Weekly Roundup … Upside Reversal

October 12, 2015

Markets finished nicely higher last for their best weekly performance in months. For the week, the Dow Jones Industrial Average finished at 17,084 to close up 3.72%. The broader-based S&P 500 closed at 2,015 for a gain of 3.26% for the week. The Nasdaq Composite closed the week at 4,830 as it added 2.61%. International markets were broadly higher as well. The 10-year Treasury closed the week at a yield of 2.099% (up 1.989% the prior week) as bonds gave back a little ground.

Markets got a lift from the release of the Fed’s minutes from their September meeting. The minutes seemed to confirm that the Fed will move very slowly in hiking rates (lower for longer). Crude oil prices jumped 8.98% last week despite U.S. crude inventories rising more than expected. Investors are hoping for increased production cuts that should support oil prices (we’ll see about that … worldwide demand is still sluggish, and more supply will likely come online from Iran and others). Geopolitical concerns in the Middle East could also temporarily prop-up prices, but we see prices ceding ground on supply/demand issues.

On the economic front, the U.S. trade deficit ballooned 16% in August to $48.3 billion from $41.18 billion in July. Imports grew 2.2% … a decent sign for healthy U.S. consumer spending. The Department of Labor reported initial jobless claims for the week ending October 3rd, and claims came in at 263,000 (below expectations of 274,000). No doubt, the labor market continues to be fairly resilient.

Third quarter earnings will be hot and heavy this week … buckle-up! So far, earnings have been relatively strong.

As always, we urge investors not to get caught up in the day-to-day noise of the markets. Instead, focus on long-term goals, and enjoy the beginning of fall.

“Far and away the best prize that life has to offer is the chance to work hard at work worth doing.”  – Theodore Roosevelt