The stock market was little changed over the week as investors are conflicted over strong corporate earnings and rising interest rates.  That said, the 10-year treasury yield continues to rise and finished the week 7 basis points higher at 3.20%.  However, the spread between the 10-year treasury yield and the 2-year treasury yield was nearly unchanged at 0.30%.  The price of gold and crude oil both saw a moderate increase, with gold rising roughly 0.37% to $1,229.60 an ounce and crude oil rising roughly 0.76% to $69.27 a barrel.  The U.S. dollar index rose from 95.33 to 95.68.

 

Index Started Week Ended Week Change Change % YTD %
DJIA 25,339.99 25,444.34 104.35 0.41% 2.93%
Nasdaq 7,496.89 7,449.03 -47.86 -0.64% 7.90%
S&P 500 2,767.13 2,767.78 0.65 0.02% 3.52%
Russell 2000 1,546.68 1,542.04 -4.64 -0.30% 0.43%

 

THIS WEEK’S HIGHLIGHTS

  • Retail sales increased 0.1% in September, much lower than the expected 0.6%.  Excluding the heavily weighted autos component, retail sales in fact dropped 0.1% as compared to the 0.4% increase expected.  Despite September’s underwhelming sales report, year-over-year retail sales are up a strong 4.9%.

 

  • Industrial production rose a strong 0.3% in September, with manufacturing production (which makes up 75% of industrial production) rising 0.2%.  Headlining the rise in production was a 0.5%  increase in mining production for a year-over-year increase of a significant 13.4%.

 

  • Housing starts came in slightly below expectations in September at a 1.2 million annualized rate, 5.3% lower than the month prior.  Housing permits also came in slightly below expectations, dropping 0.6% to an annualized rate of 1.24 million.  It should be noted that September’s housing data was affected by Hurricane Florence as housing starts in the South fell 13.7%.

 

  • The Federal Open Market Committee Minutes showed that Fed officials see a strong economy, justifying a continuation of gradual increases in the Federal Funds Rate.  Despite Fed officials’ optimism on a strong economy, they did show some skepticism over the impact that tariff’s might have on future growth.

 

  • Initial unemployment claims dropped by 4,000 to 210,000 for the week ending October 13th, however its 4-week average rose 2,000 to 211,750.  Continuing unemployment claims also dropped but by 13,000 to 1.64 million with its 4-week average down 1,250 to 1.65 million.  Both initial and continuing unemployment claims are at 45-year lows.

 

  • The Philly Fed’s General Business Conditions index dropped to 22.2 in October from 22.9 in September.  Even though the index dropped 22.2 it is still a very strong reading (i.e. any reading above zero indicates improving conditions).

 

  • Existing home sales dropped 3.4% in September to an annualized rate of 5.15 million.  Much like housing starts, existing home sales were also affected by Hurricane Florence with sales down 5.4% in the South.  However, year-over-year existing home sales are still down 4.1% as rising mortgage rates are driving down demand.

 

QUOTE

“Opportunities come infrequently.  When it rains gold, put out the bucket, not the thimble.”

– Warren Buffet

 

TIDBIT

Just 7% of actively managed funds have outperformed their benchmark index over the past 15 years, according to data from S&P Global.

 

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