate that is 4.7 percentage points below its long-run (1972-2015) average. The advance report from the Census Bureau shows new orders for all durable goods (expected to last at least three years) climbed $11.8 billion, or 4.8%, in October from the prior month. Excluding the volatile transportation segment, new orders increased 1.0%. Orders for capital goods increased $10.2 billion, or 14.5%, and shipments rose 0.1%.
• Imports and exports:Reversing course from the prior month, the advance report on international trade in goods for October revealed that the trade gap widened by 9.6% to $62.0 billion in October, up from $56.5 billion in September. Exports of goods fell $3.4 billion, while imports rose $2.1 billion. Dragging down exports was a nearly 12.0% drop in foods, feeds, and beverages. Both wholesale and retail inventories fell by 0.4%. According to the Bureau of Labor Statistics, import prices advanced 0.5% in October, following a 0.2% increase the previous month. Export prices increased 0.2% for the month. The price increase in imports was driven by higher fuel prices (7.2%), which more than offset declining nonfuel prices (0.1%). Despite the price increase for exports, overall export prices are down 1.1% over the past year.
• International markets:European stock markets had a good month in November, possibly feeding off of the strong U.S. market performance and OPEC’s agreement to cut back oil production. China’s currency has declined to its lowest level in eight years. Japan and China, along with other Asian countries, are waiting for President-elect Trump’s trade proposals, particularly as to whether he holds to his proposal to withdraw from the Trans-Pacific Partnership.
• Consumer sentiment:Consumers’ confidence in the economy weakened in October. The Conference Board Consumer Confidence Index® for October dropped 4.9 points to 98.6 from September’s revised reading of 103.5. The Surveys of Consumers of the University of Michigan Index of Consumer Sentiment fell from 87.9 in September to 87.2 in October. Both reports show consumers are pessimistic about current and future business conditions and future job prospects.

Eye on the Month Ahead

The stock market climbed following the presidential election. Interest rates remained unchanged in November. However, much could change in December as President-elect Trump rounds out his cabinet and offers more details on his economic and foreign policies moving forward. All indications are that the Fed will relax stimulus measures by increasing the federal funds interest rate when the Committee meets in mid December.

The Markets (as of market close November 25, 2016)

Based on the performance of stock market indexes, it was another banner week for equities amidst slow trading volume. The Dow, S&P 500, Russell 2000, and Nasdaq each reached record highs, with the Dow eclipsing 19000 for the first time ever. Some analysts suggest the market surge is based on expectations that the new administration will reduce taxes and spend more on infrastructure. Money continues to move from long-term bonds and gold into equities. Also, investors may view the likelihood of the Fed raising interest rates next month with more certainty, which could lead to money fleeing from long-term bonds and gold.

The price of crude oil (WTI) increased by last week’s end, closing at $45.96 per barrel, up from the prior week’s price of $45.58 per barrel. The price of gold (COMEX) fell again last week closing at $1,186.10 by late Friday afternoon, down from the prior week’s price of $1,207.30. The national average retail regular gasoline price decreased to $2.155 per gallon on November 21, 2016, $0.029 less than the prior week’s price but $0.061 more than a year ago.

Market/Index	2015 Close	Prior Week	As of 11/25	Weekly Change	YTD Change
DJIA	17425.03	18867.93	19152.14	1.51%	9.91%
Nasdaq	5007.41	5321.51	5398.92	1.45%	7.82%
S&P 500	2043.94	2181.90	2213.35	1.44%	8.29%
Russell 2000	1135.89	1315.64	1347.20	2.40%	18.60%
Global Dow	2336.45	2428.04	2466.14	1.57%	5.55%
Fed. Funds target rate	0.25%-0.50%	0.25%-0.50%	0.25%-0.50%	0 bps	0 bps
10-year Treasuries	2.26%	2.35%	2.35%	0 bps	9 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

• For the second consecutive month, the number of existing home sales increased in October. According to the National Association of Realtors®, total existing home sales grew 2.0% in October to an annual rate of 5.60 million from 5.49 million in September. October’s sales pace is 5.9% above a year ago and is the highest annual rate since February 2007. The median existing-home price for all housing types in October was $232,200, up 6.0% from October 2015 ($219,100). Total housing inventory at the end of October declined 0.5% to 2.02 million, and is now 4.3% lower than a year ago (2.11 million). Unsold inventory is at a 4.3-month supply at the current sales pace, which is down from 4.4 months in September. According to Lawrence Yun of the NAR, “As a result of the anticipated economic stimulus in early 2017, mortgage rates post-election have now surged to around 4% as investors expect a strengthening economy and higher inflation. In the short-term, some prospective buyers may rush to lock in their rate and buy now, while others — especially those in higher-priced markets — may be forced to delay as a larger monthly payment outstretches their budget.”
• While existing home sales increased in October, new home sales lagged a bit compared to the prior month. According to the Census Bureau, sales of new single family houses in October were at a rate of 563,000, 1.9% below the revised September rate, but still 17.8% above October 2015. The median sales price of new houses sold in October 2016 was $304,500; the average sales price was $354,900. The seasonally adjusted estimate of new houses for sale at the end of October was 246,000. This represents a supply of 5.2 months at the current sales rate.
• The advance report on durable goods orders for October was generally favorable, according to the Census Bureau. New orders for manufactured durable goods (items expected to last at least three years) increased 4.8% to $239.4 billion, up $11 billion from September. Shipments of durable goods increased 0.1%. Unfilled orders, following four consecutive monthly decreases, gained 0.7% in October, while inventories remained relatively the same as the prior month. Year-to-date, shipments of durable goods are down 0.9%, while new orders for durable goods are lagging by 0.2%.
• The minutes of the last Federal Open Market Committee meeting held on November 2 revealed that, by an 8-2 vote, members agreed to maintain the current Fed funds rate range of 0.25%-0.50%. A couple of points to note: members generally agreed that the case for an interest rate hike has strengthened, but several members wanted more evidence that inflationary trends are gaining momentum; and this meeting occurred before the results from the presidential election, the results of which could impact the Committee’s decision on interest rates when it next meets in December.
• The international trade deficit widened to $62.0 billion in October, up $5.5 billion from September, according to the monthly advance report from the Census Bureau. Exports of goods were $122.1 billion, $3.4 billion less than September exports. Imports for goods for October were $184.1 billion, $2.1 billion more than September imports. Exports of foods, feed & beverages declined 11.8%, while exports of industrial supplies, including petroleum, fell 4.1%.
• According to the University of Michigan’s Surveys of Consumers chief economist, Richard Curtin, “The initial reaction of consumers to Trump’s victory was to express greater optimism about their personal finances as well as improved prospects for the national economy.” The Index of Consumer Sentiment jumped 6.6 points to 93.8, the Current Economic Conditions Index increased from 103.2 in September to 107.3 for October, and the Index of Consumer Expectations climbed 8.4 points to 85.2.
• In the week ended November 19, the advance figure for seasonally adjusted initial unemployment insurance claims was 251,000, an increase of 18,000 from the previous week’s revised level. The advance seasonally adjusted insured unemployment rate increased 0.1 percentage point to 1.5%. The advance number for seasonally adjusted insured unemployment during the week ended November 12 was 2,043,000, an increase of 60,000 from the previous week’s revised level.

Eye on the Week Ahead

Important economic indicators relied upon by the FOMC are posted this week ahead of the Committee’s meeting during the second full week of December. The latest reports on the third-quarter GDP, personal income and outlays, and the employment situation are on tap this week.

The Markets (as of market close November 18, 2016)

Treasury yields continue to climb as the 10-year rate jumped 20 basis points for the week while exceeding last year’s closing yield for the first time in 2016. The dollar has been keeping pace with rising bond yields, which is good for imports but not so good for exports. Equities have apparently benefitted from money moving from Treasuries as each of the indexes listed here posted week-over-week gains, except for the Global Dow. The Russell 2000 small-cap index has been on a roll of late, climbing over 10% by the end of election week and gaining another 2.60% last week.

The price of crude oil (WTI) increased by last week’s end, closing at $45.58 per barrel, up from the prior week’s price of $43.17 per barrel. The price of gold (COMEX) continued its downward trend, closing last week at $1,207.30 by late Friday afternoon, down from the prior week’s price of $1,225.50. The national average retail regular gasoline price decreased to $2.184 per gallon on November 14, 2016, $0.049 less than the prior week’s price but $0.006 more than a year ago.

Market/Index	2015 Close	Prior Week	As of 11/18	Weekly Change	YTD Change
DJIA	17425.03	18847.66	18867.93	0.11%	8.28%
Nasdaq	5007.41	5237.11	5321.51	1.61%	6.27%
S&P 500	2043.94	2164.45	2181.90	0.81%	6.75%
Russell 2000	1135.89	1282.38	1315.64	2.59%	15.82%
Global Dow	2336.45	2441.96	2428.04	-0.57%	3.92%
Fed. Funds target rate	0.25%-0.50%	0.25%-0.50%	0.25%-0.50%	0 bps	0 bps
10-year Treasuries	2.26%	2.15%	2.35%	20 bps	9 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 prices consumers pay for goods and services increased 0.4% in October and 1.6% over the last 12 months, according to the latest Consumer Price Index (CPI). Components of the CPI that saw price increases include the energy index (3.5%) and the indexes for fuel oil (5.9%) and gasoline (7.0%). The index for food was unchanged for the fourth consecutive month. The index for all items less food and energy (core prices) rose 0.1% for the second straight month, but is up 2.1% over the last 12 months. The increase in the CPI over the past year is closing in on the Fed’s 2.0% inflation target, which could further strengthen the argument for an interest rate increase next month.
• Food and services sales at the retail level increased last month. The Census Bureau announced last week that advance estimates of U.S. retail and food services sales for October were $465.9 billion, an increase of 0.8% from the previous month, and 4.3% above October 2015. Total sales for the August 2016 through October 2016 period were up 3.3% from the same period a year ago. Retail trade sales were up 1.0% from September 2016, and up 4.3% from last year. Nonstore (online) retailer sales were up 12.9% from October 2015, while miscellaneous store retailer sales were up 9.5% from last year. This retail sales report bodes well for the fourth-quarter GDP.
• The prices producers received for goods and services in October did not change compared to the prior month. Year-over-year, producer prices are up 0.8%. Prices for goods edged up 0.4% in October, but the increase was offset by a 0.3% reduction in the prices for services. Prices less foods, energy, and trade services edged down 0.1% in October after rising 0.3% in both August and September. Food prices dropped 0.8% in October, while energy prices climbed 2.5% with gas jumping 9.7%.
• October was a banner month for new home construction. According to the Census Bureau, privately owned housing starts increased 25.5% above September and are 23.3% ahead of last October. Housing completions were up 5.5% for the month and 7.2% year-over-year. And the new home-building boom should continue as the number of building permits issued in October was 0.3% ahead of the number of permits pulled in September. Across the country, housing starts experienced substantial gains in the Northeast (44.8%) and Midwest (44.1%) in October.
• Speaking before the Joint Economic Committee, FOMC chair Janet Yellen indicated that economic conditions may be sufficiently improved to prompt the Committee to raise short-term interest rates soon. The Committee has held off raising interest rates this year in anticipation of continued improvement in the labor market and a return of inflation to 2.0%. Nevertheless, Yellen warned that, “were the FOMC to delay increases in the federal funds rate for too long, it could end up having to tighten policy relatively abruptly to keep the economy from significantly overshooting both of the Committee’s longer-run policy goals.”
• According to the latest report from the Federal Reserve, industrial production was unchanged in October after decreasing 0.2% in September. On the positive side, manufacturing output increased 0.2%, and mining posted a gain of 2.1% for its largest increase since March 2014. Overall production was pulled down by the index for utilities, which dropped 2.6%, as warmer-than-normal temperatures reduced the demand for heating. Total industrial production in October was 0.9% lower than its year-earlier level. Capacity utilization for the industrial sector edged down 0.1 percentage point in October to 75.3%.
• We’re still paying a little more for products purchased abroad (imports) compared to the prices we’re receiving for products sold overseas (exports). According to the latest figures from the Bureau of Labor Statistics, U.S. import prices grew by 0.5% in October, following a 0.2% increase in September. The October increase was driven by higher fuel prices (7.5%), which more than offset declining nonfuel prices. Import prices, excluding fuel, actually fell 0.1% for the second consecutive month. The price index for U.S. exports increased 0.2% in October following a 0.3% advance the previous month. Despite the recent increases, prices for U.S. exports fell over the past year, declining 1.1%.
• The National Association of Home Builders Housing Market Index (HMI®) is based on a survey of association members concerning their opinions on the economy in general and single-family housing market conditions in particular. The HMI® for November was 63 — unchanged from October. An index reading above 50 is considered positive. Most members responded before the presidential election, which may explain why levels remained unchanged pending the election results. The index for single-family home sales over the next six months dropped from 71 to 69 in November, while the index for traffic of prospective buyers gained a bit, moving from October’s reading of 46 to 47 for November.
• In the week ended November 12, the advance figure for seasonally adjusted initial unemployment insurance claims was 235,000, a decrease of 19,000 from the previous week’s unrevised level. The advance seasonally adjusted insured unemployment rate fell 0.1 percentage point to 1.4%. The advance number for seasonally adjusted insured unemployment during the week ended November 5 was 1,977,000, a decrease of 66,000 from the previous week’s revised level.

Eye on the Week Ahead

Trading may be light during Thanksgiving week, which could exaggerate any market movements during the holiday-shortened week. Nevertheless, the latest reports on existing and new home sales for October are out as is the Census Bureau’s report on international trade in goods, which closed September with a trade balance deficit of $56.1 billion.

The Markets (as of market close November 11, 2016)

The markets climbed at the beginning of last week as money moved from bonds (yield on 10-year Treasuries gained 5 basis points) to equities. The Dow jumped 370 points and Nasdaq gained over 2.0% by the close of trading last Monday. Following the election, equities surged as did long-term bond yields. The Dow gained over 256 points, Nasdaq and the S&P 500 each jumped over 1.0%, and the Russell 2000 climbed over 3.0%. Money continued to move from long-term government bonds as the yield on 10-year Treasuries reached 2.0% for the first time in nine months. The trading frenzy calmed by the end of last week, but not before the Dow reached a record high, gaining almost 1000 points over the week to close at 18847.66. The Russell 2000 was last week’s strongest performer, climbing more than 10.0% on the heels of its best weekly performance since December 2011.

The price of crude oil (WTI) fell by last week’s end, closing at $43.17 per barrel, down from the prior week’s price of $44.13 per barrel. The price of gold (COMEX) also sunk, closing at $1,225.50 by late Friday afternoon, down from the prior week’s price of $1,305.60. The national average retail regular gasoline price increased to $2.233 per gallon on November 7, 2016, $0.003 more than the prior week’s price but $0.002 less than a year ago.

Market/Index	2015 Close	Prior Week	As of 11/11	Weekly Change	YTD Change
DJIA	17425.03	17888.28	18847.66	5.36%	8.16%
Nasdaq	5007.41	5046.37	5237.11	3.78%	4.59%
S&P 500	2043.94	2085.18	2164.45	3.80%	5.90%
Russell 2000	1135.89	1163.44	1282.38	10.22%	12.90%
Global Dow	2336.45	2390.21	2441.96	2.17%	4.52%
Fed. Funds target rate	0.25%-0.50%	0.25%-0.50%	0.25%-0.50%	0 bps	0 bps
10-year Treasuries	2.26%	1.77%	2.15%	38 bps	-11 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

• Donald Trump was elected as the 45th president of the United States last Tuesday. He is the first person elected to the Oval Office without prior political or military experience. The long-term impact president-elect Trump’s election will have on the economy and the stock market has yet to be determined, however following an immediate drop in equities early last Wednesday, stocks rebounded during the week, led by the Dow, which reached an all-time high. As the next several weeks unfold, more information about the president-elect’s policies and cabinet appointments should be revealed. How the economy and markets respond is open to speculation at this point.
• According to the Job Openings and Labor Turnover report for September, the number of job openings increased slightly from 5.453 million in August to 5.486 million in September. There were 187,000 fewer hires in September, while total separations (quits, layoffs, discharges) fell by about 138,000. The quits rate was unchanged at 2.1% and the layoffs and discharges rate decreased to 1.0% — a record low. Some 3.1 million workers quit their jobs in September, while another 1.5 million workers lost their jobs to discharges or layoffs.
• October is the first month of the federal government’s 2017 fiscal year. According to the October monthly statement from the Department of the Treasury, there was a $44.19 billion deficit for the month. The government took in $221.69 billion and spent $265.88 billion for the month. Compared to the last fiscal year, the deficit for this October is $92.37 billion lower than the deficit from 12 months earlier.
• Following a decline in October, consumers’ opinion of the economy has picked up, according to November’s preliminary results from the University of Michigan’s Surveys of Consumers. Respondents’ improving economic outlook helped drive the Index of Consumer Sentiment to 91.6 — well ahead of October’s 87.2. It should be noted that the preliminary data for this report was collected before last week’s presidential election.
• In the week ended November 5, the advance figure for seasonally adjusted initial unemployment insurance claims was 254,000, a decrease of 11,000 from the previous week’s unrevised level. The advance seasonally adjusted insured unemployment rate remained at 1.5%. The advance number for seasonally adjusted insured unemployment during the week ended October 29 was 2,041,000, an increase of 18,000 from the previous week’s revised level.

Eye on the Week Ahead

With the results of the U.S. presidential election in the rearview mirror, it will probably take a while for the dust to settle as to the effect the election results will have on the equities markets and the economy. Will the Trump victory impact the Fed’s decision regarding interest rates? With respect to the economy, reports next week highlight the latest information on retail sales, the Consumer Price Index, and the Producer Price Index — each of which are indicators of consumer spending and inflationary trends.

The Markets (as of market close November 4, 2016)

Even a good jobs report wasn’t enough to steady investors last week, as each of the indexes listed here lost value from the prior week. Oil prices fell sharply midweek following a report that crude oil inventories are much larger than expected. While OPEC leaders agreed to reduce production following a September meeting, several countries sought and received exemptions from the cut, prompting crude oil production to increase. Crude oil prices continued to drop, closing the week 10.0% below the previous week’s closing price. With oil prices falling, energy shares tumbled, leading to drop-offs in the large-cap indexes such as the S&P 500. The Nasdaq, Russell 2000, and Global Dow each lost over 2.0% on the week, while the Dow fell 1.50%. The Nasdaq, which had been up over 6.0% year-to-date in early October, is close to its 2015 year-end value. Prices increased on 10-year Treasuries as yields dropped. Gold had a good week, climbing 2.2%. It appears the tight U.S. presidential election is prompting investors to exercise caution for now.

The price of crude oil (WTI) fell by last week’s end, closing at $44.13 per barrel, down from the prior week’s price of $48.64 per barrel. The price of gold (COMEX) increased, closing at $1,305.60 by late Friday afternoon, up from the prior week’s price of $1,277.00. The national average retail regular gasoline price decreased to $2.230 per gallon on October 31, 2016, $0.013 less than last week’s price but $0.006 more than a year ago.

Market/Index	2015 Close	Prior Week	As of 11/4	Weekly Change	YTD Change
DJIA	17425.03	18161.19	17888.28	-1.50%	2.66%
Nasdaq	5007.41	5190.10	5046.37	-2.77%	0.78%
S&P 500	2043.94	2126.41	2085.18	-1.94%	2.02%
Russell 2000	1135.89	1187.61	1163.44	-2.04%	2.43%
Global Dow	2336.45	2449.11	2390.21	-2.40%	2.30%
Fed. Funds target rate	0.25%-0.50%	0.25%-0.50%	0.25%-0.50%	0 bps	0 bps
10-year Treasuries	2.26%	1.85%	1.77%	-8 bps	-49 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 jobs report for October was a mixed bag of information, but most of it was positive. There were 161,000 new jobs added in October, down from September’s upwardly revised total of 191,000. The unemployment rate fell 0.1 percentage point to 4.9%. Employment continued to trend upward in health care, professional and business services, and financial activities. But the big news from the report is on the earnings side, where average hourly earnings increased $0.10 to $25.92, following an $0.08 gain in September. Over the year, average hourly earnings have risen by 2.8%.
• In a move that was not unexpected, the Fed decided to maintain the federal funds rate at its current 0.25%-0.50% range. While the Committee acknowledges that the case for an increase in the federal funds rate has continued to strengthen, it decided, for the time being, to wait for some further evidence of continued progress toward further improvement in labor market conditions and a return to 2.0% inflation. Unless economic conditions worsen over the course of the next several weeks, it is expected that the Committee will raise interest rates following its last meeting of the year in December.
• An indicator of inflationary trends that receives special consideration by the Fed, the personal consumption expenditures price index rose 0.2% in September from August. The PCE index is up 1.2% from a year earlier — still short of the Fed’s 2.0% target inflation rate. Overall, personal income increased $46.7 billion (0.3%) in September, disposable personal income (personal income less current taxes) increased $37.0 billion (0.3%), and personal consumption expenditures (PCE) increased $61.0 billion (0.5%). Excluding food and energy (core PCE), the index increased 0.1% in September. The increase in personal income in September primarily reflected gains in employee and nonfarm proprietors’ income.
• The latest figures from the Bureau of Economic Analysis show that the goods and services trade deficit fell $4.0 billion in September to $36.4 billion. September exports were $189.2 billion, $1.0 billion more than August exports. September imports were $225.6 billion, $3.0 billion less than August imports. Year-to-date, the goods and services deficit decreased $9.2 billion, or 2.5%, from the same period in 2015. Exports decreased $60.5 billion, or 3.5%. Imports decreased $69.7 billion, or 3.3%.
• In the manufacturing sector, Markit’s U.S. Manufacturing Purchasing Managers’ Index™ (PMI™) for October was 53.4 — better than September’s 51.5. The improvement in the index, based on a survey of purchasing managers, was driven by strengthening in production and new orders. The latest Manufacturing ISM® Report On Business® also noted an increase in manufacturing activity, as its PMI registered 51.9% — a 0.4 percentage point increase over September’s reading. While the ISM® report saw a drop in new orders, production and employment increased in October compared to September.
• The latest Non-Manufacturing ISM® Report On Business® shows economic activity in the non-manufacturing sector slowed in October as the non-manufacturing index registered 54.8% — 2.3 percentage points lower than September’s reading of 57.1%. Non-manufacturing business activity, new orders, and employment all decreased in October from September. Only the Prices Index increased 2.6 percentage points, indicating rising producer prices in October. There has been a slight cooling-off in the non-manufacturing sector month-over-month, indicating that September’s increases weren’t sustainable.
• Business sector labor productivity (output per hour) increased at a 3.1% annual rate during the third quarter of 2016, the U.S. Bureau of Labor Statistics reported last week, as output increased 3.4% and hours worked increased 0.3%. This is the first labor productivity increase out of the last four quarters. Labor costs increased 0.3% in the third quarter, reflecting a 3.4% increase in hourly compensation and a 3.1% increase in productivity.
• In the week ended October 29, the advance figure for seasonally adjusted initial unemployment insurance claims was 265,000, an increase of 7,000 from the previous week’s unrevised level. The advance seasonally adjusted insured unemployment rate remained at 1.5%. The advance number for seasonally adjusted insured unemployment during the week ended October 22 was 2,026,000, a decrease of 14,000 from the previous week’s revised level.

Eye on the Week Ahead

There isn’t much in terms of economic reports this week, which is probably a good thing as all eyes will be on the results of Tuesday’s U.S. presidential election.

The Markets (as of market close October 31, 2016)

Trading in the early part of October saw equities respond negatively to rumors of a pullback on stimulus measures by the European Central Bank, which ultimately proved to be unfounded. Each of the indexes listed here closed the first week of October below their respective September closing values, except for the Global Dow, which eked out a marginal gain. Markets continued their tailspin during the second week of October led by the Global Dow and Nasdaq, each of which lost close to 1.5%.

Stocks rebounded during the third week of the month, posting week-over-week gains by the October 21 market close. Nevertheless, equities fell on the last day of October, closing the month in the red. The Dow fell for the third consecutive month in October, losing almost 1.0%. The S&P 500 lost nearly 2.0% compared to September. But the biggest downturn was posted by the Russell 2000, which plunged about 5.0%. Ultimately, investors may be cautious entering November’s presidential election.

U.S. government bond prices fell during October, as the yield on 10-year Treasuries closed up 23 basis points month-over-month. Gold lost value, closing October at $1,277.80, down $41 from its September closing value.

Market/Index	2015 Close	Prior Month	As of October 31	Month Change	YTD Change
DJIA	17425.03	18308.15	18142.42	-0.91%	4.12%
NASDAQ	5007.41	5312.00	5189.13	-2.31%	3.63%
S&P 500	2043.94	2168.27	2126.15	-1.94%	4.02%
Russell 2000	1135.89	1251.65	1191.39	-4.81%	4.89%
Global Dow	2336.45	2459.66	2445.57	-0.57%	4.67%
Fed. Funds	0.25%-0.50%	0.25%-0.50%	0.25%-0.50%	0 bps	0 bps
10-year Treasuries	2.26%	1.59%	1.82%	23 bps	-44 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

• Employment: The employment sector has not been overwhelmingly strong, but it has been steady throughout much of the year. According to the Bureau of Labor Statistics, there were 156,000 new jobs added in September, up from 151,000 jobs added in August. Thus far this year, job growth has averaged 178,000 per month, compared with an average of 229,000 per month in 2015. The unemployment rate remained relatively the same at 5.0% (4.9% in August). There were 7.9 million unemployed persons. Both the unemployment rate and the number of unemployed persons has changed little since August of last year. The labor force participation rate was 62.9% and the employment/population ratio came in at 59.8%. The average workweek increased by 0.1 hour to 34.4 hours (the workweek in manufacturing was 40.7 hours compared to 33.3 workweek hours for private service-providing employees). Average hourly earnings rose by $0.06 to $25.79. Over the year, average hourly earnings have risen by 2.6%.

• FOMC/interest rates:The FOMC did not meet in October, keeping the federal funds target rate at the 0.25%-0.50% range. However, minutes from its September meeting indicate several Committee members are of the opinion that the time is right for another rate hike — at least by the end of the year.

• Oil: The price of crude oil (WTI) fluctuated during October, reaching almost $52 per barrel, before finally settling at $46.74 per barrel by the end of the month. The national average retail regular gasoline price was $2.243 per gallon on October 24, down from the September 26 selling price of $2.224.

• GDP/budget: According to the first advance estimate of the GDP from the Bureau of Economic Analysis, the third-quarter 2016 gross domestic product grew at an annualized rate of 2.9% — exceeding the second-quarter GDP growth rate of 1.4%. The primary positives driving the upward movement of the GDP were exports, which increased at a 10% rate in the third quarter, offsetting a 2.3% increase in imports, which are a negative in the calculation of GDP. Nonresidential (e.g., business) fixed investment increased at a rate of 1.2%, slightly ahead of the prior quarter’s 1.0% rate of growth. The third quarter’s 2.9% annualized increase is the strongest since the third quarter of 2014. September was the last month of the government’s fiscal year. The federal deficit for FY 2016 was $587.4 billion — about 34% over the FY 2015 budget deficit. For the year, total receipts increased only 0.6%, while expenditures rose 4.5%. For the month, September saw a surplus of $33.4 billion.

• Inflation/consumer spending: Inflationary trends showed some life in September. Personal income (pre-tax earnings) and disposable personal income (income less taxes) each rose 0.3%, while personal spending, as measured by personal consumption expenditures, increased 0.5% for the month. Core personal consumption expenditures (personal spending excluding volatile food and energy costs) rose 0.1% in September, following a 0.2% monthly increase in August. The core PCE index is up 1.7% compared to last year. The price index increased 0.2% for the month, and is up 1.2% year-over-year. The Producer Price Index, which measures the prices companies receive for goods and services, jumped 0.3% in September and is up 0.7% year-over-year — the largest 12-month increase since December 2014. Excluding food, trade services, and energy, prices increased 0.3% for the month, the same as August. For the 12 months ended in September, the index for final demand less foods, energy, and trade services rose 1.5% — the largest increase since climbing 1.5% for the 12 months ended November 2014. The Consumer Price Index, which measures what consumers pay for both goods and services, increased 0.3% in September. Over the last 12 months, the CPI has risen 1.5%. Increases in the shelter (0.4%) and gasoline (5.8%) indexes were the main causes of the rise in the CPI. The index less food and energy increased 0.1% in September after a 0.3% increase in August.

• Housing: The housing sector has been a mixed bag for much of the year. Higher home prices and a lack of available homes for sale are keeping the housing market in check. Existing home sales for all housing types increased 3.2% in September to an annual rate of 5.47 million sales, compared to a downwardly revised 5.30 million in August, according to the National Association of Realtors®. Existing home sales are at their highest pace since June (5.57 million) and are 0.6% above a year ago (5.44 million). The median sales price for existing homes in September was $234,200, down over 2.5% from the price in August, but up 5.6% from September 2015. Total housing inventory at the end of September increased 1.5% to 2.04 million existing homes available for sale, but is 6.8% lower than a year ago (2.19 million) and has declined year-over-year for 16 straight months. The Census Bureau’s latest report reveals sales of new single-family homes increased 3.1% in September to an annual rate of 593,000 — up from August’s rate of 575,000. The median sales price of new houses sold in September was $235,000, while the average sales price was $377,700. The seasonally adjusted estimate of new houses for sale at the end of September was 235,000. This represents a supply of 4.8 months at the current sales rate, which is down from 236,000 homes available (supply of 4.9 months) in August.

• Manufacturing:One of the reasons the Fed has held off on raising interest rates is the continued weakness in the manufacturing and industrial production sectors. The Federal Reserve’s monthly index of industrial production (which includes factories, mines, and utilities) rose a scant 0.1% in September following a 0.4% drop in August. Manufacturing output increased 0.2% for the month. Industrial production rose at an annual rate of 1.8% for the third quarter, which is its first quarterly increase since the third quarter of 2015. However, compared to last year, industrial production is down 1.0%. At 104.2% of its 2012 average, total industrial production in September was 1.0% lower than its year-earlier level. Capacity utilization for the industrial sector edged up 0.1 percentage point in September to 75.4%, a rate that is 4.6 percentage points below its long-run (1972-2015) average. The advance report from the Census Bureau shows new orders for all durable goods (expected to last at least three years) fell $0.3 billion, or 0.1%, in September from the prior month. Excluding the volatile transportation segment, new orders increased 0.2%. Orders for capital goods increased $1.0 billion, or 1.5%, and shipments rose 0.8%.

• Imports and exports:In a positive sign for business investment, the advance report on international trade in goods revealed that the trade gap narrowed by about 3.1% in September from August. The overall trade deficit was $56.10 billion in September, down from $59.15 billion in August. Exports rose 0.9% to $125.6 billion, $1.1 billion more than August exports. Imports dropped 1.1% to $181.7 billion, $2.0 billion less than August imports. Rising fuel prices lifted the prices for U.S. imports (goods purchased here but produced abroad) 0.1% in September following a 0.2% decline in August. The prices for exports rose 0.3% following an 0.8% dip the prior month. Year-over-year, import prices are down 1.1% and export prices have fallen 1.5%.

• International markets: The European Central Bank didn’t expand its stimulus measures, but it didn’t retract them either — keeping its policies and benchmark interest rate intact. In the United Kingdom, September’s CPI was up 1.0%, which is a two-year high. Following completion of several economic overhauls, Greece is expected to receive an additional round of fresh loans. In China, the GDP expanded 6.7% from a year ago. Retail sales were up almost 11%, while industrial production advanced 6.1%.

• Consumer sentiment:Consumers’ confidence in the economy gained some momentum in September. The Conference Board Consumer Confidence Index® for September rose 2.3 points to 104.1. The Surveys of Consumers of the University of Michigan Index of Consumer Sentiment expanded from 90.1 in August to 91.2 in September. Both reports show consumers are bullish on future economic gains, but guarded when it comes to present economic conditions.

Eye on the Month Ahead

November should be an interesting month for the economy in general and the stock market in particular. Of course, the big news focuses on the results of the November 8 presidential election. In addition, the FOMC meets in November. While interest rates may be raised by the end of the year, it is not expected to occur until December. Once the dust settles from the election, and presuming interest rates aren’t increased in November, equities markets may begin to focus on what’s left of earnings season as well as the jobs and inflation data.

The Markets (as of market close October 28, 2016)

As the presidential election draws near, news about the candidates may be affecting the markets. Word of an FBI investigation into more Clinton emails, coupled with some earnings reports that were weaker than expected, sent equities into the red for the week. Of the indexes listed here, only the Dow posted a gain over the prior week, albeit less than 1.0%. The Nasdaq and Russell 2000 fell back a bit, dropping 1.28% and 2.50%, respectively. Gold climbed 0.8%, while the price of crude oil, which had been over $50 per barrel, dropped almost 5.0%.

The price of crude oil (WTI) fell by last week’s end, closing at $48.64 per barrel, down from the prior week’s price of $51.0 per barrel. The price of gold (COMEX) increased, closing at $1,277.00 by late Friday afternoon, up from the prior week’s price of $1,266.70. The national average retail regular gasoline price decreased to $2.243 per gallon on October 24, 2016, $0.014 less than the prior week’s price but $0.015 more than a year ago.

Market/Index	2015 Close	Prior Week	As of 10/28	Weekly Change	YTD Change
DJIA	17425.03	18145.71	18161.19	0.09%	4.22%
Nasdaq	5007.41	5257.40	5190.10	-1.28%	3.65%
S&P 500	2043.94	2141.16	2126.41	-0.69%	4.03%
Russell 2000	1135.89	1218.10	1187.61	-2.50%	4.55%
Global Dow	2336.45	2449.62	2449.11	-0.02%	4.82%
Fed. Funds target rate	0.25%-0.50%	0.25%-0.50%	0.25%-0.50%	0 bps	0 bps
10-year Treasuries	2.26%	1.73%	1.85%	12 bps	-41 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 first estimate of the third-quarter GDP exceeded expectations, increasing at an annual rate of 2.9% — the fastest growth rate in two years. The second-quarter GDP increased by 1.4%. There are three estimates for each quarterly GDP report, with each estimate based on more complete economic data, so the annual growth rate may change with subsequent reports. The biggest driver of the increase in the GDP was personal consumption expenditures, which rose 2.1% — a much slower rate of growth than the 4.3% gain during the second quarter. According to the Bureau of Economic Analysis report, the increase in real GDP growth in the third quarter reflected an upturn in private inventory investment, an acceleration in exports, a smaller decrease in state and local government spending, and an upturn in federal government spending.

• In the manufacturing sector, the report on durable goods orders is important as it shows the number of new orders placed with U.S. manufacturers. Last week’s advance report for September projects a decrease of $0.3 billion, or 0.1%, in new orders for manufactured durable goods (expected to last at least three years). A decrease in orders for transportation equipment drove the overall decrease. Excluding transportation, new orders increased 0.2%. Excluding defense, new orders increased 0.7%. On the other hand, shipments of durable goods in September increased $0.2 billion, or 0.8%, led by a jump in shipments of transportation equipment. As new orders slow, manufacturers draw down unfilled orders to keep shipments moving. Unfilled orders fell 0.4% in September for the fifth consecutive monthly decrease. Overall, the manufacturing sector continues to be relatively flat, with weakness in global demand for domestic products.

• Employer costs increased for the third straight quarter, according to the latest figures released by the Bureau of Labor Statistics. Compensation costs increased 0.6% for the third quarter, as wages and salaries rose 0.5%, and benefits increased 0.7%. Compensation costs for civilian workers increased 2.3% for the 12-month period ended in September 2016. In September 2015, compensation costs increased 2.0%. On the year, wages and salaries increased 2.4%, while benefit costs increased 2.3%. Growth in wages and salaries has been steady, but certainly not spectacular, over the past couple of years.

• The Census Bureau’s advance report on international trade in goods for September saw the trade deficit fall roughly $3.1 billion from $59.149 billion in August to $56.083 billion in September. Exports of goods for September were $125.6 billion, $1.1 billion more than August exports. Imports of goods for September were $181.7 billion, $2.0 billion less than August imports.

• New home sales picked up in September. The Census Bureau reported that sales of new single-family homes were at an annual rate of 593,000, 3.1% above the August rate of 575,000 and 29.8% above the September 2015 estimate of 457,000 houses for sale. The median sales price of new houses sold in September 2016 was $313,500; the average sales price was $377,700. The seasonally adjusted estimate of new houses for sale at the end of September was 235,000. This represents a supply of 4.8 months at the current sales rate.

• Consumer confidence in current business and employment conditions waned, as did consumers’ short-term outlook on economic conditions. The Conference Board Consumer Confidence Index® declined in October following an increase September. The index fell from 103.5 in September to October’s 98.6. Following suit, the University of Michigan’s Surveys of Consumers also shows consumer confidence fell in October as the Index of Consumer Sentiment dropped to 87.2, down from September’s 91.2. This is the lowest level since October 2014.

• In the week ended October 22, the advance figure for seasonally adjusted initial unemployment insurance claims was 258,000, a decrease of 3,000 from the previous week’s revised level. The advance seasonally adjusted insured unemployment rate remained at 1.5%. The advance number for seasonally adjusted insured unemployment during the week ended October 15 was 2,039,000, a decrease of 15,000 from the previous week’s revised level.

Eye on the Week Ahead

Economic news this week focuses on the Federal Open Market Committee meeting and the employment figures for October. While the Committee has hinted that interest rates might be raised by the end of the year, it is not expected to happen at this meeting. Employment figures for October are out this week. The employment sector has been steady, with 156,000 new jobs added in September. Payroll has increased only marginally, while the unemployment rate has remained at about 5.0%.

The Markets (as of market close October 21, 2016)

Last week began with a whimper as equities closed down (the Dow fell 0.3%), while the 10-year Treasuries yield dropped 4 basis points and bond prices increased. Oil (WTI) fell below $50 per barrel before rallying to around $50.50 per barrel last Tuesday morning. Midweek saw the markets remain steady after the European Central Bank decided to leave its interest rates unchanged. Favorable earnings reports pushed the markets into positive territory by last week’s end, as each of the indexes listed here posted gains week-over-week, led by the Global Dow and the Nasdaq, each of which gained almost 1.0%. The price of crude oil (WTI) advanced $0.68, while gold had a good week, gaining almost $14 over the prior week’s closing price.

The price of crude oil (WTI) closed at $51.0 per barrel last week, up from $50.32 per barrel the previous week. The price of gold (COMEX) increased, closing at $1,266.70 by late Friday afternoon, up from the prior week’s price of $1,252.90. The national average retail regular gasoline price decreased to $2.257 per gallon on October 17, 2016, $0.015 less than last week’s price and $0.020 lower than a year ago.

Market/Index	2015 Close	Prior Week	As of 10/21	Weekly Change	YTD Change
DJIA	17425.03	18138.38	18145.71	0.04%	4.14%
Nasdaq	5007.41	5214.16	5257.40	0.83%	4.99%
S&P 500	2043.94	2132.98	2141.16	0.38%	4.76%
Russell 2000	1135.89	1212.41	1218.10	0.47%	7.24%
Global Dow	2336.45	2426.05	2449.62	0.97%	4.84%
Fed. Funds target rate	0.25%-0.50%	0.25%-0.50%	0.25%-0.50%	0 bps	0 bps
10-year Treasuries	2.26%	1.80%	1.73%	-7 bps	-53 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

• Overall, consumer prices increased in September, but core prices changed very little. The Consumer Price Index, a measure of the change in the prices of goods and services purchased by consumers, increased 0.3% in September over August. The gasoline index rose 5.8% in September and accounted for more than half of the increase in the CPI. The energy index increased 2.9%, its largest advance since April. The index for all items less food and energy (core prices) rose a scant 0.1% in September after a 0.3% increase in August. The CPI has risen 1.5% over the last 12 months — its largest 12-month increase since October 2014. However, core prices actually fell 0.1 percentage point year-over-year. Based on this report, inflation may be trending up, but at a very moderate pace.

• As expected, the single-family housing market picked up steam in September after a brief retreat in August. Sales of existing homes jumped 3.2% in September to an annual rate of 5.47 million, up from August’s downwardly revised 5.30 million. Through September, existing home sales are at their highest pace since last June and are 0.6% above a year ago. The median existing-home price for all housing types in September was $234,200, up 5.6% from September 2015 ($221,700). The median existing single-family home price was $235,700 in September, up 5.6% from September 2015. Unsold inventory (2.04 million homes available) is at a 4.5-month supply at the current sales pace, which is down from 4.6 months in August. Adding to the increase of existing home sales is the jump in sales to first-time homebuyers, which accounts for 34% of total sales in September. First-time buyers represented 30% of sales in all of 2015.

• According to the latest information from the Census Bureau, building permits are up 6.3% and single-family housing starts increased 8.1% in September. On the negative side, single-family housing completions fell 8.8% and multifamily housing starts plummeted 38%. However, multifamily building permits advanced 16.8%, indicating that construction in that sector should pick up over the next several months.

• The National Association of Home Builders Housing Market Index, based on a survey of NAHB members, fell 2 points to 63 for October. Home builders have some reservations about the present market for new home sales due to concerns over shortages of lots and labor. However, the index for single-family home sales over the next six months increased 1 percentage point, as respondents expect the housing market to continue to make slow and steady gains.

• Industrial production edged up 0.1% in September after falling 0.5% in August. For the third quarter as a whole, industrial production rose at an annual rate of 1.8% for its first quarterly increase since the third quarter of 2015. Manufacturing output increased 0.2% in September and moved up at an annual rate of 0.9% in the third quarter. However, compared to last year, industrial production is down 1.0% with manufacturing output remaining unchanged from a year earlier.

• In the week ended October 15, the advance figure for seasonally adjusted initial unemployment insurance claims was 260,000, an increase of 13,000 from the previous week’s revised level. The advance seasonally adjusted insured unemployment rate remained at 1.5%. The advance number for seasonally adjusted insured unemployment during the week ended October 8 was 2,057,000, an increase of 7,000 from the previous week’s revised level.

Eye on the Week Ahead

After several weeks of volatility, investors will likely keep their fingers crossed for a break in the action as third-quarter earnings reports continue to stream in. Rising oil prices and increased consumer spending could expand the third-quarter GDP.

The Markets (as of market close October 14, 2016)

Oil prices reached a one-year high early last week, as Russia expressed its support of OPEC in its efforts to limit production, prompting stocks to post early week gains. With corporate earnings season upon us, early reports from some major companies were not encouraging. Globally, China’s 10% year-over-year drop in exports once again raised concerns about the weakening of the world’s second-largest economy. Major market indexes trended down midweek, while long-term bond yields expanded and the price of crude oil remained just above $50 per barrel. Favorable earnings reports from some of the world’s largest banks at the end of last week helped boost stocks, but not enough to prevent each of the indexes listed here from closing the week in the red.

The price of crude oil (WTI) closed at $50.32 per barrel last week, up from $49.55 per barrel the previous week. The price of gold (COMEX) continued to fall, closing at $1,252.90 by late Friday afternoon, down from the prior week’s price of $1,258.60. The national average retail regular gasoline price increased to $2.272 per gallon on October 10, 2016, $0.027 more than last week’s price but $0.065 less than a year ago.

Market/Index	2015 Close	Prior Week	As of 10/14	Weekly Change	YTD Change
DJIA	17425.03	18240.49	18138.38	-0.56%	4.09%
Nasdaq	5007.41	5292.40	5214.16	-1.48%	4.13%
S&P 500	2043.94	2153.74	2132.98	-0.96%	4.36%
Russell 2000	1135.89	1236.56	1212.41	-1.95%	6.74%
Global Dow	2336.45	2464.52	2426.05	-1.56%	3.83%
Fed. Funds target rate	0.25%-0.50%	0.25%-0.50%	0.25%-0.50%	0 bps	0 bps
10-year Treasuries	2.26%	1.72%	1.80%	8 bps	-46 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 prices producers received for goods and services increased by 0.3% in September. The Producer Price Index increased 0.7% for the 12 months ended in September, the largest 12-month rise since December 2014. The price index less foods, energy, and trade services moved up 0.3% in September, the same as in August. For the 12 months ended in September, prices less foods, energy, and trade services rose 1.5%, the largest increase since climbing 1.5% for the 12 months ended November 2014.

• Retail sales at stores, online retailers, and restaurants increased 0.6% in September, following a 0.2% decline the prior month. Excluding automotive and gasoline, retail sales were up 0.3% for September. Compared to September 2015, retail sales are up 2.7%. Increased household spending, reflective of a healthy labor market, should give a boost to the GDP. Inflation may be starting to firm up based on the latest reports on producer prices and retail sales.

• The Labor Department’s Job Openings and Labor Turnover Summary for August revealed that the number of job openings decreased by 388,000 (7.3%) from July. The number of new hires fell from 5.258 million in July to 5.210 million in August. The number of job separations also dropped from 4.991 million in July to 4.954 million in August. Roughly 3.0 million workers quit their jobs in August, while 1.6 million were laid off or otherwise dismissed — rates that were essentially unchanged from the prior month. Over the 12 months ended in August, hires totaled 62.7 million and separations totaled 60.1 million, yielding a net employment gain of 2.6 million. Nevertheless, the fall in job openings coupled with the decrease in new hires seems to indicate a slowing in job growth.

• Not unexpectedly, the Fed was split as to whether to increase interest rates at its September meeting, according to the minutes released last week. In a 7-3 vote, the FOMC decided to keep rates at their current level “for the time being” with the expectation that rates would be raised, “relatively soon.” With the U.S. presidential election taking place in November, it isn’t likely that rates will be altered when the Committee meets next month. However, there is a growing expectation that rates will be increased when the Committee meets in December.

• The federal government’s fiscal year ended in September with a total deficit of $587.4 billion — roughly $148 billion over the 2015 fiscal year deficit. September saw a $33.4 billion surplus for the month. For the 2016 fiscal year, total receipts increased less than 1.0%, while expenses rose 4.5%, led by an 8.8% increase in Medicare spending.

• According to the latest information from the Bureau of Labor Statistics, both import and export prices increased in September. Prices for U.S. imports increased 0.1% in September, following a 0.2% decline the previous month. The increase is largely due to an increase in fuel prices. Export prices rose 0.3% in September, after decreasing 0.8% in August. Rising import and export prices, albeit marginal, could be a sign of strengthening inflationary trends.

• The preliminary results for October show consumers’ confidence in the economy is waning, particularly in households with incomes below $75,000. According to the Surveys of Consumers, the Index of Consumer Sentiment fell from 91.2 in September to 87.9 for October. The drop is likely driven by a fall in consumer expectations, as that index moved from 82.7 in September to 76.6 in October.

• In the week ended October 8, the advance figure for seasonally adjusted initial unemployment insurance claims was 246,000, unchanged from the prior week’s revised level, which had been revised down by 3,000. The advance seasonally adjusted insured unemployment rate remained at 1.5%. The advance number for seasonally adjusted insured unemployment during the week ended October 1 was 2,046,000, a decrease of 16,000 from the previous week’s revised level.

Eye on the Week Ahead

Several major corporations will be reporting their earnings, which have historically impacted the market — at least over the short term. Consumer spending, inflation, and housing are on tap this week. Through August, the Consumer Price Index for consumer goods and services is about 1.1% ahead of last year, and is expected to maintain that pace through September. As an indicator of inflationary trends, the CPI is still running short of the 2.0% target set by the Fed. The housing sector slowed a bit in August, but is expected to pick up the pace in September as this week’s reports on both housing starts and existing home sales should show improvement.

The Markets (as of market close October 7, 2016)

Equities took a tumble early last week as the Dow, the Nasdaq, the S&P 500, and the Russell 2000 lost value. Only the Global Dow saw gains, largely feeding off the fading value of the British pound. Oil (WTI) opened last week on an uptick, gaining over $0.40 per barrel late last Monday. On Tuesday, word that the European Central Bank would reduce stimulus and raise interest rates (a fact that was denied by the ECB) sent U.S. and global stocks reeling. Bond yields jumped, with the yield on 10-year Treasuries gaining almost 10 basis points by Wednesday morning. Gold fell $42 to $1,276.40, and the Dow tumbled almost 140 points compared to its closing value from the prior week. Oil prices continued to climb on news that U.S. reserves fell for the fifth consecutive week.

As last week came to a close, stocks slipped further as each of the indexes listed here lost value except for the Global Dow, which posted a small gain. A weaker-than-expected jobs report didn’t help matters. Bond prices fell as yields jumped to their highest levels in quite some time. The yield on 10-year Treasuries increased 13 basis points last week.

The price of crude oil (WTI) closed at $49.55 per barrel last week, up from $48.05 per barrel the previous week. The price of gold (COMEX) plummeted $60, closing at $1,258.60 by late Friday afternoon, down from the prior week’s price of $1,318.80. The national average retail regular gasoline price increased to $2.245 per gallon on October 3, 2016, $0.021 more than last week’s price but $0.073 less than a year ago.

Market/Index	2015 Close	Prior Week	As of 10/7	Weekly Change	YTD Change
DJIA	17425.03	18308.15	18240.49	-0.37%	4.68%
Nasdaq	5007.41	5312.00	5292.40	-0.37%	5.69%
S&P 500	2043.94	2168.27	2153.74	-0.67%	5.37%
Russell 2000	1135.89	1251.65	1236.56	-1.21%	8.86%
Global Dow	2336.45	2459.66	2464.52	0.20%	5.48%
Fed. Funds target rate	0.25%-0.50%	0.25%-0.50%	0.25%-0.50%	0 bps	0 bps
10-year Treasuries	2.26%	1.59%	1.72%	13 bps	-54 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 number of new jobs created in September fell a bit from August. According to the Bureau of Labor Statistics, there were 156,000 new jobs in September, down from 167,000 in August. September’s total number of new jobs is well below the 178,000 monthly average for 2016. The unemployment rate inched up 0.1 percentage point to 5.0%, and the number of unemployed persons was little changed at 7.9 million. The employment to population ratio was 59.8 — up 0.1 percentage point from August, while the labor participation rate was little changed at 62.9. In September, the average workweek for all employees on private nonfarm payrolls increased by 0.1 hour to 34.4 hours. In September, average hourly earnings for all employees on private nonfarm payrolls rose by $0.06 to $25.79. Over the year, average hourly earnings have risen by 2.6%. Overall, this lackluster jobs report should quell any thoughts of the Fed raising interest rates when it meets again in November.

• The Institute for Supply Management Report On Business® for September showed manufacturing expanding as the purchasing managers’ index (PMI) came in at 51.5% compared to 49.4% in August. Of the 18 manufacturing industries covered, 7 reported growth, including food, beverage & tobacco products, and computer & electronic products. Industries reporting contraction include petroleum & coal products; apparel, leather & allied products; transportation equipment; and machinery. Noteworthy is the 6 percentage point increase in new orders in September over August.

• The seasonally adjusted final Markit U.S. Manufacturing Purchasing Managers’ Index™ (PMI™) registered 51.5, down slightly from 52.0 in August, to signal the weakest improvement in overall business conditions since June. Manufacturers noted slower growth in September due to a reduction in client demand and diminished export sales. A reading above 50,0 indicates growth, but at a slower pace than in August. While the Markit and ISM reports may appear divergent, they are essentially reporting slow growth in the manufacturing sector.

• The Institute for Supply Management’s Non-Manufacturing ISM® Report On Business® shows economic activity expanded in the non-manufacturing, or services, sector in September. The non-manufacturing index registered 57.1% in September, 5.7 percentage points higher than the August reading of 51.4%. This is the highest reading since October 2015. Survey respondents also reported an increase in business activity, new orders, employment, and prices. Covered non-manufacturing sectors include agriculture, utilities, retail trade, management of companies & support services, health care & social assistance, transportation & warehousing.

• The U.S. goods and services deficit was $40.7 billion in August, up $1.2 billion from July. August exports were $187.9 billion, $1.5 billion more than July exports. August imports were $228.6 billion, $2.6 billion more than July imports. Year-to-date, the goods and services deficit decreased $4.3 billion, or 1.3%, from the same period in 2015. Exports decreased $62.4 billion, or 4.1%. Imports decreased $66.8 billion, or 3.6%. The positive from the report is the increase in exports against the continued strength of the dollar. Higher imports reflects strengthening of domestic demand for goods and services.

• In the week ended October 1, the advance figure for seasonally adjusted initial unemployment insurance claims was 249,000, a decrease of 5,000 from the prior week’s unrevised level. The advance seasonally adjusted insured unemployment rate remained at 1.5%. The advance number for seasonally adjusted insured unemployment during the week ended September 24 was 2,058,000, a decrease of 6,000 from the previous week’s revised level.

Eye on the Week Ahead

The Columbus holiday week begins with the job openings report for August. While a bit dated, the report provides information on the number of job openings, hires, and quits. At the end of the week, a couple of reports relating to inflationary trends are available. The Producer Price Index for September measures price changes from the producers’ perspective relative to goods, services, and construction sold to the consumer. The retail sales report offers a comparison on merchandise and services sold to consumers based on the total receipts of merchants.