Market Update: Thursday, October 6, 2016

MarketUpdate_header

  • 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%.

MacroView_header

  • 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.

MonitoringWeek_header 

Thursday

  • Challenger Job Cut Announcements (Sep)

Friday

Saturday

  • IMF/World Bank Fall meetings in Washington, DC

Sunday

  • IMF/World Bank Fall meetings in Washington, DC

Click Here for our detailed Weekly Economic Calendar

Important Disclosures

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.

Stock investing involves risk including loss of principal.

Investing in foreign and emerging markets securities involves special additional risks. These risks include, but are not limited to, currency risk, political risk, and risk associated with varying accounting standards. Investing in emerging markets may accentuate these risks.

Treasury Inflation-Protected Securities (TIPS) are subject to interest rate risk and opportunity risk. If interest rates rise, the value of your bond on the secondary market will likely fall. In periods of no or low inflation, other investments, including other Treasury bonds, may perform better.

Bank loans are loans issued by below investment-grade companies for short-term funding purposes with higher yield than short-term debt and involve risk.

Because of its narrow focus, sector investing will be subject to greater volatility than investing more broadly across many sectors and companies.

Commodity-linked investments may be more volatile and less liquid than the underlying instruments or measures, and their value may be affected by the performance of the overall commodities baskets as well as weather, disease, and regulatory developments.

Government bonds and Treasury bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.

Investing in foreign and emerging markets debt securities involves special additional risks. These risks include, but are not limited to, currency risk, geopolitical and regulatory risk, and risk associated with varying settlement standards.

High-yield/junk bonds are not investment-grade securities, involve substantial risks, and generally should be part of the diversified portfolio of sophisticated investors.

Municipal bonds are subject to availability, price, and to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rate rise. Interest income may be subject to the alternative minimum tax. Federally tax-free but other state and local taxes may apply.

Investing in real estate/REITs involves special risks such as potential illiquidity and may not be suitable for all investors. There is no assurance that the investment objectives of this program will be attained.

Currency risk is a form of risk that arises from the change in price of one currency against another. Whenever investors or companies have assets or business operations across national borders, they face currency risk if their positions are not hedged.

Technical Analysis is a methodology for evaluating securities based on statistics generated by market activity, such as past prices, volume and momentum, and is not intended to be used as the sole mechanism for trading decisions. Technical analysts do not attempt to measure a security’s intrinsic value, but instead use charts and other tools to identify patterns and trends. Technical analysis carries inherent risk, chief amongst which is that past performance is not indicative of future results. Technical Analysis should be used in conjunction with Fundamental Analysis within the decision making process and shall include but not be limited to the following considerations: investment thesis, suitability, expected time horizon, and operational factors, such as trading costs are examples.

This research material has been prepared by LPL Financial LLC.

To the extent you are receiving investment advice from a separately registered independent investment advisor, please note that LPL Financial LLC is not an affiliate of and makes no representation with respect to such entity.

Not FDIC/NCUA Insured | Not Bank/Credit Union Guaranteed | May Lose Value | Not Guaranteed by any Government Agency | Not a Bank/Credit Union Deposit

Securities and Advisory services offered through LPL Financial LLC, a Registered Investment Advisor

Member FINRA/SIPC
Tracking # 1-542801