The Dow soared and made history

The Dow soared over 300 points  on the last day of November to close above 24000 for the first time in its  history. Hopes for a tax overhaul may have contributed to investor confidence  in equities. Each of the benchmark indexes listed here posted favorable  monthly gains. The Nasdaq continued its strong performance in 2017, gaining  over 2.0% in November, while the small caps of the Russell 2000 climbed close  to 3.0%. After gaining 2.8% for November, the S&P 500 joined the Dow in  posting its eighth consecutive month of positive returns. With stocks  climbing, it’s not surprising that long-term bond prices fell, as evidenced  by the yield on 10-year Treasuries, which jumped 4 basis points over October’s  end-of-month yield.

By the close of trading on  November 30, the price of crude oil (WTI) was $57.39 per barrel, up from the  October 31 price of $54.54 per barrel. The national average retail regular  gasoline price was $2.533 per gallon on November 27, up from the October 30  selling price of $2.488 and $0.379 more than a year ago. The price of gold  increased by the end of November, closing at $1,277.40 on the last trading  day of the month, up $5.60 from its price of $1,271.80 on October 31.

Market/Index 2016 Close Prior Month As of November    30 Month Change YTD Change
DJIA 19762.60 23377.24 24272.35 3.83% 22.82%
NASDAQ 5383.12 6727.67 6873.97 2.17% 27.69%
S&P 500 2238.83 2575.26 2647.58 2.81% 18.26%
Russell 2000 1357.13 1502.87 1544.14 2.75% 13.78%
Global Dow 2528.21 2959.78 3013.56 1.82% 19.20%
Fed. Funds 0.50%-0.75% 1.00%-1.25% 1.00%-1.25% 0 bps 50 bps
10-year    Treasuries 2.44% 2.37% 2.41% 4 bps -3 bps

Chart  reflects price changes, not total return. Because it does not include  dividends or splits, it should not be used to benchmark performance of  specific investments.

Last  Month’s Economic News 

  • Employment: Total       employment rose by 261,000 in October following September’s job       reduction. The unemployment rate edged down to 4.1%. The number of       unemployed persons declined by 281,000 to 6.5 million. Since January,       the unemployment rate has declined by 0.7 percentage point, and the       number of unemployed persons has decreased by 1.1 million. The labor       participation rate decreased by 0.4 percentage point to 62.7%. The       average workweek for all employees remained at 34.4 hours in October.       Average hourly earnings fell by $0.02 to $26.53 after rising $0.12 in       September. Over the 12 months ended in October, average hourly earnings       have risen $0.63, or 2.4%.
  • FOMC/interest rates:       The Federal Open Market Committee met at the end of October and left the       target federal funds rate range at 1.00%-1.25%. However, some economic       indicators are showing mild inflationary pressures, which, when coupled       with a labor market that could be nearing full employment, may lead to       another interest rate hike when the Committee next meets in mid-December.       The FOMC may be under new leadership, as President Trump nominated       Jerome Powell to succeed Janet Yellen as Fed chairperson.
  • GDP/budget:The second       estimate of the third-quarter gross domestic product showed expansion at       an annual rate of 3.3%, according to the Bureau of Economic Analysis.       The second-quarter GDP grew at an annualized rate of 3.1%. Gross       domestic income, which estimates all income earned while producing goods       and services, increased 2.5% in the third quarter compared to an increase       of 0.9% in the second quarter. As to the government’s budget, October       marked the beginning of fiscal year 2018. The deficit for October was       $63.24 billion ($45.83 billion in October 2016). The federal deficit for       FY 2017 was $665.7 billion, more than $80 billion, or 13.7%, higher than       the 2016 deficit.
  • Inflation/consumer       spending: Inflationary pressures continued to show continued upward       momentum in October. The personal consumption expenditures (PCE) price       index (a measure of what consumers pay for goods and services) ticked up       0.3% for the month after climbing only 0.4% in September. The core PCE       price index (excluding energy and food) inched ahead 0.2% in October.       Personal (pre-tax) income increased 0.4% and disposable personal       (after-tax) income gained 0.5% from the prior month. Personal       consumption expenditures (the value of the goods and services purchased       by consumers) climbed 0.3% in October after jumping a robust 1.0% the       prior month.
  • The Consumer Price       Index, which rose 0.5% in September, edged up only 0.1% in October. For       the 12 months ended in October, consumer prices are up 2.0%, a mark that       approaches the Fed’s 2.0% target for inflation. Core prices, which       exclude food and energy, increased 0.2% in October, and are up 1.8% over       the prior 12 months.
  • The Producer Price       Index showed the prices companies receive for goods and services       advanced 0.4% in October, the same increase as in September.       Year-over-year, producer prices have increased 2.8%. Prices less food       and energy increased 0.4% for the month and are up 2.3% over the past 12       months.
  • Housing: The housing       sector continues to gain momentum towards the end of the year. Total       existing-home sales climbed 2.0% for October following a 0.7% rise in       September. Over the last 12 months, sales of existing homes are down       0.9%. The October median price for existing homes was $247,000 ($245,100       in September), 5.5% higher than the October 2016 median price of       $234,100. Inventory for existing homes fell 3.2% for the month,       representing a 3.9-month supply. The Census Bureau’s latest report       reveals sales of new single-family homes climbed 6.2% following       September’s whopping 18.7% jump. The median sales price of new houses       sold in October was $312,800 (September was $319,700). The average sales       price was $400,200 in October, up from September’s $385,200. The number       of houses for sale at the end of October was 282,000 (279,000 in       September), which represents a supply of 4.9 months at the current sales       rate.
  • Manufacturing:Industrial       production increased 0.9% in October following a 0.3% increase in       September. Industrial production has risen 2.9% over the past 12 months       ended in October. Capacity utilization increased slightly from 76.0% in       September to 77.0% in October. Manufacturing output climbed 1.3%. Mining       output fell 1.3% in October after rising 0.4% in September. The index       for utilities jumped 2.0% after gaining 1.5% in September. New orders       for manufactured durable goods fell 1.2% in October following       consecutive monthly increases of 2.2% and 1.7%. Shipments of       manufactured goods, up 5 of the last 5 months, increased $0.3 billion, or       0.1%, to $241.0 billion.
  • Imports and       exports:The advance report on international trade in goods revealed that       the trade gap for October was $68.3 billion, up from the $64.14 billion       trade gap in September. Exports of goods for October were $129.1 billion,       $1.0 billion less than September exports. Imports of goods for October       were $197.4 billion, $1.5 billion more than September imports.
  • International       markets:In a sign that the European economy is heading in the right       direction, the Bank of England raised its benchmark interest rate by 25       basis points in early November. Germany, Italy, and Finland saw their       third-quarter GDPs expand at a rate exceeding expectations, while       economic growth slowed in France, Spain, and the Netherlands. Japan’s       GDP expanded at an annualized rate of 1.4% in the third quarter, largely       driven by exports, which increased an annualized 6.0%.
  • Consumer       sentiment:Consumer confidence, as measured by The Conference Board       Consumer Confidence Index®, increased in November to 129.5, up from       126.2 in October. According to the report, consumer confidence in the       economy increased for the fifth consecutive month and remains at a       17-year high.

Eye on  the Month Ahead

All indications are that the  Federal Reserve will relax stimulus measures by increasing the federal funds  interest rate when the Committee meets this month. December should be a good  month for consumer spending on the heels of robust consumer sales on Black  Friday and Cyber Monday. While trading usually slows during December, stocks  are expected to close the year ahead of their 2016 values.

 

Best Regards,

Paul Hutton

 

 

Data sources: News items are  based on reports from multiple commonly available international news sources  (i.e. wire services) and are independently verified when necessary with  secondary sources such as government agencies, corporate press releases, or  trade organizations. Market data: Based on data reported in WSJ Market Data  Center (indexes); U.S. Treasury (Treasury yields); U.S. Energy Information  Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK); www.goldprice.org (spot gold/silver);  Oanda/FX Street (currency exchange rates). All information is based on  sources deemed reliable, but no warranty or guarantee is made as to its  accuracy or completeness. Neither the information nor any opinion expressed  herein constitutes a solicitation for the purchase or sale of any securities,  and should not be relied on as financial advice. Past performance is no  guarantee of future results. All investing involves risk, including the  potential loss of principal, and there can be no guarantee that any investing  strategy will be successful.

The Dow Jones Industrial Average  (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S.  common stocks. The S&P 500 is a market-cap weighted index composed of the  common stocks of 500 leading companies in leading industries of the U.S.  economy. The NASDAQ Composite Index is a market-value weighted index of all  common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a  market-cap weighted index composed of 2,000 U.S. small-cap common stocks. The  Global Dow is an equally weighted index of 150 widely traded blue-chip common  stocks worldwide. Market indices listed are unmanaged and are not available  for direct investment.

Securities  and investment advisory services offered through Woodbury Financial Services,  Inc., member FINRA/SIPC. Fixed and traditional insurance offered through  Hutton Financial Advisors, which is not affiliated with Woodbury Financial  Services, Inc.

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2017

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