December 6, 2016 – Weekly American Wealth Review

Weekly Letter

U.S. stocks index futures traded lower on Sunday after Italy voted not to pass a sweeping referendum on constitutional issues, designed in part to shrink the size of the government and cut government spending. The referendum was spearheaded by Italian prime minister, Matteo Renzi who indicated that he would resign following the “No” vote on the referendum. Though markets were temporarily stunned by the news from Italy, U.S. stock futures quickly regained their footing and recovered their losses.

The major market averages gapped higher at the opening bell on Monday, and held onto most of their gains throughout the trading day. By the market’s close, the Standard and Poor’s 500 was higher by 0.58 percent and the Nasdaq Composite had risen 1.01 percent. What some are noticing is how quickly market are springing back from situations of uncertainty. In the past six months, investors have stared down fears of fallout over the “Brexit” vote, the U.S. presidential election, and now the Italian referendum and each time have recovered more quickly than the last.

There was more good news on the economy Monday as the ISM non-manufacturing index for November leaped 2.4 points to a reading of 57.2. A reading of 50 or greater indicates economic expansion, so the November report indicates an acceleration of growth. The ISM non-manufacturing index is a survey of over 375 firms from various sectors of the economy that includes construction, mining, agriculture, forestry, and fishing and hunting. Some of the highlights from the report included growth in employment, new orders and business activity.

Sincerely,
Laif E. Meidell, CMT

We hope that you have a great week,
Pat Meidell, Laif Meidell and Heidi Foster

Weekly Economic Update

JOBS REPORT SHOWS UNEMPLOYMENT AT 4.6%

America’s jobless rate fell to a nine-year low in November as companies added 178,000 net new jobs. The U-6 rate (including the underemployed decreased) 0.2% to 9.3%. There were some negatives: yearly wage growth moderated to 2.5%, and the labor force participation rate ticked down to 62.7%, in part because of baby boomer retirements.1

STRONG CONSUMER CONFIDENCE, SPENDING, GDP

As November ended, the Conference Board’s monthly consumer confidence index rose 6.3 points to a mark of 107.1. In October, personal spending increased 0.3%, according to the Census Bureau, with personal incomes up 0.6%. The Bureau of Economic Analysis revised third quarter growth upward by 0.3% to 3.2% last week.2

PENDING HOME SALES, HOME PRICES SEE GAINS

The S&P/Case-Shiller 20-city home price index showed a 5.5% annualized gain in its September edition, improved from 5.2% in August. Housing contract activity rose another 0.1% in October, according to the National Association of Realtors.2

MANUFACTURING INDEX IMPROVES

The Institute for Supply Management’s November purchasing manager index for the factory sector rose 1.3 points to 53.2, indicating another month of expansion. Analysts polled by MarketWatch had projected a reading of 52.5.2

OIL PRICES SKYROCKET; S&P 500 DECLINES

News of OPEC’s oncoming production cut drove WTI crude to its best week since January 2009. Futures settled Friday at $51.68 on the NYMEX, up 12.2% in five days (including a Thursday-Friday leap of almost 13%). Only the Dow Jones Industrial Average advanced among key Wall Street indices last week, rising 0.10% to 19,170.42. The S&P 500 dipped 0.97% on the week to 2,191.95; the Nasdaq Composite, 2.65% to 5,255.65; and the Russell 2000, 2.45% to 1,314.25.3,4

THIS WEEK

November’s ISM non-manufacturing PMI appears Monday. Earnings from Analogic, AutoZone, Bob Evans Farms, Dave & Buster’s, Michaels Stores, and Toll Brothers arrive Tuesday, plus a report on October factory orders. Wednesday’s earnings parade includes results from Casey’s General Stores, Costco, H&R Block, and Lululemon Athletica. A new initial jobless claims report comes out on Thursday, along with earnings from Broadcom, Dell, Hovnanian, and Toro. Friday brings the initial December consumer sentiment index from the University of Michigan.