Equities got slammed on Friday as Boston Federal Reserve president Eric Rosengren – long-time advocate of maintaining low interest rates – said that “a reasonable case can be made for continuing a gradual normalization of monetary policy”. While the remark was far from a definitive vote for a hike in September, it was enough to take the froth out of the recent market highs set over the past few months. Those betting on a rate hike in September, however, moved up to 24% from 18% on Friday. Still quite low, although December appears to be more certain.
For the week, stocks tumbled around 2.5% on the interest rate chatter and posted the steepest drop following the Brexit vote in June. The Dow Industrials were off nearly 400 points on Friday and he S&P 500 was lower by 53 points. Traders were also rattled by a North Korean nuclear test that was its most powerful to date. It was hard to find any bidders as the holiday-shorted week came to an end with nearly 25 stocks declining for every 6 showing gains for the week. Volume also picked up after a lazy summer of trading. With the exception of energy stocks, all sectors were in the red led by consumer staples, basic materials and industrials. Oil settled slightly higher on the week to close at $45.88/bbl. On Thursday, crude oil shot up 5% on a report of a downturn in crude inventory and some agreement talk between Russia and Saudi Arabia on stabilizing prices to meet market conditions. But West Texas Intermediate fell back 4% on Friday.
Looking out on the upcoming week, producer prices and retail sales for August will be reported with Bank of America Merrill Lynch forecasting modestly higher prices and core retail sales dipping a bit. We will also hear from conservative portfolio choice Oracle Corp. which will report first quarter fiscal 2017 earnings estimated by analysts at $0.58 per share vs. $0.53 a year ago. The outlook for stocks still appear favorable, but as we can see, quite vulnerable to any negative news and rate hike blather.
Here is the answer to last week’s trivia question: Dunkin’ Brands, headquartered in Canton, Mass., owns the iconic Dunkin’ Donuts franchise and what specialty ice cream chain? Baskin-Robbins, Ben & Jerry’s, Carvel or Cold Stone Creamery. Answer: Baskin-Robbins. Baskin-Robbins, founded in 1945, has more than 7,300 locations in nearly 50 countries.
Today’s Trivia Question: Domino Foods, Inc. has a long history in the sugar business dating back to 1891. The company was originally named? Dominico Sugar, Ltd., Great Atlantic and Pacific Sugar Co., The American Sugar and Refining Co., Sugar Cane Growers Cooperative.