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Weekly Market Update – January 27, 2017

The Dow was down 7 points on Friday as it reached and stayed above 20,000 this week for the first time in history. For the week the Dow was up 1.3%. Year-to-date the Dow is up 1.7%.

GDP expanded at a seasonally adjusted annual rate of 1.9% in the last three months of 2016, below the 2.2% estimate. Initial jobless claims came in at 259,000, higher than the 245,000 consensus. New home sales fell 10.4% to a 536,000 in December, potentially dragged down by higher mortgage rates. Purchasing Manager Index increased to 55.1 in January from 53.9 in December, ahead of the 54.5 consensus. Our preferreds continue to outperform the Barclay’s Aggregate Bond Index, and continue to do well in the New Year.

 Politics dominated the news flow as the public tries to get used to the President’s communication style. President Trump opened his first week with a focus on manufacturing by meeting with executives from Johnson and Johnson, Tesla, Under Amour, and United States Steel Corporation. Trump pledges to cut regulations by 75% and impose some type of border tax. The President also signed executive orders to make it easier to complete construction on the Keystone XL and Dakota Access Pipelines, to construct a “large physical barrier” along the U.S.-Mexico border, to reinforce border security, and to start the repeal and replacement process for the Affordable Care Act.

The price of crude oil was 1.2% lower this week as strong drilling activity around the world weighs on the market. Although the OPEC countries and other exporters have agreed to cut production by 1.8 million barrels a day, the U.S. stockpiles are still growing, inciting fears that the rise in oil price will allow U.S. producers to drill profitably again.   

Corporate earnings are running ahead of expectations with upside surprises from Alibaba, Boeing, Seagate, Southwest Airlines, eBay, and Microsoft. Q1 earning reports will continue next week for widely held companies like Apple, Facebook, Amazon, etc.

Next week’s economic calendar highlights include Personal Income and Pending Home Sales (Jan. 30), Consumer Confidence (Jan. 31), Crude Inventory and Federal Reserve Open Market Committee (FOMC) Rate Decision (Feb. 1), Initial Jobless Claims (Feb. 2), and Non-farm Payrolls (Feb. 3). The FOMC interest rate decision is likely to have the biggest impact on the market.

Have a great weekend! 


Ulland Investment Advisors

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