Investment Commentary –October 12th, 2016
Market Indices as of Market Close September 12th, 2016
Dow 18,144 (4.93% YTD)
S&P 2,139 (5.66% YTD)
NASDAQ 5,239 (6.16% YTD)
Global DOW 2,432 (2,033 week low/high 2,489)
10-year Treasury 1.70 (1.77 52 week low /2.38 high)
Gold 1,256 ($1,053 52 week low /high $1,384)
Oil $49.70 ($34.10 52 week low /high $53.39)

U.S. stocks close mostly higher as Fed hints at rate hike ‘soon’

U.S. stocks closed mostly higher Wednesday after minutes from the Federal Reserve’s latest policy meeting underlined expectations for a possible rate hike in December. The S&P 500 SPX, +0.11% gained 2.48 points, or 0.1%, to 2,139.21. The Dow Jones Industrial Average DJIA, +0.09% added 15.54 points, or 0.1%, to 18,144.20. However, a sharp selloff in biotechnology stocks weighed on the Nasdaq Composite COMP, -0.15% with the index closing 7.77 points, or 0.2%, lower at 5,239.02.

Fresh Signs of Strength for the U.S. Labor Market

Amid a recent string of encouraging data reports on the U.S. labor market, the October 6th release of weekly figures for first-time filings for unemployment benefits from the U.S. Department of Labor stands out.

Initial jobless claims dropped, to 249,000, for the week ended October 1, from 254,000 one week earlier, while the four-week moving average fell, to 253,500 from 256,000—the lowest four-week average since 1973.

Since U.S. payroll employment in 1973 was about 78 million, versus 144.6 million as of August 2016, the rate of layoffs/involuntary separations is remarkably low. Thus, while wages for hourly employees have risen very slowly in recent years, this measure of job security is at an all-time high. That’s an important structural change that labor economists haven’t really examined very closely.

Fed’s Dudley says interest-rate hikes will be ‘gentle’: New York Fed president believes U.S. economy has plenty of room to run

The U.S. economy is on track to expand at a moderate pace that could last for the next five to 10 years, said New York Fed President William Dudley on Wednesday.

“I think we’re at a point where the economic expansion plenty of room to run,” Dudley said during a conversation at the Business Council of New York State, according to CNBC.

“The best thing that could happen for the U.S. economy

[is] to grow at a moderate rate for the next five to 10 years and the unemployment rate to stay around 5% or lower,” and the Fed is aiming for this outcome, the New York Fed President said.

The Fed can help foster the long-lasting growth with “gentle” interest rate hikes, Dudley said, according to Reuters.

THIS DAY IN FINANCIAL HISTORY: October 12th, 1837/ The Panic Of 1837
On this day in 1837 Congress took action to stabilize the nation’s economy during the Panic of 1837; unfortunately their efforts failed, and the depression persisted for seven years.

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.