Newman Dignan & Sheerar, Inc.

Registered Investment Advisors

Markets were higher across the board during last week’s holiday-shortened trading. It was the fourth straight week of gains for the major averages. Another positive sign – breadth has been expanding lately as roughly 55% of S&P 500 stocks closed above their 200-day moving average. Lower oil prices gave investors another reason to cheer.

For the week, the DJIA gained 1.27% while the S&P 500 moved higher by 1.00%. The tech-heavy Nasdaq jumped 0.89%. International markets finished up as well. For the week, the MSCI EAFE Index (developed countries) finished ahead by 1.06% while emerging market equities (MSCI EM) inched higher by 0.47%. Small company stocks, represented by the Russell 2000, gained 0.54% for the week. Fixed income, represented by the Bloomberg Aggregate, declined 0.09% for the week as yields moved slightly higher. As a result, the 10 YR US Treasury closed at a yield of 4.47% (up ~ 3 bps from the previous week’s closing yield of ~4.44%). Gold prices closed at $2,002.20/oz – up 1.04% as the U.S. dollar index dropped by 0.48%. Oil prices retreated to close at $75.54 per barrel, down 0.66% on the week.

Last week witnessed strong Black Friday sales as U.S. consumers continue to spend past their means. Credit card balances are now @$1.08 trillion … an all-time high. Consumer Sentiment rose to 61.3 from the estimate of 60.4. Durable goods orders fell 5.4%

The most pertinent news item in the week ahead will be the release on Thursday of the Personal Consumption Expenditures (PCE) index – the Fed’s preferred inflation gauge. Expectations for the PCE report are for a 3.5% annual inflation rate in October and for a 0.2% increase over the prior month. The PCE will give investors a clue as to the Fed’s next rate move – as of now, markets are pricing in just a 12% chance that the Fed raises rates again in this cycle. Other economic releases this week include new home sales, consumer confidence, GDP and ISM Manufacturing. Additionally, quarterly earnings reports are expected from Salesforce, Snowflake, Okta, Costco, Dollar Tree, Kroger and others.

After such a strong run for the markets over the past few weeks (too far, too fast?), we would not be surprised to see a short-term pause. That said, seasonality is still favorable into year-end. We urge investors to stick close to long-term asset allocation targets.

“The secret of getting ahead is getting started.” – Mark Twain