November 28 Trading Week

U.S. financial market indexes reported gains for the shortened holiday trading week. The Dow Jones Industrial Average ended the week at 17,828.24, up 0.11% for the week. The S&P 500 closed at 2,067.56, up 0.25% for the week.

GDP and information on the PCE Index were highlights for the week. The seasonally adjusted annual growth rate for GDP was revised up for the third quarter from 3.5% to 3.9%. The PCE Index showed a 1.4% increase over the one year period ending in October with a 1.6% increase when excluding food and energy.

GDP Revised Up from First Estimate

Year to date the Dow Jones Industrial Average has gained 7.55% while the S&P 500 has gained 11.86%. 

A Recap of the Federal Open Market Committee's October 2014 Meeting

The Federal Open Market Committee (FOMC) ended QE3 in October.

Statement
U.S. Financial Market Indexes Up For The October 31 Week; FOMC Ends QE3

On November 19, it released its meeting minutes from October.

Meeting minutes
With Wary Eye on Global Tumult, Fed Opted to Stay on Policy Path for Now

The new focus will now be on when the FOMC will increase rates.
U.S. Market’s Focus Turns To Rate Increase

Third Quarter Financial Sector Earnings

This week a number of financial companies will report their third quarter earnings including three companies in the Dow Jones Industrial Average. JPMorgan will report results on Tuesday followed by American Express on Wednesday and Goldman Sachs on Thursday.

Some key trends to watch in the banking sector include the following:

5 Trends To Watch In This Week’s Bank Earnings

More details on American Express and credit card businesses can also be found here:

American Express Q3 Earnings Preview: Key Trends That Will Impact Performance

Credit Card Company Weekly Notes – MasterCard, Visa And American Express

The FOMC's September 16-17 Meeting Minutes

September 16-17 Meeting Minutes

August 8, 2014: U.S. Equity Markets End the Week Higher

DJIA +0.35%
S&P 500 +0.32%

A few good reads on this week's geopolitical activity: 

Ukraine: Market Rising on Hint of Easing Tension in Ukraine

Middle East: U.S. Launches Airstrikes in Iraq

Markets Reaching New Highs In 2014

Markets Reaching New Highs In 2014

U.S. Equity Market Recap for the Week of April 25

U.S. equity markets were down slightly for the week ending April 25. The S&P 500 fell 0.08% and the Dow Jones Industrial Average (DJIA) was down 0.28%. The Russell 3000 which represents the broad U.S. market was down 0.21%. Large-cap outperformed small-cap for the week shown by a -0.11% loss in the Russell 1000 versus a -1.31% loss in the Russell 2000. Technology stocks were also down for the week represented by the NASDAQ Composite Index which fell 0.49%.

The DJIA which traded evenly for the week was down only 0.28% and saw a number of earnings reports that influenced valuations within the index. Exxon Mobil, United Technologies, AT&T, McDonald’s, Travelers, Boeing, Procter & Gamble, 3M, Caterpillar, Microsoft, Verizon and Visa were among the DJIA companies reporting earnings during the April 25 week.

Microsoft’s earnings were a Dow 30 highlight for the week as Satya Nadella gave his first earnings report as CEO and followers were interested in additional information on the Nokia deal which reportedly closed on April 25.

Broader economic factors also influenced the market during the week. On Monday April 21 the Conference Board reported its Leading Economic Indicators Index which showed improvement for the U.S. economy in March. Broad market improvements could indicate increases ahead in U.S. market valuations.

U.S. Credit Market Recap for the Week of April 25

For the week ending April 25, U.S. credit markets saw a decrease in yields. The one-year nominal U.S. Treasury yield was unchanged at 0.11%. The 10-year and 30-year nominal Treasury yields were both slightly lower. The 10-year yield fell to 2.68% from 2.73% in the previous week. Meanwhile, the 30-year Treasury yield was also lower at 3.45% down from 3.52% in the previous week.

During the week increased risks from issues between Russia and the Ukraine pushed investors to seek shelter in U.S. Treasury safe havens, according to T. Rowe Price. Treasury prices increased and yields decreased as a result.

For the long-term market speculators expect longer-term yields to increase slightly as the Federal Reserve tapers its asset purchasing program and gets closer to an increase in the federal funds rate.

What to look for in Coca-Cola’s results

What to look for in Coca-Cola's results

March FOMC Meeting Minutes

March FOMC Meeting Minutes

U.S. Inflation Still Below FOMC Target

At the Federal Reserve’s March Federal Open Market Committee (FOMC) meeting the FOMC reported it would continue to taper asset purchases in its QE3 program. The FOMC reduced long-term Treasury purchases and mortgage-backed securities purchases by $5 billion each per month. New Federal Reserve Chairman Janet Yellen also indicated an increase to the federal funds rate could be in store in 2015.

The FOMC continues to focus on two main goals for monetary policy decisions, price stabilization and maximum employment.

Price stabilization centers around a focus on the Bureau of Economic Analysis’ PCE Price Index report. The most recent report released on March 28 showed a decrease in the 12-month rate for the PCE Price Index. In February the 12-month PCE Price Index showed an inflation rate of 0.9%, down from 1.2% in January. The Core PCE Price Index which excludes food and energy remained at 1.1%.

The Core PCE Price Index showed continued stabilization in inflation in the U.S. economy while the PCE Price Index overall declined slightly to 0.9% and fell farther from the FOMC’s target inflation rate goal of 2.0%.

On Wednesday, April 9 the FOMC will release its March FOMC Meeting Minutes which may provide additional insight into the FOMC’s perspective and outlook for the two U.S. economic indicators that help guide its decisions on monetary policy. 

March U.S. Employment Reports

Wednesday, April 2, 2014: ADP National Employment Report

The U.S. private sector added 191,000 jobs in March.

Friday, April 4, 2014: BLS Employment Situation Report
In March the BLS reported a total increase of 192,000 jobs to the U.S. labor market. The U.S. unemployment rate remained unchanged at 6.7%.

Microsoft and Nokia

Microsoft and Nokia

2013 Berkshire Hathaway Shareholder Letter

2013 Berkshire Hathaway Shareholder Letter

2014 Mobile World Congress

2014 Mobile World Congress

U.S. Market Indicators

While the Employment Situation and PCE Index are important U.S. market indicators for the Federal Reserve, U.S. gross domestic product data also plays a role in determining monetary policy.

In the Commerce Department’s most recent GDP report the Bureau of Economic Analysis (BEA) reported a 3.2% fourth quarter increase in U.S. GDP from the third quarter of 2013. This increase followed a 4.1% quarterly increase in the third quarter. However, for the year the BEA reported a 1.9% annual GDP increase.

In the fourth quarter Personal Consumption Expenditure and Gross Private Domestic Investment increased 3.3% and 3.4% respectively while Government Consumption Expenditures and Gross Investment decreased 4.9%.

Personal Consumption Expenditure had the greatest increase in Goods adding 4.9% while Services also increased 2.5%. In Gross Private Domestic Investment Fixed Investment products increased 0.9% and Residential decreased 9.8%.

Federal Government Expenditures and Investments decreased 12.6% in the fourth quarter with National Defense decreasing 14%. State and Local Government Expenditures increased 0.5% in the fourth quarter.

While the national unemployment rate has decreased to 6.6% and the PCE Index inflation rate is 1.2%, the GDP report showed signs of slower improvement in the underlying gross domestic product data.