Market Update: Thursday, October 6, 2016


  • Global stocks mixed, oil breaks through. Domestic markets are losing a little bit of ground this morning amid a lull in economic data before tomorrow’s much anticipated jobs report; this after the S&P 500’s 0.4% gain on Wednesday, led by strength in the energy and financials sectors. Weakness once again stemmed from utilities, telecom, and consumer staples. European markets are mixed in afternoon trading as investors parse the minutes from the European Central Bank’s September meeting. In Asia, Japan’s Nikkei (+0.5%) gained for a fourth straight day while the Hang Seng also advanced. Meanwhile, WTI crude oil has broken above $50/barrel, COMEX gold has dipped to $1252/oz. and the yield on the 10-year Treasury note is slightly higher at 1.74%.


  • Claims move lower. New claims for unemployment insurance came in at 249,000 for the week ending October 1, 2016, down 5,000 from last week. New claims remain near 40-year lows, and the latest reading is the second time this year that claims have fallen below the 250,000 level. In the past, claims need to rise more than 75,000 over a six-month (26-week) period to indicate a recession. Claims are down 17,000 from their level 26 weeks ago, so they are not showing a recession signal at this point in time.
  • Services sector rebounds. The Institute for Supply Management’s (ISM) non-manufacturing Purchasing Managers’ Index (PMI) moved sharply higher in September, rebounding from a disappointing August. The Index rose from 51.4 to 57.1, easily topping the consensus estimate of 52.9. (Above 50 indicates expansion.) New orders, which tend to be a leading indicator of future economic activity, were particularly strong. The services sector, which accounts for about 80% of U.S.economic activity, has been playing an increasing role in the U.S. economy for decades; strong services activity could help drive growth as the manufacturing sector recovers from oil- and dollar-driven weakness.
  • Get ready for the September jobs report. Tomorrow is the September employment report and the expectations are for 174,000 new jobs created, an unemployment rate of 4.9%, and a 2.6% year-over-year increase in hourly earnings. The August jobs report came in a little beneath consensus at 151,000 jobs created, but be aware the August number has been revised higher in September in each of the past six years. With the election right around the corner, this piece of economic data will be very heavily watched and scrutinized. Today on the LPL Research blog we will do a preview of the September employment report.
  • How will Hurricane Matthew affect energy prices? With Hurricane Matthew set to hit the United States later this evening, our thoughts go out to all those who are in the storm’s potential path. Today on the LPL Research blog we will take a closer look at how energy prices (crude oil and natural gas) do when level 2 hurricanes (or stronger) generate in the Atlantic Ocean and make landfall in the United States. In fact, since 1984, this has happened 27 times and West Texas Intermediate (WTI) Cushing crude oil has been higher a month later 66.7% of the time, with average and median returns of 2.3% and 1.8%. Be on the lookout for this blog later today.



  • Challenger Job Cut Announcements (Sep)



  • IMF/World Bank Fall meetings in Washington, DC


  • IMF/World Bank Fall meetings in Washington, DC

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Past performance is no guarantee of future results.

The economic forecasts set forth in the presentation may not develop as predicted.

The opinions voiced in this material are for general information only and are not intended to provide or be construed as providing specific investment advice or recommendations for any individual security. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly.

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