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Weekly Market Update – October 16, 2015

The Dow gained 74 points Friday as weaker-than-expected economic data gave a boost to markets.  For the week the Dow was up .8% (its third straight week of gains) and for the year the index is now down 3.7%.

September industrial production (factory output) came in below expectations Friday while earlier in the week September retail sales did the same.  Inflation data was also tame.  The tepid numbers increase speculation that an interest rate hike will be pushed back into 2016 and the current stimulus measures will continue in the short term. 

GE announced third quarter earnings Friday that beat expectations, pushing the Dow component up 3%. Third quarter corporate earnings begin in earnest next week and will be parsed to determine the effect the strong dollar and slowing global demand had on profits.     

The yield on the 10-year Treasury held steady Friday to 2.02%, down 8 bps for the week and down 16 bps for the year.  Oil settled 18 cents higher Friday to end the day at $47.26 after the weekly drill rig report again showed a reduction in the number of drilling rigs in operation, dropping the count by 10 to 595, the seventh consecutive weekly decline.  For the week, oil was down almost 5% on continued global over-supply concerns (US crude inventories grew by 7.6 million barrels last week, the largest increase in six months). 

Next week’s economic calendar highlights include September housing data on Tuesday and Thursday and weekly jobless claims also on Thursday.  Expect the housing data (housing starts and existing home sales) to show a slight decline in activity from August and weekly jobless claims to settle in the 260-270,000 range (from 255,000 this week).  The week will be full of market-moving Q3 earnings news as well.

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Ulland Investment Advisors

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