How
high can this Stock Market go?
Stocks
climbed again this week with the S&P 500 and Dow closing out a sixth
straight week of gains despite some volatility. For the week, the S&P 500 gained
1.56%, the Dow rose 1.27%, and the Nasdaq climbed 1.70%.[1]
All
eyes were on the Senate confirmation hearings for Federal Reserve chair nominee
Janet Yellen last week. The hearing didn’t generate any bombshells but
confirmed Wall Street’s belief that the Fed will not be in any hurry to taper
its bond-buying programs. Yellen also made it clear that under her leadership,
the Fed will take on greater supervision of banks. Dodd-Frank regulations
specifically task the Fed with protecting the financial system from risks that
could spill into the broader economy – something called macroprudential
regulation.[2]
Hopefully a Fed with sharper teeth can prevent a repeat of the financial
crisis. Though current chairman Ben Bernanke spoke at a town hall meeting last
week, he appears to be working on a graceful exit, as he made no specific comments
about tapering or pending monetary policy decisions.[3]
The
bulk of earnings season is behind us, with results from 92.6% of S&P 500
companies already known. Overall, we’d say that Q3 earnings have been reasonably
good, particularly as compared to previous quarters. Out of the 463 companies
that have reported results so far, 65.4% beat earnings expectations and 43.4%
beat revenue expectations, which is better than the same group did in Q2.
Estimates for total earnings growth suggest that S&P companies were able to
eke out 4.9% earnings growth on 3.0% higher revenues.[4]
As we’ve seen in previous quarters, companies are deriving a lot of their
profits through cost-cutting measures and productivity increases, which will
hopefully benefit them when demand turns around.
Looking
ahead, investors will be focusing their attention on a raft of economic data
due to be released. Wednesday is particularly important as the meeting minutes
from the most recent FOMC meeting will be released, hopefully giving analysts
some insight into when the Fed may begin tapering. While a December taper is
still possible, most Fed analysts expect the Fed to delay until the New Year.
ECONOMIC CALENDAR:
Monday: Treasury International Capital, Housing
Market Index
Tuesday: Employment Cost Index, Ben Bernanke Speaks 7:00 PM ET
Wednesday: Consumer Price Index, Retail Sales, Business
Inventories, Existing Home Sales, EIA Petroleum Status Report, FOMC Minutes
Thursday: Jobless Claims, Producer Price Index, PMI
Manufacturing Index Flash, Philadelphia Fed Survey
HEADLINES:
U.S. manufacturing output rises for
third straight month. Manufacturing
activity rose in October, even as automobile production fell, suggesting a broadening
of activity in the sector. This is a sign of possible factory momentum after a
slump earlier in 2013.[5]
China unveils bold new reforms. China unwrapped its boldest set of
economic and social reforms in nearly three decades, relaxing its one-child social
policy and further loosening markets. The sweeping changes strengthened hopes
that the country’s leadership is committed to the reforms needed to bolster
economic growth.[6]
Industrial production falls in
October. Falling output
at power plants and mines caused industrial production to unexpectedly decline
even though manufacturing output increased. Experts attribute the slide to the
temporary shutdown of oil and gas rigs in the Gulf of Mexico as Tropical Storm
Karen approached.[7]
U.S. consumer debt rises the most
since 2008.
While Americans have been on a deleveraging spree in the past few years, an
increase in credit balances and loans suggests that the cycle may be over.
While this is a sign that Americans feel comfortable spending again, a return
to high debt burdens could cause financial distress.[8]
“Common sense and a sense of humor
are the same thing, moving at different speeds. A sense of humor is just common
sense, dancing.” – William James
Share the Wealth of
Knowledge!
Please share this market update with family, friends, or colleagues. If you would like us to add them to our list, simply click on the "Forward email" link below. We love being introduced!
Please share this market update with family, friends, or colleagues. If you would like us to add them to our list, simply click on the "Forward email" link below. We love being introduced!
If
you would like to opt-out of future emails, please reply to this email with
UNSUBSCRIBE in the subject line.
Securities
offered through Aurora Capital Member
FINRA/SIPC.
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.
Diversification
does not guarantee profit nor is it guaranteed to protect assets
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 International (MSCI) that serves as a benchmark
of the performance 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 represent the market performance, on a total-return
basis, of investment-grade bonds issued by leading U.S. companies. Bonds are
equally weighted by maturity cell, industry sector, and the overall index.
The S&P/Case-Shiller Home Price Indices
are the leading measures of U.S. residential real estate prices, tracking
changes in the value of residential real estate. The index is made up of
measures of real estate prices in 20 cities and weighted to produce the index.
The 10-year Treasury Note represents debt owed by the
United States Treasury to the public. Since the U.S. Government is seen as a
risk-free borrower, investors use the 10-year Treasury Note as a benchmark for
the long-term bond market.
Google Finance is the source for any reference to the
performance of an index between two specific periods.
Opinions expressed are subject to change without notice
and are not intended as investment advice or to predict future performance.
Past performance does not guarantee future results.
You cannot invest directly in an index.
Consult your financial professional before making any
investment decision.
Fixed income investments are subject to various risks
including changes in interest rates, credit quality, inflation risk, market
valuations, prepayments, corporate events, tax ramifications and other factors.
. All information is believed to be from
reliable sources; however, we make no representation as to its completeness or
accuracy. Please consult your financial advisor for further information.
By clicking on these links, you will leave
our server, as they are located on another server. We have not independently
verified the information available through this link. The link is provided to
you as a matter of interest. Please click on the links below to leave and
proceed to the selected site.
[1]
http://briefing.com/investor/markets/weekly-wrap/weekly-wrap-for-november-11-2013.htm
[2]
http://www.reuters.com/article/2013/11/15/us-usa-fed-yellen-regulation-idUSBRE9AD13H20131115
[3]
http://wsj-us.econoday.com/byshoweventfull.asp?fid=459888&cust=wsj-us&year=2013&lid=0&prev=/byweek.asp#top
[4]
http://www.zacks.com/commentary/29950/The-Last-Earnings-Trickle-In
[5]
http://www.reuters.com/article/2013/11/15/us-usa-economy-idUSBRE9AD0RZ20131115
[6]
http://www.cnbc.com/id/101203929
[7]
http://www.reuters.com/article/2013/11/15/us-usa-economy-output-idUSBRE9AE0OK20131115
[8]
http://www.reuters.com/article/2013/11/14/us-usa-fed-consumerdebt-idUSBRE9AD0W920131114
