U.S. stocks ended the volatile week significantly higher but foreign stocks were generally down. There was a strong post-election rally on Wednesday but markets gave back some of the gains on Thursday and Friday. On Thursday as expected, the Federal Reserve left interest rates unchanged but left the door open to a December rate increase and further gradual rate increases. This weighed on the markets especially after another sharp headline gain in producer prices on Friday. Oil prices fell sharply with Nymex crude ending the week at $59.87 down from the early October peak of $76. The factors attributed to this decline are: rising U.S. inventories of crude, Saudi Arabia’s recent promise to make up for lost Iranian production, the U.S. granting waivers to 5 countries to continue importing Iranian crude and slower projected global growth. Since late September, we have seen natural gas jump from less than $3.00 ending the week at $3.726 due to low inventories coupled with increased exports of liquified natural gas. So, expect to pay less at the pump and more to heat your house. Treasury yields were little changed and the U.S. dollar gained strength.
Foxconn is opening a large factory in Mount Pleasant, Wisconsin that may employ up to 13,000 employees to supply Apple with LCD displays. However, due to a shortage of engineers, Foxconn is considering using Chinese workers to fill some of these positions.
In the numbers this week:
- The Labor Department reported that
- The Institute for Supply Management reported that its non-manufacturing index fell to 60.3 in October from a post-recession high of 61.6 in September. Keep in mind that anything over 50 represents growth and 60.3 shows a services sector that is still growing at a healthy clip.
- The Labor department reported
- First time claims for unemployment fell 1,000 at a seasonally adjusted 214,000. The four-week moving average of claims was fell 250 to a seasonally adjusted 213,750.
- The producer price index rose 0.6% in October, the largest monthly gain since September 2012. Excluding volatile food, energy and trade services, producer prices gained 0.2%. From a year earlier producer prices were up 2.6% and excluding food, energy and trade services were up 2.8%.
- There were 7.01MM job openings at the end of September and only 5.96MM Americans that are unemployed. There is a huge shortage of workers to fill higher skilled jobs.
- The Energy Information Administration weekly report is here wpsrsummaryattached. Also, the EIA reported
- U.S. Crude oil production from 10.9MM barrels per day to 11.2MM barrels per day.
- Storage of natural gas rose 48BN cubic feet. Natural gas storage is below the minimum for this date during the past five years.
- According to Baker Hughes, In the past week, the number of active oil rigs fell 1 to 874 and natural gas rigs were unchanged at 193.
- Factset reported, with 74% of S&P 500 companies reporting 3rd quarter earnings, the blended earnings increase was 25.2% from the 3rd quarter of last year. However, 58 companies reported negative guidance and 25 reported positive guidance.
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Loren C. Rex, CFP®, AIF®, MA Erik A Smith
President Managing Partner
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Carrie Fuce, Assistant 269-441-4091
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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.