FEDERAL RESERVE SENDS A DOVISH SIGNAL
The Federal Open Market Committee voted 9-1 to leave interest rates unchanged last week, and it also scaled back its rate hike expectations for 2016. The central bank’s latest dot-plot projects just two interest rate increases by the end of the year with a median forecast of 0.9% for the federal funds rate as 2017 begins. Fed policymakers now estimate economic growth of 2.2% in 2016, with inflation at 1.2% as the fourth quarter ends.1
CORE PRICES UP MORE THAN 2% IN 12 MONTHS
The core Consumer Price Index measured 2.3% annualized inflation in February as a result of its 0.3% monthly increase. Headline consumer prices retreated 0.2% last month, slimming the year-over-year gain in headline CPI to 1.0%. As for the Producer Price Index, it fell 0.2% in February with the core PPI unchanged.2
THE LATEST ON SALES, SENTIMENT & STARTS
According to the Commerce Department, retail sales tailed off 0.1% in February. (The decline was the same minus auto sales.) The University of Michigan’s March consumer sentiment index also retreated; its 90.0 initial March reading was 1.7 points below its final February mark. Census Bureau figures showed housing starts increasing 5.2% last month, although building permits decreased 3.1%.2
DOW, S&P TURN POSITIVE FOR 2016
Wall Street rallied last week with help from recent, accommodative policy statements issued by the Fed, the Bank of Japan, and the European Central Bank. March 14-18 saw the Dow Jones Industrial Average rise 2.26% to 17,602.30; the Nasdaq Composite, 0.99% to 4,795.65; and the S&P 500, 1.35% to 2,049.58.Elsewhere in New York, light sweet crude settled at $39.44 on Friday, gold at $1,254.30.3
THIS WEEK: Monday offers the February existing home sales report from the National Association of Realtors and earnings from Carnival. Krispy Kreme, Nike, Red Hat, and Steelcase post earnings Tuesday. Wednesday, February new home sales figures complement earnings announcements from Fred’s, General Mills, KB Home, and Oxford Industries. Reports on initial jobless claims and February durable goods orders arrive Thursday, plus earnings from Accenture, Finish Line, GameStop, and Winnebago. March 25 is Good Friday; while the federal government will issue its final estimate of Q4 GDP, the NYSE and NASDAQ will be closed.
Sources: wsj.com, bigcharts.com, treasury.gov - 3/18/16 4,5,6,7 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.
| % CHANGE || Y-T-D || 1-YR CHG || 5-YR AVG || 10-YR AVG |
| DJIA || +1.02 || -2.62 || +9.69 || +5.61 |
| NASDAQ || -4.23 || -3.76 || +16.28 || +10.79 |
| S&P 500 || +0.28 || -2.38 || +12.04 || +5.68 |
| REAL YIELD || 3/18 RATE || 1 YR AGO || 5 YRS AGO || 10 YRS AGO |
| 10 YR TIPS || 0.27% || 0.23% || 0.85% || 2.61% |
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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. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. 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 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 indices are unmanaged and are not illustrative of any particular investment. 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. 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. Past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. 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.
Posted on Mon, March 21, 2016
by Sound Financial Strategies Group