Stocks sold off sharply on Wednesday after the FED’s rate cut and Chairman Powell’s statement that progress on inflation must continue for further FED rate cuts.  Also, the FED predicted only two rate cuts next year, down from the previous prediction of four.  Long term bond yields rose, steepening the yield curve and the U.S. dollar strengthened.

On Friday the government’s personal consumption expenditure price index came in lower than expected and stocks rallied, but for the week, all major indices ended substantially lower.  Adding to the market anxiety was the looming possibility of a government shutdown.

Treasury bond yields rose with the 30-year bond yield at 4.721% and the 10-Year note at 4.530%.  Freddie Mac reported that the average 30-year mortgage rate rose to 6.72%.  Crude oil fell to $69.51 a barrel and natural gas rose to $3.77 per MMBTUs.  The U.S. dollar index rose to 107.78 and gold fell to $2,642.90 an ounce.

In economic reports this week:

• The Federal Reserve reported that industrial production fell 0.1% in November and was down 0.9% from a year ago.
  • Manufacturing rose 0.2% in November and was down 1.0% from a year ago.
  • Mining, including oil and gas production fell 0.9% and was down 1.3% year over year.
  • Utilities fell 1.3% but was up 0.1% from a year ago.
• The National Association of Realtors reported that existing home sales rose 4.8% in the month of November and were up 6.1% from last November.
• The Commerce Department reported:
  • Retail sales rose 0.7% in November.  For the three months ending in November, retail sales were up 2.9% from the same period last year.

• • Housing starts fell a seasonally adjusted 1.8% in November and were 11.7% below last November.
    • Single family starts rose 6.4% and were down 10.2% year over year.
    • Multi family starts (5 units or larger) fell 24.1% and were down 28.8% from last year.
    • Permits, a sign of future housing starts, rose 6.1% in November but are down 0.2% from last November.

• • The third quarter gross domestic product was revised up to 3.1% from the previous estimate of 2.8%.

• • Personal consumption expenditures rose 0.4% in November.
    • The PCE price index rose 0.1% and was up 2.4% from a year ago.
    • Excluding volatile food and energy, the PCE price index rose 0.1% and is up 2.8% from a year ago.
    • Adjusted for inflation, personal consumption expenditures rose 0.3% in November.
    • Personal incomes rose 0.3% or 0.2% adjusted for inflation.
• The Labor department reported:
  • Seasonally adjusted first-time claims for unemployment were 220,000, a decrease of 22,000 from the previous week.  
    • The 4-week moving average of claims, designed to smooth out volatility, was 225,500 an increase of 1,250 from the previous week. 
    • For the full unemployment report go here:  https://www.dol.gov/ui/data.pdf .
• The EIA weekly oil report is here: http://ir.eia.gov/wpsr/wpsrsummary.pdf .  Also, the EIA reported in the prior week:
  • Field production of crude oil fell from 13.631MM BPD to 13.604MM BPD.
  • Natural gas storage fell 125BN cubic feet and is above its average level during the past five years at this time of year.
• Baker Hughes reported the number of oil rigs rose 1 to 483 and the number of natural gas rigs fell 1 to 102.

Please call us if you have any questions.

Loren Rex – Emeritus

Erik A Smith, AIF® – President & C.E.O.

These are the opinions of Loren Rex and Erik Smith and are not necessarily those of Cambridge, are for informational purposes only, and should not be construed or acted upon as individualized investment advice. The Indices mentioned are unmanaged and cannot be invested into directly. The Dow Jones Industrial Average, Dow Jones, or simply the Dow, is a stock market index of 30 prominent companies listed on stock exchanges in the United States. The DJIA is one of the oldest and most commonly followed equity indexes. The Nasdaq Composite is a stock market index that includes almost all stocks listed on the Nasdaq stock exchange (more than 2500 stocks).

Sources:

https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WCRFPUS2&f=W

https://ir.eia.gov/ngs/ngs.html

https://www.freddiemac.com/pmms

https://www.wsj.com/market-data?mod=nav_top_subsection

https://bakerhughesrigcount.gcs-web.com/na-rig-count

https://www.census.gov/economic-indicators

https://www.federalreserve.gov/releases/g17/current/

https://www.bea.gov/data/gdp/gross-domestic-product

https://www.nar.realtor/research-and-statistics/housing-statistics/existing-home-sales

https://www.bea.gov/news/2024/personal-income-and-outlays-november-2024