Receive Weekly Market Updates via Email


Weekly Market Update – January 30, 2015

A late-afternoon slide cost the Dow 250 points Friday as global growth concerns overshadowed a rally in the energy sector.  For the week, the Dow was down 2.9% and for the year the index is now down 3.7%.

The first estimate of US Q4 GDP showed growth of only 2.6%, below estimates of over 3% and well below Q3’s 5% gain.  A drop in government spending, reduced business investment and a widening trade gap due to the strong dollar muted growth even as consumer spending, which accounts for 70% of GDP, grew by 4.3% (aided in part by falling energy prices).  Given the rise in consumer spending and low energy prices, it was no surprise that the latest consumer confidence reading reached an 11-year high.

Economic concerns were not limited to the US.  Russia, projected to enter a recession this year, cut its main interest rate by 2%, precipitating a further slide in the ruble while in Europe, all eyes remain on Greece and its new anti-austerity leadership.  The country’s finance minister on Friday stated that the new government will not negotiate the terms of its bailout with the “troika” (the IMF, ECB and European Commission) but instead will go directly to leaders of crediting countries within the Eurozone.  The delivery of the next tranche of bailout money, $7 billion due to be delivered at the end of February, is in doubt, pending a review by the currently snubbed troika.  Greece’s economy continues to struggle, as does the wider Eurozone, forecast to grow only about 1% this year.     
Oil surged over 8% on Friday, closing at $48.24 per barrel as data showed the largest weekly drop in drilling rigs since 1987.  The number of rigs drilling for oil has now dropped 24% since October.  While the impact on production is still several months away, the larger-than-expected drop in rigs will only accelerate this timeline. We expect oil to remain volatile as demand is influenced by inventories and worldwide growth.

Next week’s economic calendar highlights will be job-related, with weekly jobless claims on Thursday and the January jobs report on Friday.  Expect weekly jobless claims to settle in the 290,000 – 300,000 range (from 265,000 this week) and the jobs report to show the addition of 235,000 jobs in January (from 252,000 in December) and the unemployment rate to remain at 5.6%.  A small number of remaining fourth-quarter earnings reports will be announced as well.


Ulland Investment Advisors

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