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Weekly Market Update – January 22, 2016

The Dow produced its best day of 2016 Friday, adding 211 points (1.33%) to its recently-diminished total.  The S&P 500 fared even better, rising 2.03%.  For the week the Dow was up .7% and for the year the index is down 7.6%.

A number of factors combined to rally markets on Friday.  Perhaps most importantly, crude oil surged $2.66 to over $32/barrel, lending strength to energy shares and the overall market.  Domestically, existing home sales in December jumped over 14%, the largest month-to-month increase ever, while a January manufacturing index unexpectedly rose.  Outside the US, European Central Bank President Mario Draghi announced that the implementation of additional Eurozone stimulus measures could come sooner than expected, perhaps as early as March.  Also, the Bank of Japan released a similar statement, suggesting further monetary stimulus to help improve the country’s struggling economy.
   
The yield on the 10-year Treasury rose 3 basis points (bps) Friday to 2.05%, up 2 bps for the week and now down 22 bps for the year. 

Next week’s economic calendar highlights include consumer confidence on Tuesday, December new home sales on Wednesday, weekly jobless claims on Thursday and manufacturing and the first estimate of Q4 GDP on Friday.  Expect consumer confidence to fall slightly given the recent state of the markets, December new home sales to increase from November, weekly jobless claims to settle in the 280-290,000 range (from 293,000 this week), the manufacturing report to show an uptick in activity from late last year and the GDP report to show growth of approximately 1.0% in Q4.  Fourth quarter earnings reports will continue as well.  To date, results have been relatively positive, led by the financial sector.

Have a nice weekend,

James Skjong

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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