Q3 GDP READING SUGGESTS HEALTHIER ECONOMY
The Commerce Department’s initial third quarter estimate of annualized growth – 2.0% – was better than expected. Still, it fell short of the 2.5% pace analysts feel is needed to reduce the unemployment rate. Consumer spending, defense spending and residential real estate investment were the key factors behind the third quarter improvement – in fact, spending on homebuilding and home improvement rose more than 14% in the quarter.1,2
NEW HOME SALES, HOME SALE CONTRACTS INCREASE
September saw a 5.7% rise in new home buying, according to the Census Bureau. The annual projection of new home sales (389,000) paled in comparison to the 800,000+ pace of early 2007, but sales were still up 27.1% year-over-year to the highest level since April 2010. Elsewhere in the housing market, the National Association of Realtors reported an 0.3% gain in pending home sales last month.3,4
CONSUMER BAROMETER SEES October gain
October’s final Thomson Reuters/University of Michigan consumer sentiment index came in at 82.6, the best monthly reading since September 2007. Across 2003-2007, the index averaged 89.0; during the last recession, it averaged 64.2.5
STOCKS RETREAT, ALONG WITH GAS PRICES
October may go in the books as the poorest month for stocks in some time. As of Friday’s close, the S&P 500 was down 1.99% for the month. Major indices turned south last week – S&P 500, -1.48% to 1,411.94; NASDAQ, -0.59% to 2,987.95; DJIA, -1.77% to 13,107.21. Gas prices also dropped, however: AAA had the national average price per gallon at $3.58 Friday, down 3.8% for the week and 5.6% this month.1,6,7
THIS WEEK: September’s consumer spending report arrives Monday, along with earnings from Burger King and Baidu. Tuesday sees the release of a new Case-Shiller Home Price Index, the Conference Board’s October consumer confidence survey and Q3 earnings from BP, Pfizer, UBS, U.S. Steel, Valero Energy, Sirius XM, Take Two, Ford, Electronic Arts, Dreamworks and Shutterfly. On Wednesday, MetLife, GM, Time Warner Cable, Visa, Arcelor Mittal, GlaxoSmithKline, MasterCard, Allstate, Barclays, Clorox and Ralph Lauren report earnings. ISM’s October manufacturing index comes out Thursday in addition to new initial claims figures and Q3 results from Starbucks, ExxonMobil, Royal Dutch Shell, Cigna, Kellogg, AIG, Chesapeake Energy, Hartford Financial, Open Table, WebMD and Yelp. Friday sees the release of the October jobs report, the numbers on September factory orders and Q3 results from Chevron.
% CHANGE Y-T-D 1-YR CHG 5-YR AVG 10-YR AVG
DJIA +7.28 +10.43 -1.01 +5.52
NASDAQ +14.69 +12.72 +1.31 +12.45
S&P 500 +12.27 +13.68 -1.61 +5.73
REAL YIELD 10/26 RATE 1 YR AGO 5 YRS AGO 10 YRS AGO
10 YR TIPS -0.69% 0.15% 2.05% 3.10%
Sources: cnbc.com, bigcharts.com, treasury.gov, treasurydirect.gov – 10/26/127,8,9,10 Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends.
WEEKLY QUOTE
“You can only perceive real beauty in a person as they get older.”
– Anouk Aimée
WEEKLY TIP
If you gift stock to help your student pay some college costs, be careful – if the gain is too large from the sale, your child’s unearned income could top $1,900 and you will be hit with the “kiddie tax” and pay 15% instead of 0% on the gain.
WEEKLY RIDDLE
A man tells you there are 12 seconds in a year. This sounds absurd, but in what sense is he correct?
Last week’s riddle:
Holly finds herself in a room without windows, holes or even cracks in the walls. She doesn’t have any tools and the door to the room is 4″ thick and made of steel. Using only her hands, she manages to escape through the doorway. How does she do it?
Last week’s answer:
The door is unlocked.
Citations.
1 – money.msn.com/market-news/post.aspx?post=8b58846a-7feb-420a-9551-e2324bbc9bc6 [10/26/12]
2 – www.suntimes.com/business/15973988-420/us-economy-accelerates-to-2-percent-growth-in-third-quarter.html [10/26/12]
3 – blogs.wsj.com/economics/2012/10/25/vital-signs-chart-new-home-sales/ [10/25/12]
4 – www.reuters.com/article/2012/10/25/usa-economy-homes-idUSL1E8LP59420121025 [10/25/12]
5 – www.bloomberg.com/news/2012-10-26/michigan-consumer-sentiment-index-increased-to-82-6-in-october.html [10/26/12]
6 – montoyaregistry.com/Financial-Market.aspx?financial-market=retirement-investment-funds&category=3 [10/26/12]
7 – www.cnbc.com/id/49567684 [10/26/12]
8 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=10%2F26%2F11&x=0&y=0 [10/26/12]
8 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=10%2F26%2F11&x=0&y=0 [10/26/12]
8 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=10%2F26%2F11&x=0&y=0 [10/26/12]
8 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=10%2F26%2F07&x=0&y=0 [10/26/12]
8 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=10%2F26%2F07&x=0&y=0 [10/26/12]
8 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=10%2F26%2F07&x=0&y=0 [10/26/12]
8 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=10%2F25%2F02&x=0&y=0 [10/26/12]
8 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=10%2F25%2F02&x=0&y=0 [10/26/12]
8 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=10%2F25%2F02&x=0&y=0 [10/26/12]
9 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [10/26/12]
9 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [10/26/12]
10 – treasurydirect.gov/instit/annceresult/press/preanre/2002/ofm71002.pdf [7/10/02]
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 Stonecreek Wealth Advisors, Inc. an independent fee-only Registered Investment Advisor firm. Salt Lake City, Provo, Utah. Mark Lund is the author of The Effective Investor.
