Weekly Market Snapshot

Market Commentary
by Scott J. Brown, Ph.D., Chief Economist

The economic calendar was quiet until the end of the week. April retail sales results surprised to upside, with upward revisions to February and March. This ran counter to generally weak monthly sales reports from a number of individual retailers. March sales were likely distorted (and depressed) by the early Easter. Results reflected strong trends in nonstore retailers (which includes Internet retailers), restaurants (helped by low gasoline prices, but also reflecting a long-term trend of households taking more meals outside the home), and drug stores (which likely reflects runaway prices of pharmaceuticals). Figures suggested an upward revision to the first quarter GDP growth estimate and boosted expectations for 2Q16 GDP growth.

The stock market was unimpressed by the retail sales results. Many investors remain worried about the prospects for earnings.

Next week, the economic calendar picks up, with several reports piling up on Tuesday. The focus, however, is likely to be on the FOMC minutes. We’re unlikely to learn much new from these minutes. We know that officials are split on the expected timing of rate increases, but the hawkish view (those wanting to raise rates sooner rather than later) is a small minority. Nevertheless, investors will try to glean something about whether the Fed will raise rates in June or wait until September (or December). Residential construction activity and industrial production are expected to have picked up in April, following Easter-related weakness in March.

Indices

Last Last Week YTD return %
DJIA 17720.50 17660.71 1.70%
NASDAQ 4737.34 4717.09 -5.39%
S&P 500 2064.11 2050.63 0.99%
MSCI EAFE 1645.55 1641.61 -4.12%
Russell 2000 1108.60 1107.95 -2.40%

Consumer Money Rates

Last 1 year ago
Prime Rate 3.50 3.25
Fed Funds 0.37 0.12
30-year mortgage 3.63 3.85

Currencies

Last 1 year ago
Dollars per British Pound 1.445 1.575
Dollars per Euro 1.138 1.135
Japanese Yen per Dollar 109.02 119.15
Canadian Dollars per Dollar 1.285 1.196
Mexican Peso per Dollar 17.970 15.265

Commodities

Last 1 year ago
Crude Oil 46.70 60.50
Gold 1271.20 1218.20

Bond Rates

Last 1 month ago
2-year treasury 0.75 0.75
10-year treasury 1.73 1.77
10-year municipal (TEY) 2.38 2.55

Treasury Yield Curve – 05/13/2016


As of close of business 05/12/2016

S&P Sector Performance (YTD) – 05/13/2016


As of close of business 05/12/2016

Economic Calendar

May 16  — Empire State Manufacturing Index (May)
Homebuilder Sentiment (May)
May 17  — Consumer Price Index (April)
Building Permits, Housing Starts (April)
Industrial Production (April)
May 18  — FOMC Minutes (April 26-27)
May 19  — Jobless Claims (week ending 5/14)
Philadelphia Fed Index (May)
Leading Economic Indicators (April)

Past performance is not a guarantee of future results. There are special risks involved with global investing related to market and currency fluctuations, economic and political instability, and different financial accounting standards. There is no assurance that any trends mentioned will continue in the future. While interest on municipal bonds is generally exempt from federal income tax, it may be subject to the federal alternative minimum tax, state or local taxes. In addition, certain municipal bonds (such as Build America Bonds) are issued without a federal tax exemption, which subjects the related interest income to federal income tax. Also municipal bonds may be subject to capital gains taxes if sold or redeemed at a profit. Investing involves risk and investors may incur a profit or a loss.

US government bonds and treasury bills are guaranteed by the US government and, if held to maturity, offer a fixed rate of return and guaranteed principal value. US government bonds are issued and guaranteed as to the timely payment of principal and interest by the federal government. Treasury bills are certificates reflecting short-term (less than one year) obligations of the US government.

Commodities trading is generally considered speculative because of the significant potential for investment loss. Markets for commodities are likely to be volatile and there may be sharp price fluctuations even during periods when prices overall are rising. Specific sector investing can be subject to different and greater risks than more diversified investments.

Tax Equiv Muni yields (TEY) assumes a 35% tax rate. Municipal securities may lose their tax-exempt status if certain legal requirements are not met, or if tax laws change.

Material prepared by Raymond James for use by its financial advisors.

Data source: Bloomberg, as of close of business May 12, 2016.