Markets ended the holiday week on an upbeat note, giving stocks their best week since late November. For the week, the S&P 500 gained 2.76%, the Dow Jones grew 2.47%, and the NASDAQ rose 2.55%.
On the economic front, final data on third-quarter economic growth showed that Gross Domestic Product (GDP) grew 2.0%, down from the previous estimate of 2.1%. The report showed that a slew of global issues cut into demand for U.S. goods abroad; on the positive side, what growth we had was driven by domestic demand.
As the holiday shopping season fades, data shows that retailers are struggling to meet even modest sales goals. The last Saturday before Christmas can often make or break the season with last-minute shoppers flooding stores. However, this year's sales were tepid, and forecasts predict holiday sales to grow 3.1% over last year, down from 4.1% growth in 2014.
The data also shows that shopping trends are shifting away from brick and mortar stores toward online retailers. Sales at physical stores dropped 5.8% over last year while traffic fell 8.0% between early November and mid-December. In contrast, online sales rose 11.8% between late November and late December. The increased online volume strained supply chains, causing some popular retailers, like Eddie Bauer [EBHI] to miss Christmas shipping deadlines.
The week ahead, sandwiched between two trading holidays, has historically been slow, though surprises are always possible. On the calendar are reports about housing and consumer confidence, which investors are hoping will show that rising fortunes in the labor market continue to translate into spending.
As we enter the final week of 2015, we're confronted by the fact that markets may close out the year flat. While that's frustrating for investors who were hoping to see the continued recovery translate into strong stock returns, it's important to consider the many headwinds markets had to contend with this year: global economic weakness, historic highs, terrorism, and declining commodity prices. Stay tuned for next week's update where we review 2015 and discuss expectations for the year to come.
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Monday: Dallas Fed Mfg. Survey
Tuesday: International Trade in Goods, S&P Case-Shiller HPI, Consumer Confidence
Wednesday: Pending Home Sales Index, EIA Petroleum Status Report
Thursday: Jobless Claims, Chicago PMI
Friday: U.S. Markets Closed for New Year's Day
Notes: All index returns exclude reinvested dividends, and the 5-year and 10-year returns are annualized. Sources: Yahoo! Finance and Treasury.gov. International performance is represented by the MSCI EAFE Index. Corporate bond performance is represented by the DJCBP. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly.
Consumer sentiment rises to five-month high. Consumers regained their optimism about the U.S. economy at the end of December, pushing a measure of sentiment to the highest level since July.
Durable goods orders flat in November. Orders for long-lasting manufactured goods were flat in November and a measure of business investment fell, indicating that demand remains weak.
Weekly jobless claims close to four-decade low. The number of Americans filing new applications for unemployment benefits fell to a near-42-year low. Though seasonal factors may be affecting the data, the drop is another sign indicating that the labor market continues to improve.
Personal income rises for eighth straight month. Solid wage gains pushed up income in November for the eighth month in a row, raising hopes that consumer spending and economic growth should increase next year.
These are the views of 4th River Financial Group, and not necessarily those of the named representative, and should not be construed as investment advice. Neither the named representative nor the Investment Advisor gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your financial advisor for further information.
Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.
Diversification does not guarantee profit nor is it guaranteed to protect assets.
The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.
The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the NASDAQ. The DJIA was invented by Charles Dow back in 1896.
The Nasdaq Composite is an index of the common stocks and similar securities listed on the NASDAQ stock market and is considered a broad indicator of the performance of stocks of technology companies and growth companies.
The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) that serves as a benchmark of the performance in major international equity markets as represented by 21 major MSCI indexes from Europe, Australia and Southeast Asia.
The Dow Jones Corporate Bond Index is a 96-bond index designed to represent the market performance, on a total-return basis, of investment-grade bonds issued by leading U.S. companies. Bonds are equally weighted by maturity cell, industry sector, and the overall index.
The S&P/Case-Shiller Home Price Indices are the leading measures of U.S. residential real estate prices, tracking changes in the value of residential real estate. The index is made up of measures of real estate prices in 20 cities and weighted to produce the index.
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