Investors
have a lot to be Thankful for
Stocks
climbed again as the S&P 500 and Dow notched their seventh straight week of
gains on positive economic data. The S&P 500 and Dow both hit new record
closes, and the Dow posted its longest winning streak in nearly three years.[i]
For the week, the S&P 500 gained 0.37%, the Dow rose 0.65%, and the Nasdaq
swelled 0.14%.[ii]
Optimistic
economic data was behind a lot of the market movement last week. Initial
jobless claims fell to their lowest level since the government shutdown; though
seasonal factors may have affected the data, the four-week moving average (a
less volatile measure) supports the trend.[iii]
This trend is not unexpected as retailers often pick up seasonal employees
before the holiday shopping season. October retail sales were moderately good
after a weak September, as consumers felt good enough to spend more on
electronics, appliances, and eating out.[iv]
This is a very optimistic sign heading into the all-important holiday shopping
season. On the other hand, factory activity slowed, dropping to its lowest rate
since May as manufacturers lost some optimism about the future.[v]
Minutes
from the October FOMC meeting were released and it’s clear that there’s a lot
of debate among Fed officials about when to begin tapering. The one thing that
participants seem to agree on is that the tapering of quantitative easing
should not be automatic.[vi]
With the level of disagreement between major players so high, it’s hard to
believe that a tapering decision will come at the December 17-18 meeting, but
the decision will ultimately depend on what the economic tea leaves show.
Markets
have picked up a head of steam and the rally has continued for nearly two
months, hitting new highs along the way. Whenever market rallies continue,
especially without the support of solid fundamentals, many investors start to
expect a pullback. Though we don’t like to put too much confidence in technical
stock market indicators, the Chicago Board Options Exchange Volatility Index
(VIX), a popular measure of volatility in the S&P 500, has been steadily
falling, which has often presaged a market decline.[vii]
On the other hand, buyers are still buying on every dip, and there’s no sign
yet that holders are selling out their positions to take profits. While we’re
delighted that markets have been performing so well in 2013, we always take
measures to prepare our clients for potential declines, and we continue hunting
for opportunities amid the volatility. As always, we’ll keep you informed.
Looking
ahead at the shortened holiday week, analysts will be focusing on the economic
data released before the Thanksgiving holiday. They will also be closely
monitoring any early retail data that might give a hint as to sector
performance this quarter.
ECONOMIC CALENDAR:
Monday: Pending Home Sales Index, Dallas
Tuesday: Housing Starts, S&P Case-Shiller
HPI, Consumer Confidence
Wednesday: Durable Goods Orders, Jobless Claims,
Chicago
Thursday: U.S. Thanksgiving Holiday .
All Markets Closed
HEADLINES:
Western negotiators reach initial
nuclear deal with Iran Iran Iran
Obamacare rolls out two new
extensions. Given the
technical difficulties and widespread confusion surrounding the Affordable Care
Act, the Obama administration has announced two significant deadline extensions
for enrollment. The first gives consumers eight extra days – until Dec. 23 – to
enroll in plans that kick in Jan. 1, 2014, and gives them until Dec. 31 to
actually begin paying their premiums. The other changes the enrollment period
in 2014 for plans beginning in 2015.[ix]
Senate committee backs Yellen for Fed. Prospective Federal Reserve chair
Janet Yellen took a big step towards confirmation when the Senate Banking
Committee backed her nomination for the top seat. If she is confirmed by the
full Senate, as is widely expected, she will become the first woman to lead the
U.S.
Stimulus fears tarnish gold. Strong economic data caused a sharp
drop in gold’s value as investors ditched bullion for other investments.
Typically, gold moves against economic trends, and positive economic news is
usually bad for gold prices.[xi]
‘“Be
thankful for what you have; you'll end up having more. If you concentrate on
what you don't have, you will never, ever have enough”
― Oprah Winfrey
― Oprah Winfrey
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Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.
Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.
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The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.
The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.
The Dow Jones Industrial Average is a price-weighted average of 30
significant stocks traded on the New York Stock Exchange and the NASDAQ. The
DJIA was invented by Charles Dow back in 1896.
The Nasdaq Composite is an index of the common stocks and similar
securities listed on the NASDAQ stock market and is considered a broad
indicator of the performance of stocks of technology companies and growth
companies.
The MSCI EAFE Index was created by Morgan Stanley Capital
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in major international equity markets as represented by 21 major MSCI
indexes from Europe, Australia
and Southeast Asia .
The Dow Jones Corporate Bond Index is a 96-bond index designed to
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The S&P/Case-Shiller Home Price Indices are the leading
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Chicago Board Options Exchange Market Volatility Index (VIX) is a weighted
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points and translates, roughly, to the expected movement in the S&P 500
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