Investment Commentary –September 26th, 2017
Market Indices as of Market Close September 26th, 2017
Dow 22,284 (12.76% YTD)
S&P 2,497 (11.57% YTD)
NASDAQ 6,380 (18.52% YTD)
Global Dow 2,891 (14.34%)
Gold $1,299.10 (11.91%)
OIL $51.92 (-11.82%)
US 10Y Treasury 2.28 (-20.95%)
Barclay Bond Aggregate (3.47% YTD)
Wall Street ends unchanged while tech bounces back
(Reuters) – U.S. stocks ended flat on Tuesday even as technology shares bounced from sharp losses in the prior session and comments from Fed Chair Janet Yellen boosted expectations of a December rate hike.
The Dow Jones Industrial Average .DJI fell 10.05 points, or 0.05 percent, to 22,286.04, the S&P 500 .SPX gained 0.28 points, or 0.01 percent, to 2,496.94 and the Nasdaq Composite .IXIC added 9.57 points, or 0.15 percent, to 6,380.16.
Fed’s Yellen says gradual hikes should continue, despite weak inflation
CLEVELAND (Reuters) – The Federal Reserve needs to continue gradual rate hikes despite broad uncertainty about the path of inflation, Fed Chair Janet Yellen said on Tuesday in remarks that acknowledged the central bank’s struggles to forecast one of its key policy objectives.
Still, recent low inflation was likely a reflection of factors that would fade over time and despite uncertainties, it “would be imprudent to keep monetary policy on hold until inflation is back to 2 percent,” Yellen said in a 37-page address to the National Association for Business Economics
“Without further modest increases in the federal funds rate over time, there is a risk that the labor market could eventually become overheated, potentially creating an inflationary problem down the road that might be difficult to overcome without triggering a recession,” she said.
It is possible, Yellen said, that the Fed may have “misspecified” its models for inflation, and “misjudged” key facts like the underlying strength of the labor market and whether inflation expectations are as stable as they seem, and central bankers need to remain open to that possibility as they decide on policy.
News around the web
Fed taper begins
The U.S. Federal Reserve Board on Wednesday said next month will mark the beginning of its long-awaited program to gradually shrink the size of its massive portfolio of Treasury bonds and mortgage-backed securities. The portfolio is a legacy of the Fed’s efforts to stimulate economic growth following the financial crisis of 2008.
Gold’s shine dulls
The Fed’s new outlook for higher rates weighed on gold prices, which slipped below $1,300 an ounce on Thursday for the first time in nearly a month.
Major U.S. companies spent nearly 10% less on stock repurchases in this year’s second quarter than they did in the first quarter, according to S&P Dow Jones Indices. One reason for the decline: Stock prices continued to rise in the spring, making it more expensive for companies to buy back shares.
LEADERS & LAGGARDS
Leaders this past week included Basic Materials and industrial goods. Laggards included Healthcare, Consumer Goods and Utilities.
This day in financial history: AT&T Sells Itself to Get Even
Today in 1996 AT&T sells its broadcast satellite division Skynet to Loral Space Communications. Loral dished out $712.5 million in cash, money that AT&T would use to try and dethrone the “Baby Bells” in the nation’s long-distance and local phone markets.
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 investments.