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Weekly Market Update – September 2, 2016

The Dow was up 72.2 points on Friday following the release of August’s nonfarm payroll report, which showed hiring levels just slightly below expectations. For the week the Dow was up .5%. Year-to-date the Dow is up 6%.

As the month of August came to a close markets were relatively quiet, showing low volatility, as most investors awaited Friday’s Job reports. After recent speeches from Janet Yellen it seemed as if a September rate hike was highly likely; reflected by the drop in the Dow at the beginning of the week, the increase in treasury yields, and strength in the dollar. However, Friday’s modest jobs report might cause uncertainty at the Fed for a rate hike in September.

Nonfarm payrolls grew by 151,000 in August. This was below expectations of around 180,000 but nonetheless consistent with an improving labor market picture and continued wage growth. The unemployment rate held steady at 4.9%. Initial jobless claims rose 2,000 to 263,000, slightly under the 265,000 forecast. In other domestic economic news, The ISM manufacturing index was lower than expected, falling to 49.4 against a forecast of 52.0. Likewise, Markit’s manufacturing PMI index contracted to 52.0, from 52.9 in July. The report cited sluggish economic growth and weak employment numbers as factors contributing to the slowdown.

The Federal Reserve’s next meeting will be on September 20th and 21st. Until then the market should experience volatility as the Fed will take into account mixed economic data and recent global developments (Brexit and Emerging Market issues) as it formulates an interest rate decision.

Crude oil was down 7% this week. Disappointing inventory data – EIA reports of higher-than expected crude stockpiles and a slower-than-forecast drawdown of gasoline stockpiles – combined with skepticism about Iran’s willingness to participate in a production freeze drove prices lower. Prices were up 2.5% on Friday following Russian president Vladimir Putin’s call for a production cap.

Next week’s economic calendar highlights include crude inventories (Sep. 7), initial jobless claims (Sep. 8), and wholesale inventories (Sep. 9).

Our Office will be closed on Monday Sept. 5th in observance of Labor Day.

Have a great Weekend,
Joshua Estes

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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