FED RAISES RATES, PLOTS THREE 2017 HIKES
Federal Reserve policymakers unanimously chose to raise the benchmark interest rate by a quarter point last week. That was expected; less expected was the central bank’s adjustment to its 2017 dot-plot. Fed officials now see three rate hikes next year instead of two. The move to the new target range of 0.50-0.75% sent the dollar and bond yields higher Wednesday – the yield on the 2-year note quickly touched a peak unseen since August 2009. Stocks suffered only moderate losses after the announcement. Federal Open Market Committee members now forecast economic growth of 2.1% in 2017 and 2.0% in 2018.1
RETAIL SALES TICK UP, PRODUCER PRICES RISE
Economists, polled by Briefing.com, had expected a 0.4% October advance for retail purchases; the gain was only 0.1% instead, and 0.2% minus car and truck sales. The Producer Price Index rose 0.4% last month after a flat October; the core PPI also posted a 0.4% increase. Inflation pressure remained steady for the consumer: both the headline and core Consumer Price Index advanced 0.2% in November.2
HOUSING STARTS FALL FROM 9-YEAR PEAK
Groundbreaking declined 18.7% last month as winter arrived, with single-family starts down 4.1%. The Census Bureau also reported a 4.7% November decline in building permits.3
DOW ADVANCES, WHILE NASDAQ, S&P 500 RETREAT
A relatively calm trading week ended with the Dow Jones Industrial Average at 19,843.41, 0.44% higher than it had closed the previous Friday. Both the S&P 500 and Nasdaq Composite saw small weekly losses; the Nasdaq descended 0.13% to 5,437.16, while the S&P declined 0.06% to 2,258.07. Over on the NYMEX, light sweet crude settled at $51.94 a barrel Friday; gold at $1,135.60 an ounce.4
THIS WEEK: Lennar announces Q4 results Monday. CarMax, Darden Restaurants, FedEx, General Mills, Nike, Steelcase, and Valspar all report earnings on Tuesday. Wednesday, investors assess the latest existing home sales numbers and earnings from Accenture, Bed Bath & Beyond, Finish Line, Micron Technology, Red Hat, and Winnebago. Thursday offers new initial claims data, reports on November consumer spending and durable goods orders, the November core PCE price index, the last estimate of Q3 GDP, and earnings from Cintas. Friday brings November new home sales figures and the final University of Michigan consumer sentiment index of 2016.
% CHANGE Y-T-D 1-YR CHG 5-YR AVG 10-YR AVG
DJIA +13.88 +11.80 +13.44 +5.94
NASDAQ +8.58 +7.22 +22.55 +12.13
S&P 500 +10.48 +8.92 +17.03 +5.82
REAL YIELD 12/16 RATE 1 YR AGO 5 YRS AGO 10 YRS AGO
10 YR TIPS 0.74% 0.84% -0.05% 2.29%
Sources: wsj.com, bigcharts.com, treasury.gov – 12/16/164,5,6,7
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
“The heads of strong old age are beautiful beyond all grace of youth.”
– Robinson Jeffers
WEEKLY TIP
Need some business capital? Be aware that most banks and credit unions will want you to put 20% down as a condition of a loan. Lenders will probably also ask to see up to three years of your firm’s financial records.
WEEKLY RIDDLE
So gentle it soothes the skin, so forceful it cracks rocks, so light it serves as a mirror to the clouds. What could it be?
Last week’s riddle:
I have roads but no cars, forests but no trees, and cities but no people. What am I?
Last week’s answer:
A map.
Citations.
1 – cnbc.com/2016/12/14/fed-raises-rates-for-the-second-time-in-a-decade.html [12/14/16]
2 – briefing.com/investor/calendars/economic/2016/12/12-16 [12/16/16]
3 – cnbc.com/2016/12/16/us-housing-starts-nov-2016.html [12/16/16]
4 – markets.wsj.com/us [12/16/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=12%2F16%2F15&x=0&y=0 [12/16/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=12%2F16%2F15&x=0&y=0 [12/16/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=12%2F16%2F15&x=0&y=0 [12/16/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=12%2F16%2F11&x=0&y=0 [12/16/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=12%2F16%2F11&x=0&y=0 [12/16/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=12%2F16%2F11&x=0&y=0 [12/16/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=12%2F15%2F06&x=0&y=0 [12/16/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=12%2F15%2F06&x=0&y=0 [12/16/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=12%2F15%2F06&x=0&y=0 [12/16/16]
6 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [12/16/16]
7 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [12/16/16]
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 a Wealth Advisor, 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 investment and retirement planning for individuals and 401k consulting for small businesses. 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.
