Weekly Market Update, October 28, 2013
Presented by Michael Manning
General Market News
- Treasuries remained at their recent lows early Monday morning. The 10-year stood at 2.50 percent, the same level it has held for a few days now, following its recent drop from 2.75 percent. The market is anticipating $96 billion in new issuance this week, as well as the next Federal Open Marketing Committee (FOMC) meeting, which is set for Tuesday and Wednesday.
- Equity markets continued to move higher last week, with the S&P 500 gaining 0.88 percent. The Dow Jones Industrial Average was the top performer, posting a 1.11-percent increase, while the small-cap Russell 2000 Value Index was the domestic laggard, gaining just 0.33 percent. International results were mixed: the MSCI EAFE gained nearly 1 percent, and the MSCI Emerging Markets Index lost 1.07 percent.
- Not much is expected from the FOMC meeting this week. The Fed has told us that its decision making is data dependent, and with Janet Yellen set to take over from Chairman Bernanke in January, we believe that any tapering of the asset purchasing program would take place late in the first quarter or into the second quarter, at the earliest, depending on economic developments.
- The pace of economic reports will likely pick up in the coming weeks, and after a void of information during the government shutdown, these reports could come under intense scrutiny.
Equity Index | Week-to-Date % | Month-to-Date % | Year-to-Date % | 12-Month % |
S&P 500 | 0.88% | 4.77% | 25.50% | 27.32% |
Nasdaq Composite | 0.75% | 4.60% | 31.92% | 34.20% |
DJIA | 1.11% | 3.04% | 21.21% | 21.95% |
MSCI EAFE | 0.99% | 4.38% | 21.88% | 28.61% |
MSCI Emerging Markets | 1.07% | 4.50% | 0.11% | 6.11% |
Russell 2000 | 0.33% | 4.19% | 33.03% | 38.89% |
Source: Bloomberg
Fixed Income Index | Month-to-Date % | Year-to-Date % | 12-Month % |
U.S. Broad Market | 0.93% | 1.12% | 0.54% |
U.S. Treasury | 0.65% | 1.82% | 1.06% |
U.S. Mortgages | 0.82% | 0.12% | 0.04% |
Municipal Bond | 0.68% | 2.59% | 2.27% |
Source: Bloomberg
What to look forward to
This week’s data will begin with information on the output of U.S. industry. Industrial Production likely rose 0.4 percent in September, according to analysts polled by Bloomberg. This piece of information had been delayed by the stalemate in Washington.
A more forward-looking (but less comprehensive) view of the current state of U.S. industry, ISM Manufacturing for the month of October will be released on Friday. Manufacturing has been particularly strong over the past few months, reflecting an improving housing market and increased growth abroad, notably in Europe.
Expectations remain muted for the Consumer and Producer Price indices, which have so far continued to reflect benign inflation, despite a greatly increased monetary base. Investors will also learn how much Consumer Confidence has been shaken by the turmoil in Washington.
The S&P Case-Shiller Home Price Index may reflect a bit of the slowdown that we have observed in home sales volume. Housing inventories remain relatively tight, so medium-term fundamentals still look positive for continued increases in home prices. That said, there could be some shorter-term weakness.
Disclosures: Certain sections of this commentary contain forward-looking statements that are based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. All indices are unmanaged and are not available for direct investment by the public. Past performance is not indicative of future results. The S&P 500 is based on the average performance of the 500 industrial stocks monitored by Standard & Poor’s. The Nasdaq Composite Index measures the performance of all issues listed in the Nasdaq Stock Market, except for rights, warrants, units, and convertible debentures. The Dow Jones Industrial Average is computed by summing the prices of the stocks of 30 large companies and then dividing that total by an adjusted value, one which has been adjusted over the years to account for the effects of stock splits on the prices of the 30 companies. Dividends are reinvested to reflect the actual performance of the underlying securities. The MSCI EAFE Index is a float-adjusted market capitalization index designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI Emerging Markets Index is a market capitalization-weighted index composed of companies representative of the market structure of 26 emerging market countries in Europe, Latin America, and the Pacific Basin. The Russell 2000® Index measures the performance of the 2,000 smallest companies in the Russell 3000 Index. The Bank of America Merrill Lynch U.S. Broad Market Index tracks the performance of U.S. dollar-denominated investment-grade debt publicly issued in the U.S. domestic market, including U.S. Treasury, quasi-government, corporate, securitized, and collateralized securities. The Bank of America Merrill Lynch U.S. Treasury Index tracks the performance of U.S. dollar-denominated sovereign debt publicly issued by the U.S. government in its domestic market. The Bank of America Merrill Lynch U.S. Mortgage-Backed Securities Index tracks the performance of U.S. dollar-denominated fixed-rate and hybrid residential mortgage pass-through securities publicly issued by U.S. agencies in the U.S. domestic market. The Bank of America Merrill Lynch U.S. Municipal Securities Index tracks the performance of U.S. dollar-denominated investment-grade tax-exempt debt publicly issued by U.S. states and territories, and their political subdivisions, in the U.S. domestic market.
For IARs: Michael Manning is a financial advisor located at 2550 Fifth Avenue, Suite 800, San Diego, CA 92103. He offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. He can be reached at 619-237-9977 or at [email protected].
Authored by the Investment Research team at Commonwealth Financial Network.
© 2013 Commonwealth Financial Network®
