CONSUMER MORALE, CONSUMER SPENDING IMPROVE
On Friday, the Commerce Department announced that consumer spending rose 0.4% in December, even as consumer incomes stayed flat. The University of Michigan’s final January consumer sentiment index came in at 81.2 (up 0.8 points from December) and the Conference Board’s January consumer confidence index posted a reading of 80.7 (up 3.2 points from last month). Analysts surveyed by Briefing.com thought both indices would be flat for January.1
HOME SALES DIP, BUT PRICES RISE
Brutal weather sent pending home sales down 8.7% in December to a 43-month low, as reported by the National Association of Realtors. The Census Bureau measured a 7.0% drop in new home buying last month. In better news, November’s Case-Shiller Home Price Index showed a 13.7% yearly advance (the best 12-month gain in housing values since February 2006), and new home prices rose 8.4% in 2013.2,3
FEWER ORDERS FOR BIG-TICKET ITEMS
Durable goods orders fell 4.3% in December, but the Census Bureau said the retreat was only 1.6% when transportation orders were factored out. This was a switch from the (revised) 3.4% gain in hard goods orders in November.1
FED TAPERS FURTHER, STOCKS SLIP
As expected, the Federal Reserve announced last week that it would reduce its monthly bond purchases by another $10 billion starting in February. Wall Street struggled for most of the week, with the 5-day performances as follows: DJIA, -1.13% to 15,698.85; NASDAQ, -0.59% to 4,103.88; S&P 500, -0.43% to 1,782.59.4,5
THIS WEEK: On Monday, Janet Yellen will be sworn in as Fed chair, ISM puts out its January manufacturing PMI, the Commerce Department issues December auto sales figures, and Anadarko, Hartford Financial, Yum! Brands and Sysco release quarterly results. SiriusXM, Archer Daniels Midland, Michael Kors and Aflac post earnings Tuesday, and data on December factory orders also arrives. Wednesday brings January’s ISM service sector index, January’s ADP employment report and earnings from Merck, Time Warner, Green Mountain Coffee, Aramark, Allstate, CBRE, Yelp!, Ralph Lauren, Marathon Oil, Walt Disney, Twitter, Tesoro and Pandora. Thursday, earnings from AOL, Expedia, Zynga, GM, Kellogg, Aetna, Towers Watson, Fidelity, Activision Blizzard, Vulcan Materials, Monster, Phillip Morris, Invacare, Amtech, 21st Century Fox, Lions Gate, Universal and LinkedIn all arrive, plus new initial claims figures and a new Challenger job-cut report. Friday, the Labor Department releases the January employment report.
% CHANGE Y-T-D 1-YR CHG 5-YR AVG 10-YR AVG
DJIA -5.30 +13.26 +19.24 +4.97
NASDAQ -1.74 +30.61 +35.59 +9.86
S&P 500 -3.56 +18.99 +23.17 +5.76
REAL YIELD 1/31 RATE 1 YR AGO 5 YRS AGO 10 YRS AGO
10 YR TIPS 0.53% -0.57% 1.73% 1.85%
Sources: USATODAY.com, bigcharts.com, treasury.gov – 1/31/146,7,8,9
Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly.
These returns do not include dividends.
WEEKLY QUOTE
“No two persons ever read the same book.”
– Edmund Wilson
WEEKLY TIP
Review your will every 3-5 years or whenever a life event occurs.
WEEKLY RIDDLE
Joe showed up at a business meeting fresh and alert, even though he had not slept a wink during any of the past four days. Why wasn’t he tired?
Last week’s riddle:
You can make it and read about it today, and many classes are taught in it, but it is not part of the future. What is it?
Last week’s answer:
History.
Citations.
1 – briefing.com/investor/calendars/economic/2014/01/27-31 [1/31/14]
2 – bloomberg.com/news/2014-01-30/pending-sales-of-u-s-existing-homes-slump-most-since-may-2010.html [1/30/14]
3 – foxbusiness.com/economy-policy/2014/01/27/new-home-sales-slide-7-in-december/ [1/27/14]
4 – marketwatch.com/story/fed-stays-the-course-by-tapering-another-10-billion-2014-01-29 [1/29/14]
5 – google.com/finance?q=INDEXDJX%3A.DJI%2CINDEXSP%3A.INX%2CINDEXNASDAQ%3A.IXIC&ei=ABvsUviuDeetiQKN3QE&gl=us [1/31/14]
6 – usatoday.com/money/markets/overview/ [1/31/14]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=1%2F31%2F12&x=0&y=0 [1/31/14]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=1%2F31%2F12&x=0&y=0 [1/31/14]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=1%2F31%2F13&x=0&y=0 [1/31/14]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=1%2F30%2F09&x=0&y=0 [1/31/14]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=1%2F30%2F09&x=0&y=0 [1/31/14]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=1%2F30%2F09&x=0&y=0 [1/31/14]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=1%2F30%2F04&x=0&y=0 [1/31/14]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=1%2F30%2F04&x=0&y=0 [1/31/14]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=1%2F30%2F04&x=0&y=0 [1/31/14]
8 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [1/31/14]
9 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [1/31/14]
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. 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. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. 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. This material was prepared by MarketingLibrary.Net Inc., for Mark Lund, The 401k Advisor, Investor Coach and author of The Effective Investor. Mark offers investment advisory services through Stonecreek Wealth Advisors, Inc. an independent, fee-only, Registered Investment Advisor firm providing 401k consulting for small businesses and private investment management services for select individuals. Stonecreek is located in Salt Lake City and Provo Utah.
