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Weekly Market Update – August 26, 2016

The Dow was down 53 points on Friday following Fed chair Janet Yellen’s statement that an interest-rate rise was likely in the near future. Year-to-date the Dow is up 5.6%.

This week’s domestic economic data was mixed. Durable goods orders jumped 4.4% in July, which was more than expected, following a 4.2% fall in June. The labor market showed signs of continued momentum, as initial jobless claims fell to 261,000. This was 4,000 below expectations and marked their lowest level in five weeks. Housing data was mixed. New home sales beat expectations, rising 12.4% in July to their highest level in nine years. However, existing-home sales fell 3.2% to 5,400,000. The release cited low inventories as a factor putting pressure on affordability. Finally, Markit’s US manufacturing PMI fell to 52.1 following a high of 52.9 in July. Though expectations for hiring were positive, new orders and backlogs both contracted.

Crude oil was down 2.4% this week. Following a decline Monday, reports of Iranian collaboration with OPEC in a potential price freeze sparked a new rally. Much of this ground was later given up following high inventory data and a statement from Saudi Arabia that no production freeze from OPEC was imminent.

In her speech today at Jackson Hole, Federal Reserve Chair Janet Yellen signaled an increased likelihood that the Fed would raise rates in the months ahead. Yellen cited strong numbers in the labor market and internal forecasts predicting an increase in inflation, which she said outweighed in importance sluggish GDP growth. Yellen left open the possibility that rates could be increased as early as the Fed’s September meeting, though her comments suggested that such a decision would hinge on whether or not the September 2nd jobs report showed continued improvement in the labor market. For the week, the U.S. Preferred Stock Index was up 0.2%.

Next week’s economic calendar highlights include Personal Income (Aug. 29), Consumer Confidence (Aug. 30), Crude Inventories (Aug. 31), Initial Jobless Claims (Sept. 1), and Nonfarm Payrolls (Sept. 2). The biggest market movement will come from the jobs report.

Have a great weekend,
Yansong Pang

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Ulland Investment Advisors

4550 IDS Center · Eighty South Eighth Street · Minneapolis MN 55402 · Telephone: 612-312-1400 · Facsimile: 612-204-3464