TIGHTENING BEGINS
As anticipated, the Federal Reserve raised the benchmark interest rate by 0.25% last week. The Federal Open Market Committee voted 10-0 to make the move. Its latest dot-plot forecast projects four rate hikes during 2016, which would put the federal funds rate above 1% by the end of next year. The Fed also adjusted the discount rate charged to commercial banks, raising it a quarter-point to 1.0%.1,2
ANOTHER TOUGH WEEK FOR OIL
Baker Hughes data showed a gain in the number of active U.S. oil rigs last week, the first since mid-November. Light sweet crude slipped 0.6% Friday, settling at $34.73 on the NYMEX and losing 2.5% in five days.3
CORE CONSUMER PRICES RISE 0.2%
The core Consumer Price Index matched its October advance in November, taking its year-over-year gain to 2.0%. As for the headline CPI, it was flat in the eleventh month of the year and up just 0.5% in 12 months.4
BUILDERS WERE BUSY LAST MONTH
Housing starts climbed 10.5% in November according to the Census Bureau, nearly reversing the (revised) 12.0% decline in October. Building permits surged by 11.0% last month, following a 4.1% October rise.4
CRUDE WEIGHS DOWN EQUITIES AGAIN
Aside from a Wednesday rally following the Federal Reserve decision to raise interest rates, investors had little to cheer last week. During five days, the S&P 500 declined 0.34% to 2,005.55, the Nasdaq 0.21% to 4,923.08, and the Dow 0.79% t0 17,128.55.3
THIS WEEK: Cintas and Steelcase report quarterly results Monday. On Tuesday, Wall Street reacts to November existing home sales figures, the final Q3 GDP number from the federal government, and earnings from ConAgra Foods, Micron, Nike, and Paychex. Wednesday’s important items include reports on November personal spending, new home sales, and capital goods orders and the final December consumer sentiment index from the University of Michigan. Thursday is Christmas Eve, with the NYSE and NASDAQ closing at 1:00pm EST; earlier, the Labor Department will present its usual weekly initial claims report. Friday is Christmas Day; all U.S. financial markets will be closed.
% CHANGE Y-T-D 1-YR CHG 5-YR AVG 10-YR AVG
DJIA -3.90 -3.65 +9.81 +5.81
NASDAQ +3.95 +3.68 +17.25 +12.15
S&P 500 -2.59 -2.70 +12.25 +5.92
REAL YIELD 12/18 RATE 1 YR AGO 5 YRS AGO 10 YRS AGO
10 YR TIPS 0.73% 0.57% 1.05% 2.11%
Sources: wsj.com, bigcharts.com, finance.yahoo.com, treasury.gov – 12/18/155,6,7,8,9
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
“Chance is always powerful. Let your hook be always cast; in the pool where you least expect it, there will be a fish.”
– Ovid
WEEKLY TIP
Many people stay with the same bank for decades. Online tools now make it easier to compare various banks. If you find your bank’s fees irritating or its ATM network insufficient, you can explore your options.
WEEKLY RIDDLE
Normally flat and often inscribed, it can fall off the tallest building and land unscathed, but it can fall off a kayak or raft and be ruined. What is it?
Last week’s riddle:
Gaze at my flat and anchored face. You will not see 13 any place. What am I?
Last week’s answer:
A clock.
Citations.
1 – marketwatch.com/story/federal-reserve-lifts-interest-rates-for-first-time-since-2006-2015-12-16 [12/16/15]
2 – marketwatch.com/story/federal-reserve-dot-plot-still-signals-4-interest-rate-hikes-in-2016-2015-12-16 [12/16/15]
3 – cnbc.com/2015/12/18/us-markets.html [12/18/15]
4 – tradingeconomics.com/united-states/calendar [12/18/15]
5 – markets.wsj.com/us [12/18/15]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=12%2F18%2F14&x=0&y=0 [12/18/15]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=12%2F18%2F14&x=0&y=0 [12/18/15]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=12%2F18%2F14&x=0&y=0 [12/18/15]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=12%2F17%2F10&x=0&y=0 [12/18/15]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=12%2F17%2F10&x=0&y=0 [12/18/15]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=12%2F19%2F05&x=0&y=0 [12/18/15]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=12%2F19%2F05&x=0&y=0 [12/18/15]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=12%2F19%2F05&x=0&y=0 [12/18/15]
7 – finance.yahoo.com/q/hp?s=^DJI&a=11&b=8&c=2010&d=11&e=11&f=2010&g=d [12/18/15]
8 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [12/18/15]
9 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [12/18/15]
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.
