CAN STOCKS REGAIN THEIR FOOTING THIS WEEK?
Investors hope so after a very rough start to 2016. Declining oil prices and disappointing manufacturing data in both the U.S. and China helped trigger a global selloff: the major equity indices in Europe and Asia fell between 5-9% last week with our benchmarks following suit. The Dow Jones Industrial Average lost 6.19% in five days to 16,346.45, paralleled by a 6.13% fall for the S&P 500 to 1,922.03 and a 7.27% descent for the Nasdaq Composite to 4,643.60. The week ended with the S&P 9.8% below its May 2015 peak, and with Wall Street hoping for some stability and a decent Q4 earnings season.1,2
292,000 NEW HIRES IN DECEMBER
The Labor Department’s latest employment report affirmed the durability of the U.S. economy. Last month’s impressive payroll growth was complemented by upward revisions to hiring totals for October (307,000) and November (252,000). Economists surveyed by the Wall Street Journal had expected 210,000 new jobs in December. The U-3 and U-6 jobless rates remained at 5.0% and 9.9% last month. Year-over-year wage growth rose to 2.5%.3
FACTORY SECTOR CONTRACTS FOR ANOTHER MONTH
In December, the Institute for Supply Management’s manufacturing PMI remained under 50, slipping 0.4 points lower to a reading of 48.2. ISM’s service sector PMI declined 0.6 points last month, but still showed strong sector growth at 55.3.4
GOLD PRICES CLIMB, OIL PRICES SLIDE
Rallying in the flight to safety that occurred last week, COMEX gold settled Friday at 1,097.90. The yellow metal gained 3.6% in five trading days. NYMEX crude ended the week at its lowest close since 2005 – just $33.16, a price resulting from a 10.0% five-day decline.5
THIS WEEK: Earnings season starts Monday evening with Q4 results from Alcoa. Nothing major is slated for Tuesday. Wednesday, a new Federal Reserve Beige Book appears, plus Q4 results from SuperValu. Earnings from Intel, JPMorgan Chase, and Rocky Mountain Chocolate Factory arrive Thursday. Friday offers earnings from BlackRock, Citigroup, Fastenal, PNC Financial Services, Wells Fargo, Regions Financial, and U.S. Bancorp, the initial January University of Michigan household sentiment index, the December PPI, and reports on December industrial production and retail sales.
% CHANGE Y-T-D 1-YR CHG 5-YR AVG 10-YR AVG
DJIA -6.19 -8.72 +8.00 +4.84
NASDAQ -7.27 -1.95 +14.36 +10.03
S&P 500 -6.13 -6.79 +10.23 +4.90
REAL YIELD 1/8 RATE 1 YR AGO 5 YRS AGO 10 YRS AGO
10 YR TIPS 0.65% 0.41% 0.98% 2.05%
Sources: investing.com, bigcharts.com, treasury.gov – 1/8/161,6,7,8
Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends. 10-year TIPS real yield = projected return at maturity given expected inflation.
WEEKLY QUOTE
“No one is useless in this world who lightens the burdens of another.”
– Charles Dickens
WEEKLY TIP
Try to contribute the maximum amount to your IRA(s) as early as you can this year, rather than waiting until the April deadline. By doing so, you give those dollars a little more time to potentially grow and compound.
WEEKLY RIDDLE
A man and a woman wearing very expensive outfits manage, without using wheels or any form of assistance, to push a 6-ton object entirely through their own physical effort. Under what circumstances are they able to do this?
Last week’s riddle:
There is an adjective. When you take away the whole from it, some still remains. What adjective is this?
Last week’s answer:
Wholesome.
Citations.
1 – investing.com/indices/major-indices [1/8/16]
2 – bloomberg.com/news/articles/2016-01-08/u-s-index-futures-signal-rebound-as-yuan-fixing-soothes-nerves [1/8/16]
3 – news.morningstar.com/all/dow-jones/us-markets/201601085057/us-job-market-closed-2016-on-strong-note.aspx [1/8/16]
4 – briefing.com/investor/calendars/economic/2016/01/04-08 [1/8/16]
5 – 247wallst.com/investing/2016/01/08/the-4-stocks-that-weighed-on-the-djia-friday-2/ [1/8/16]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=1%2F8%2F15&x=0&y=0 [1/8/16]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=1%2F8%2F15&x=0&y=0 [1/8/16]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=1%2F8%2F15&x=0&y=0 [1/8/16]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=1%2F7%2F11&x=0&y=0 [1/8/16]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=1%2F7%2F11&x=0&y=0 [1/8/16]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=1%2F7%2F11&x=0&y=0 [1/8/16]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=1%2F9%2F06&x=0&y=0 [1/8/16]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=1%2F9%2F06&x=0&y=0 [1/8/16]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=1%2F9%2F06&x=0&y=0 [1/8/16]
7 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [1/8/16]
8 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [1/8/16]
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, Mark is known as The 401k Advisor, Investor Coach, The Financial Advisor, The Financial Planner 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 financial Advisor services for professional athletes and individuals. Stonecreek is located in Salt Lake City, Murray City, West Jordan City, Sandy City, Draper City, South Jordan City, Provo City, Orem City, Lehi City, Highland City, Alpine City, and American Fork City in Utah.
