Weekly Economic Update

ANOTHER GOOD JOBS REPORT

America’s best year for hiring since 2000 wrapped up with 252,000 more people finding work in December. Labor Department data showed the jobless rate declining to 5.6% last month (the U-6 rate tracking the unemployed and underemployed decreased to 11.2%). The economy added 2.53 million non-farm payroll jobs in 2014, representing 1.9% net employment growth. October and November hiring totals were respectively revised up to 261,000 and 353,000. December did see wages slip 0.2%; private sector average hourly earnings increased just 1.7% during 2014.1

 

DECEMBER SEES ISM SERVICES PMI RETREAT

The latest Institute for Supply Management’s non-manufacturing purchasing manager index came in at 56.2 – still strong, but well under the November reading of 59.3. Tempering that disappointment is the fact that ISM’s services index has shown sector growth for 59 consecutive months.2

 

OIL DIPS BENEATH $50

The price of West Texas Intermediate crude fell 8.2% last week on the NYMEX. A barrel was valued at just $48.36 at Friday’s close. With OPEC doing nothing to reduce output, investors are left wondering when the steep losses will end. Gold did very well last week, rising 2.5% on the COMEX to settle Friday at $1,216.10.3

 

A WILD WEEK, A DOWN WEEK

Crude’s continuing slump, excellent December hiring, assumptions of central bank action, fears following the terrorist attack in Paris – they all contributed to pronounced volatility. Selling exceeded buying: the S&P 500 lost 0.63% in five days to settle at 2,044.81 Friday. The Dow pulled back 0.50% for the week to 17,737.37, the Nasdaq 0.49% to 4,704.07.4,5

 

THIS WEEK: Here comes earnings season: Alcoa reports Q4 results Monday, with KB Home following suit Tuesday. Wednesday offers data on December retail sales and November business inventories, the latest eurozone factory output report, a new Beige Book from the Federal Reserve and earnings from Charles Schwab, Kinder Morgan, Wells Fargo and JPMorgan Chase. Thursday’s spate of earnings announcements includes releases from Bank of America, Citigroup, Intel, Lennar, Schlumberger and BlackRock. On Friday, the December Consumer Price Index and the Federal Reserve’s report on December industrial output arrive along with the latest eurozone inflation reading and the preliminary January consumer sentiment index from the University of Michigan.

 

% CHANGE Y-T-D 1-YR CHG 5-YR AVG 10-YR AVG
DJIA -0.48 +7.86 +13.41 +6.70
NASDAQ -0.68 +13.18 +20.60 +12.43
S&P 500 -0.68 +11.24 +15.72 +7.18
REAL YIELD 1/9 RATE 1 YR AGO 5 YRS AGO 10 YRS AGO
10 YR TIPS 0.36% 0.66% 1.41% 1.77%

Sources: online.wsj.com, bigcharts.com, treasury.gov – 1/9/155,6,7,8

Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends. 10-year TIPS real yield = projected return at maturity given expected inflation

 

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This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. It is not possible to invest directly in an index. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world’s largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Past performance is no guarantee of future results.  Investments will fluctuate and when redeemed may be worth more or less than when originally invested. All economic and performance data is historical and not indicative of future results. Market indices discussed are unmanaged. Investors cannot invest in unmanaged indices. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.

 

Citations.

1 – haver.com [1/9/15]

2 – ism.ws/ismreport/nonmfgrob.cfm [1/6/15]

3 – proactiveinvestors.com/companies/news/59186/gold-rebounds-after-2-straight-losses-us-crude-settles-down-09–59186.html [1/9/15]

4 – google.com/finance?q=INDEXDJX%3A.DJI&ei=z02wVKKhKe7FiwLW2IBo [1/9/15]

5 – markets.wsj.com/us [1/9/15]

6 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=1%2F9%2F14&x=0&y=0 [1/9/15]

6 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=1%2F9%2F14&x=0&y=0 [1/9/15]

6 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=1%2F9%2F14&x=0&y=0 [1/9/15]

6 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=1%2F8%2F10&x=0&y=0 [1/9/15]

6 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=1%2F8%2F10&x=0&y=0 [1/9/15]

6 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=1%2F8%2F10&x=0&y=0 [1/9/15]

6 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=1%2F10%2F05&x=0&y=0 [1/9/15]

6 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=1%2F10%2F05&x=0&y=0 [1/9/15]

6 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=1%2F10%2F05&x=0&y=0 [1/9/15]

7 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [1/9/15]

8 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [1/9/15]

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