Investment Commentary – August 19th, 2015
Market Indices as of Market Close August 19th, 2015
Dow 17,349 (-2.66% YTD)
S&P 500 2,079 (1.01% YTD)
NASDAQ 5,019 (5.98% YTD)
Global Dow 2,481 (52 week low 2,375/high 2,644)
10-year Treasury 2.12 (52 week low 1.64/high 2.66)
Gold $1,132 (52 week low $1,074/high $1,310)
Oil $40.54 (52 week low $40.46/high $92.26)
“U.S. stocks trim losses after Fed minutes”
U.S. stocks came off from some of the lowest levels of the day, but most remained in negative territory Wednesday after minutes from the Federal Reserve’s July meeting indicated that conditions for raising rates for the first time in nearly a decade are “approaching.”
Earlier, stocks sold off, with the S&P 500 briefly falling below the 200-day moving average, a key technical level, as a plunge in oil prices hit energy shares.
The minutes from the meeting of the central bank’s Federal Open Market Committee, or FOMC, suggested that a September rate increase may be on the table, while noting that a minority of the policy makers recommended caution as global markets face headwinds from a slowdown in China, which has pummeled commodity prices.
The initial market reaction suggested that investors interpreted the minutes as dovish, with the odds of a September rate hike a little lower, according to analysts.
The Fed minutes came out ahead of schedule after a 2 p.m. Eastern embargo set by the Fed was broken.
The S&P 500 SPX, -0.82% was off 15 points, or 0.7%, to 2,082 with nine of its 10 main sectors trading lower. The energy sector was hit hardest after oil prices plunged to new lows following an increase in crude supplies. The S&P 500 energy sector was down more than 2%.
The Dow Jones Industrial Average DJIA, -0.93% was down 135 points, or 0.8%, at 17,376, dragged lower by a fall in shares of energy giant Chevron Corp. CVX, -0.22% which was off 2.3% and hit a 52-week intraday low.
“Fed’s Signals Mixed on Rate Increase at September Meeting”
July minutes show most officials saw conditions for liftoff ‘not yet’ achieved, but ‘approaching that point’.
The Federal Reserve’s next policy meeting is four weeks away and officials show no clear sign of having settled on a decision about whether to raise short-term interest rates at that time.
“Solid retail sales gains in July”
The week’s domestic economic data did not appear to drive markets strongly in either direction. On Thursday, the government reported a good gain in July retail sales. T. Rowe Price Chief U.S. Economist Alan Levenson notes that core retail sales (which exclude sales at gas stations, auto dealers, and building materials stores) were revised higher for May and June and are tracking at a solid pace in the current quarter. Solid payroll gains and moderate wage increases are coming to provide a significant boost to total labor income, which should sustain further increases in spending.
The views presented are not intended to be relied on as a forecast, research or investment advice and are the opinions of the sources cited and are subject to change based on subsequent developments. They are not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy.