All Eyes on the Fed

The Markets (as of market close September 11, 2015)

The stock market rebounded nicely from the prior week's sell-off with each of the major indexes listed here posting positive gains last week. The Nasdaq was the leader, increasing 2.96% ahead of the previous week's close, followed by the S&P 500 and the Dow. Nevertheless, market uncertainty abounds, as investors anxiously await news from this week's Federal Reserve policymakers' meeting relative to a potential interest rate hike.

The price of gold (COMEX) dropped again, selling at about $1,107.90 by late Friday afternoon compared to $1,122.30 a week earlier. Crude oil (WTI) prices remained relatively the same, selling at $44.78/barrel by week's end. The national average retail regular gasoline price decreased to $2.437 per gallon on September 7, 2015, $0.073 under the previous week's price of $2.510 per gallon and $1.02 below a year ago.

Market/Index2014 ClosePrior WeekAs of 9/11Weekly ChangeYTD Change
DJIA 17823.07 16102.38 16433.09 2.05% -7.80%
Nasdaq 4736.05 4683.92 4822.34 2.96% 1.82%
S&P 500 2058.90 1921.22 1961.05 2.07% -4.75%
Russell 2000 1204.70 1136.17 1157.79 1.90% -3.89%
Global Dow 2501.66 2281.91 2328.19 2.03% -6.93%
Fed. Funds 0.25% 0.25% 0.25% 0% 0%
10-year Treasuries 2.17% 2.12% 2.19% 7 bps 2 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.

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Last Week's Headlines

  • Job seekers apparently had more opportunities in July as the number of job openings increased to 5.75 million compared to a revised total of 5.32 million openings in June, according to a report from the Bureau of Labor Statistics. This is the highest level of job openings since December 2000. Professional and business services, accommodation and food services, and retail led the way. Interestingly, while the number of job openings increased, the number of actual hires edged lower to 4.98 million, down from June's total of 5.18 million hires.
  • For the week ended September 5, new claims for unemployment insurance decreased 6,000 to 275,000 from the prior week's revised level. The seasonally adjusted insured unemployment rate remained at 1.7% for the week ended August 29, with 2.26 million continuing claims.
  • The price of goods bought in the United States but produced abroad (import prices) fell 1.8% in August, while export prices--the price of goods produced domestically but sold abroad--dropped 1.4%, according to the Bureau of Labor Statistics. The August decrease was primarily driven by lower fuel prices, although falling nonfuel prices and the continued strength of the dollar contributed to the decline as well. Compared to a year earlier, import prices are down 11.4%, while export prices are off 7%.
  • The Producer Price Index, which measures the average change over time in prices received by domestic producers of goods and services, was unchanged in August, according to the latest report from the Bureau of Labor Statistics. On an unadjusted basis, the final demand index moved down 0.8% for the 12 months ended in August--the seventh straight 12-month decline. In August, a 0.4% increase in the index for services offset a 0.6% decrease in prices for goods. These figures suggest that inflation remains relatively soft.
  • Possibly sending a message to the Fed concerning a possible near-term interest rate hike, consumer sentiment dropped from 91.9 in August to 85.7 for the early part of September, according to the University of Michigan's Index of Consumer Sentiment. Richard Curtin, chief economist for the Surveys of Consumers suggests, "To be sure, consumers still anticipate a weaker domestic economy due to the global slowdown and are less optimistic about future growth in jobs and wages than they were a few months ago."
  • According to the latest monthly budget report from the Department of the Treasury, the budget deficit for August stood at $64.4 billion--down from July's $149 billion figure. Through 11 months of the government's fiscal year, the deficit sits at about $530 billion compared to a $589.2 billion deficit for the same 11-month period last year.

Eye on the Week Ahead

This week, inflationary trends will be examined through reports on retail sales and the Consumer Price Index. But the big news will follow the FOMC meeting and whether interest rates will be raised.

Data sources: News items are based on reports from multiple commonly available international news sources (i.e. wire services) and are independently verified when necessary with secondary sources such as government agencies, corporate press releases, or trade organizations. Market data: Based on data reported in WSJ Market Data Center (indexes); U.S. Treasury (Treasury yields); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK); www.goldprice.org (spot gold/silver); Oanda/FX Street (currency exchange rates). All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results. All investing involves risk, including the potential loss of principal, and there can be no guarantee that any investing strategy will be successful.

The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indices listed are unmanaged and are not available for direct investment.

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