October usually gets a bad rap as a negative month for the stock market, and it also tends to be a low point for the stock market, the kind of low from which stocks usually rally. However, as October came to a close on Monday, that low point is still not apparent just yet. Part of the reason for this is due to three significant events coming up this week and next, these are the November FOMC meeting announcement this Wednesday, the October employment report this Friday, and the Presidential election next Tuesday. Any one of theses events would cause investors to push the pause button and wait for the results before making any new commitments, let alone all three.
U.S. crude oil fell 3.90 percent to $46.76 per barrel on Monday, after OPEC failed to nail down a plan that would cut global oil supplies over during a series of meetings over the weekend. So far, OPEC has been successful at holding oil prices aloft with verbal promises of a coordinated effort to cap global production. However, OPEC’s inability to deliver may set in motion a larger pull back in the coming months.
During October, the U.S. Dollar rose back to where it began the year and bond yields rose, as signs of inflation may be an indicating that the economy is picking up. The expectation that inflation will rise can be seen in the recent gains in the 10-year treasury yield that closed on Monday at 1.83 percent, well off its July low of 1.36 percent earlier this year.
Laif E. Meidell, CMT
We hope that you have a great week,
Pat Meidell, Laif Meidell and Heidi Foster
Weekly Economic Update
ECONOMY EXPANDS 2.9% IN THIRD QUARTER
After just 1.4% growth in Q2, this was welcome news. Surging exports and greater inventory investment and federal spending made Q3 the best quarter for the economy in two years, according to the Department of Commerce. The federal government’s core PCE price index was up 1.7% for the quarter versus 1.8% in Q2.1
CONSUMER CONFIDENCE INDICES DESCEND
Last week, the Conference Board’s gauge of household confidence came in at 98.6 for October, down from 103.5 in September. The University of Michigan’s final October consumer sentiment index slipped to 87.2 from its prior mark of 87.9.2
PENDING HOME SALES REBOUND
The National Association of Realtors noted a 1.5% gain in housing contract activity in September, following a 2.5% downturn in August. The August S&P/Case-Shiller home price index revealed a 5.3% annual rise in U.S. home values.2
BLUE CHIPS FARE BEST DURING A MIXED WEEK
Across five trading days, the Dow Jones Industrial Average rose 0.09% to settle at 18,161.19 Friday. Weekly losses struck the S&P 500 (0.69% to 2,126.41) and Nasdaq Composite (1.28% to 5,190.10).3
September consumer spending figures are out on Monday, along with earnings from Aegion, Anadarko Petroleum, Loews, Nautilus, and Tesoro. Tuesday, ISM releases its October factory PMI and Archer Daniels Midland, Coach, Cummins, Electronic Arts, Gilead Sciences, Kellogg, Molson Coors, Mosaic, Noble Energy, Occidental Petroleum, Papa John’s, Pfizer, Square, U.S. Steel, Western Union, and Wingstop announce earnings. Wednesday, the Federal Reserve makes its latest policy statement, ISM’s service sector PMI appears, ADP issues its September payrolls report, and earnings news arrives from Allergan, Allstate, AIG, Anthem, Avis Budget, Clorox, Estee Lauder, Facebook, GoDaddy, iHeartMedia, Marathon Oil, MetLife, Office Depot, Prudential, Red Robin, Sunoco, Take-Two Interactive, Time Warner, Transocean, Whole Foods, Yelp, and Zynga. The October Challenger job-cut report and the latest initial claims figures come out Thursday, and Alamo Group, AMC Networks, Avon, Chesapeake Energy, Cigna, Fluor, GoPro, Hyatt Hotels, Icahn Enterprises, Kemper, Kraft Heinz, Lions Gate, Monster Beverage, Noble Corp., Starbucks, and TiVo all join the earnings parade. Friday, the Department of Labor provides its October jobs report, and Duke Energy, Humana, Jamba, and Revlon present earnings.