Interest rate jitters were again the major culprit this past week. Despite a less-than-anticipated growth in new jobs, it is all but certain that the Federal Reserve will hike the short-term rate sometime this year. Probably sometime after the election and the first time since last December when it signaled “a few” increases for 2016. Interest rates around the globe are also destined for higher ground. The Labor Department reported that the economy added 156,000 new jobs in September, modestly below estimates of 170,000 and the unemployment rate ticked back up to 5%. Gold tanked nearly 5% with interest rate talk to close the week at $1,248.90/oz. vs. $1,366 as recently as July. Oil passed $50/bbl. following a sharp reduction of inventories, but did little for energy stocks.
For the week, the Dow Industrials and the NASDAQ gave up 0.37% and the S&P 500 about double that closing at 2,153.74. I could not find one market sector in the green with interest-sensitive utility and telecommunication shares falling about 3.7%. And declining stocks led advances by 2 to 1 on the NYSE. Equity markets will be open for Columbus Day on Monday, but the bond market will be closed. Retail sales for September will come out on Friday and are expected to rebound from a sluggish first-half.
Earnings’ season kicks off unofficially on Tuesday with Alcoa reporting third quarter results. We will also hear from east coast rail and intermodal carrier CSX on Wednesday with earnings estimated at $0.45 per share vs. last year’s $0.52. Most equity market indexes are holding modest gains for the year, but with a notable increase in volatility as the third quarter ended and the fourth quarter began. However, Wall Street’s ability to handle most of the challenges thrown at it bodes well for the remainder of 2016, but income stocks (especially REITS, utilities and telecoms) will be hard pressed to maintain any momentum as interest rates trend higher.
Here is the answer to last week’s trivia question: The NASDAQ, the first electronic stock exchange focusing on the trading of OTC stocks, was established in? 1966,1971,1979 or 1982. Answer: February 8, 1971. On that first day, 2,500 stocks were traded. Today, the NASDAQ list about 3,100 individual equities.
Today’s Trivia Question: The percentage of women CEOs of the companies comprising the Fortune 500 is? 2.5%, 3.6%, 4.8% or 5.7%.