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December 19, 2016

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.


 

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This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. The information herein has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. 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. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is a 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 a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. 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. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. MarketingPro, Inc. is not affiliated with any person or firm that may be providing this information to you. 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.

  

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]

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