WHEN WILL THE MARKET CALM DOWN?
Earnings didn’t preoccupy investors last week; Europe did. The International Monetary Fund warned that the euro area could enter another recession; European Central Bank president Mario Draghi urged EU member nations to go in for quantitative easing, but German finance minister Wolfgang Schäuble disagreed. IMF and Federal Reserve officials noted the potential for Europe to slow global and U.S. growth. Factor in a selloff in small caps and a plunge for oil, and you had the CBOE VIX hitting an 8-month high of 20.53 Friday. A very poor week for equities ended with the Dow at 16,544.10, the Nasdaq at 4,276.24 and the S&P 500 at 1,906.13. Losing 3.14% in five days, the S&P had its worst week in two years. Maybe earnings will pull some focus from Europe this coming week.1,2
OIL HITS A 9-MONTH LOW AS GOLD FUTURES RISE
NYMEX crude finished Friday’s trading session at just $85.52 a barrel. Futures fell 4.4% in five days. On Thursday, West Texas Intermediate crude entered a bear market, one day after Brent crude did. Oil production of OPEC nations hit a 3-year peak in September. COMEX gold was the bright spot last week, settling at $1,221.70 Friday. Across five days, the yellow metal gained 2.4% for its first weekly ascent since late September. COMEX silver ended the week at $17.30.1,3
WALL STREET FINDS REASSURANCE IN FED MINUTES
The Federal Open Market Committee again used the phrase “considerable time” in the minutes of its September 16-17 policy meeting – a rough projection of the lag time between the end of QE3 and adjustments to the federal funds rate. That language helped the S&P 500 rise 1.8% Wednesday.4
THIS WEEK: EU finance ministers meet on Monday, which is also Columbus Day; U.S. bond markets will be closed. Tuesday, earnings from Citigroup, Wells Fargo, JPMorgan Chase, Healthcare Services, Intel, CSX, Domino’s Pizza, J.B. Hunt and Johnson & Johnson arrive plus a report on September euro area industrial output. September’s PPI and retail sales data appear Wednesday, plus a new Fed Beige Book, China’s latest inflation reading and earnings from American Express, eBay, Kinder Morgan, PNC, Bank of America, BlackRock, Netflix and Charles Schwab. Thursday brings the latest CPI for the euro area, numbers on U.S. industrial output and earnings from BB&T, Fifth Third, AMD, Blackstone Group, Capital One, Delta Air Lines, Bancorp, Goldman Sachs, Google, Mattel, Philip Morris, SanDisk, Schlumberger and UnitedHealth. Friday morning, Fed chair Janet Yellen speaks in Boston and Wall Street looks at September housing starts data and the initial October consumer sentiment index from the University of Michigan.
% CHANGE Y-T-D 1-YR CHG 5-YR AVG 10-YR AVG
DJIA -0.20 +9.37 +13.54 +6.41
NASDAQ +2.39 +13.71 +19.98 +12.17
S&P 500 +3.13 +12.62 +15.58 +6.95
REAL YIELD 10/10 RATE 1 YR AGO 5 YRS AGO 10 YRS AGO
10 YR TIPS 0.35% 0.50% 1.56% 1.78%
Sources: online.wsj.com, bigcharts.com, treasury.gov – 10/10/145,6,7,8
Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly.
These returns do not include dividends.
WEEKLY QUOTE
“If we couldn’t laugh, we would all go insane.”
– Jimmy Buffett
WEEKLY TIP
If your child or grandchild recently graduated from college, consider suggesting a move that might help him or her get a financial jump on other millennials: living on 70-80% of earned income and investing or saving the rest.
WEEKLY RIDDLE
It has a thumb and four fingers, but isn’t alive. What could it be?
Last week’s riddle:
It usually loses a head by noon, but that same head often returns by midnight. What is it?
Last week’s answer:
A pillow.
Citations.
1 – bloomberg.com/news/2014-10-09/index-futures-slip-as-stocks-slump-while-oil-extends-drop.html [10/10/14]
2 – markets.on.nytimes.com/research/markets/usmarkets/usmarkets.asp [10/10/14]
3 – proactiveinvestors.com/companies/news/57379/gold-slides-03-oil-records-biggest-weekly-drop-since-january-57379.html [10/10/14]
4 – usatoday.com/story/money/markets/2014/10/08/stocks-wednesday/16900165/ [10/8/14]
5 – markets.wsj.com/us [10/10/14]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=10%2F10%2F13&x=0&y=0 [10/10/14]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=10%2F10%2F13&x=0&y=0 [10/10/14]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=10%2F10%2F13&x=0&y=0 [10/10/14]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=10%2F9%2F09&x=0&y=0 [10/10/14]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=10%2F9%2F09&x=0&y=0 [10/10/14]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=10%2F9%2F09&x=0&y=0 [10/10/14]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=10%2F11%2F04&x=0&y=0 [10/10/14]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=10%2F11%2F04&x=0&y=0 [10/10/14]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=10%2F11%2F04&x=0&y=0 [10/10/14]
7 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [10/10/14]
8 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [10/10/14]
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 professional athletes and select individuals. Stonecreek is located in Salt Lake City, Murray, West Jordan, Sandy, Draper, South Jordan, Provo, Orem, Lehi, Highland, Alpine, American Fork all in Utah.
