Weekly Market Snapshot

Weekly Market Snapshot

As expected, the Federal Open Market Committee lowered short-term interest rates for the third time this year. Chair Powell, hinting that the Fed is done cutting rates for a while, said that “we see the current stance of monetary policy as likely to remain appropriate as long as incoming information about the economy remains broadly consistent with our outlook of moderate economic growth, a strong labor market, and inflation near our symmetric 2% objective – we believe that monetary policy is in a good place to achieve these outcomes.” Of course, “if developments emerge that cause a material reassessment of our outlook, we would respond accordingly – policy is not on a preset course.”

Real GDP rose at a 1.9% annual rate in the advance estimate for 3Q19, up 2.0% from 3Q18. Consumer spending rose at a 2.9% pace, while business fixed investment fell 3.0% (partly reflecting a contraction in energy exploration and ongoing problems at Boeing). Residential fixed investment rose 5.1%, the first increase since 4Q17. The October Employment Report was stronger than expected. Nonfarm payrolls rose by 128,000, despite the strike at GM (which subtracted 40,000) and the loss of 20,000 temporary workers for the 2020 census. August and September were revised a net 95,000 higher. Average hourly earnings rose 0.2% (+3.0% y/y overall and +3.5% y/y for production workers). The unemployment rate was essentially unchanged (3.6% vs. 3.5% in September). The ISM Manufacturing Index remained in contraction for the third consecutive month.

Next week, the economic calendar thins out. The ISM Non-Manufacturing Index has some market-moving potential (but the headline figure would have to be sufficiently far from expectations). Earnings reports will continue, and market participants will be sensitive to any news on trade negotiations.

Indices

  Last Last Week YTD return %
DJIA 27046.23 26805.53 15.94%
NASDAQ 8292.36 8185.80 24.97%
S&P 500 3037.56 3010.29 21.17%
MSCI EAFE 1954.10 1932.47 13.62%
Russell 2000 1562.45 1550.18 15.86%

Consumer Money Rates

  Last 1 year ago
Prime Rate 4.75 5.25
Fed Funds 1.80 2.18
30-year mortgage 3.71 4.97

Currencies

  Last 1 year ago
Dollars per British Pound 1.290 1.277
Dollars per Euro 1.115 1.131
Japanese Yen per Dollar 108.85 112.94
Canadian Dollars per Dollar 1.316 1.316
Mexican Peso per Dollar 19.083 19.339

Commodities

  Last 1 year ago
Crude Oil 55.06 65.31
Gold 1496.70 1215.00

Bond Rates

  Last 1 month ago
2-year treasury 1.52 1.39
10-year treasury 1.68 1.54
10-year municipal (TEY) 2.28 2.12

Treasury Yield Curve – 11/01/2019

Treasury Yield Curve 

As of close of business 10/31/2019


S&P Sector Performance (YTD) – 11/01/2019


S&P Sector Performance 

As of close of business 10/31/2019


Economic Calendar

November 4  —  Factory Orders (September)
November 5  —  Trade Balance (September)
 —  ISM Manufacturing Index
November 6  —  Nonfarm Productivity (3Q19, preliminary)
November 7  —  Jobless Claims (week ending November 2)
November 8  —  UM Consumer Sentiment Index (mid-November)
November 11  —  Veterans Day (bond market closed)
November 13  —  Consumer Price Index (October)
November 15  —  Retail Sales (October)
 —  Industrial Production (October)
November 28  —  Thanksgiving Holiday (markets closed)
December 11  —  FOMC Policy Decision

 

All expressions of opinion reflect the judgment of the Research Department of Raymond James & Associates, Inc. and are subject to change. There is no assurance any of the forecasts mentioned will occur or that any trends mentioned will continue in the future. Investing involves risks including the possible loss of capital. Past performance is not a guarantee of future results. International investing is subject to additional risks such as currency fluctuations, different financial accounting standards by country, and possible political and economic risks, which may be greater in emerging markets. While interest on municipal bonds is generally exempt from federal income tax, it may be subject to the federal alternative minimum tax, and state or local taxes. In addition, certain municipal bonds (such as Build America Bonds) are issued without a federal tax exemption, which subjects the related interest income to federal income tax. Municipal bonds may be subject to capital gains taxes if sold or redeemed at a profit. Taxable Equivalent Yield (TEY) assumes a 35% tax rate.

The Dow Jones Industrial Average is an unmanaged index of 30 widely held stocks. The NASDAQ Composite Index is an unmanaged index of all common stocks listed on the NASDAQ National Stock Market. The S&P 500 is an unmanaged index of 500 widely held stocks. The MSCI EAFE (Europe, Australia, Far East) index is an unmanaged index that is generally considered representative of the international stock market. The Russell 2000 index is an unmanaged index of small cap securities which generally involve greater risks. An investment cannot be made directly in these indexes. The performance noted does not include fees or charges, which would reduce an investor's returns. U.S. government bonds and treasury bills are guaranteed by the US government and, if held to maturity, offer a fixed rate of return and guaranteed principal value. U.S. government bonds are issued and guaranteed as to the timely payment of principal and interest by the federal government. Treasury bills are certificates reflecting short-term (less than one year) obligations of the U.S. government.

Commodities trading is generally considered speculative because of the significant potential for investment loss. Markets for commodities are likely to be volatile and there may be sharp price fluctuations even during periods when prices overall are rising. Specific sector investing can be subject to different and greater risks than more diversified investments. Gross Domestic Product (GDP) is the annual total market value of all final goods and services produced domestically by the U.S. The federal funds rate (“Fed Funds”) is the interest rate at which banks and credit unions lend reserve balances to other depository institutions overnight. The prime rate is the underlying index for most credit cards, home equity loans and lines of credit, auto loans, and personal loans. Material prepared by Raymond James for use by financial advisors. Data source: Bloomberg, as of close of business October 31, 2019.

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