Clearly all the positive vibes that surround a weekend of good food, football, family and friends had worn off by the opening bell on Monday, as U.S. stocks snapped their winning streak after the long holiday weekend. For the major market averages, Monday’s decline was a well-deserved rest after the gains made over the prior week, with the Standard and Poor’s 500 off 0.53 percent and the Nasdaq Composite lower by 0.56 percent. However, for the Russell 2000 small company index, Monday’s decline of 1.29 percent ended the index’s longest winning streak in 20 years, with 15 consecutive daily gains for the index that began the Friday prior to the presidential election.
U.S. crude oil prices jumped 2.2 percent on Monday to $47.08 per barrel, as investors attempt to anticipate the outcome of this week’s meeting of major oil producers in Vienna. Back in September, the members of OPEC agreed to cut oil production to manage the global oil supply glut. However, the details of that commitment such as who is going to cut and by how much, was left to be worked out this Wednesday in Vienna. So far, OPEC has been all talk and no action, so it will be a pleasant surprise if a decision is finally reached.
This week all eyes will be on the November employment report due out this Friday. In prior months, investors would have use the bellwether economic report to determine the likelihood the Federal Reserve will raise interest rates at their next meeting. However, the Fed fund futures are currently predicting a 100 percent chance the Federal Reserve will raise interest rates when they meet on December 14th, so Friday’s employment report will likely have more of an impact on what the Fed does in 2017.
Laif E. Meidell, CMT
We hope that you have a great week,
Pat Meidell, Laif Meidell and Heidi Foster
Weekly Economic Update
STOCKS SETTLE AT ALL-TIME HIGHS
An abbreviated trading week was also a historic week on Wall Street, as the four key U.S. equity indices all reached new peaks. At Friday’s closing bell, the Russell 2000 settled at a record 1,347.20 after its fifteenth straight day of gains; it was up 2.37% for the week. The Dow advanced 1.47% on the week to a Friday close of 19,152.14. Adding 1.42% in three-and-a-half days, the Nasdaq ended the week at 5,398.92. The S&P 500, which finished Friday up more than 3% since the election, rose 1.40% on the week to 2,213.35.1,2,5
EXISTING HOME SALES RISE, NEW HOME SALES FALL
The National Association of Realtors announced a 2.0% gain for resales in October. Existing home sales have kept their momentum, even with inventory down 4.3% and the median sale price up 6.0% in the past year. According to the Census Bureau, new home sales declined 1.9% in October, but were still up 12.7% year-over-year.3
CONSUMER SENTIMENT IMPROVES
At a final November mark of 93.8, the University of Michigan’s household sentiment index surpassed the consensus forecast of economists polled by MarketWatch, who expected a 92.0 reading. The index’s initial November edition had a reading of 91.6.4
DURABLE GOODS ORDERS RISE 4.8%
October’s gain in capital goods orders was the largest measured by the Department of Commerce in a year. A 94% increase in commercial aircraft orders was a major factor. Business investment rose 0.4% in October.3,4
Shoe Carnival and Thor Industries announce earnings on Monday. On Tuesday, the federal government releases its second estimate of Q3 growth, the Conference Board’s November consumer confidence index and the September S&P/Case-Shiller home price index both appear, and Autodesk and Tiffany present Q3 results. Wednesday brings ADP’s November employment change report, October consumer spending figures, the October PCE price index, a new Beige Book from the Federal Reserve, the NAR’s latest pending home sales index, and earnings from American Eagle Outfitters, Guess, and La-Z-Boy. Thursday, investors look at the latest initial jobless claims figures, the November Challenger job-cut report, November’s ISM manufacturing PMI, and earnings from Dollar General, Express, Five Below, Kroger, Land’s End, Sears Holdings, and Smith & Wesson. The November employment report from the Department of Labor arrives Friday, along with earnings from Big Lots and Fred’s.