Week of April 4, 2016
Domestic equity markets were pushed higher last week by dovish comments from the Federal Reserve and cooperative economic data that didn’t change expectations for future rate hikes.
The Dow Jones Industrial average rose 1.6% while the S&P 500 climbed 1.8% and the Nasdaq gained 3%. This closed out a first quarter where the S&P 500 appreciated 0.8%, a small miracle given its collapse during the first several weeks of 2016.
Goldilocks Gets a Job
The Labor Department released March jobs figures on Friday. This is the last report before the Federal Reserve’s next meeting in late April. According to the figures, U.S. employers added 215,000 jobs in March, slightly above consensus expectations and roughly in line with the average monthly gain for the past year. The unemployment rate ticked up slightly to 5%, but this is largely the result of more Americans looking for jobs. For the month, the participation rate rose to 63%, a good sign as an improving economy and slightly rising wages encourage out-of-work Americans to begin looking for jobs again. The average hourly earnings rate rose 2.3% year-over-year to $25.43.
IPO Market Dries Up
The volatility in the equity markets during 2016 has taken a toll on initial public offerings. So far this year, only nine companies have gone public raising just $1.2 billion. This is the lowest number of deals since the depths of the financial crisis when two firms raised $830 million in the first quarter of 2009. Interestingly, while nine deals were completed, more than twice as many companies shelved plans at the last minute due to the market turbulence. This marks only the fifteenth quarter since 1995 where the number of withdrawn public filings exceeds the number of completed listings. This is extremely unusual given markets are hovering near all-time highs.
Gold Shines During First Quarter
Gold surprised several investors during the start of 2016 with a 16.5% rally during the first three months of the year. This marks the largest quarterly gain in three decades. Most of the rise was recorded during the first few weeks of the year, which is not unusual given the slump in stocks. However, the precious metal added to its gains even as stocks rallied in the back half of the quarter. Is this a sign that the recent stock rally isn’t sustainable? A precursor to pending uncertainty given the U.S. election trajectory? Or, simply a response to the continued dovish stance by most central banks? Only time will tell. The rise in the commodity has also pushed gold mining equities higher. Some of the largest players have witnessed stock appreciation of around 50% so far in 2016.
Fun Story of the Week
Have you ever wanted to change your name? Perhaps you are tired of it, your parents saddled you with something you just don’t like, or the combination of your newly married name sounds silly. Some people have a very different reason for wanting to do so: their name breaks the internet. Jennifer Null has this problem. Whenever she fills out an online form to buy books or a plane ticket, she is greeted with a message to fill in her last name and try again. Most programmers know that “null” is the default database entry when a field is left blank, so her last name is fooling the computer and won’t let her proceed with her transaction. She must call and complete the transaction by phone. These types of problems are called “edge cases” by programmers; the one in a millionth example that doesn’t work. But, as the world becomes more global, they are occurring more frequently. For example, some Hawaiians with last names that include long strings of vowels, or westerners using Japanese websites. So, anyone who is not happy with their great aunt’s old fashioned name, be grateful. At least you can book a hotel room online.
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Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
Precious metal investing involves greater fluctuation and potential for losses. Investing involves risk including loss of principal.
The Dow Jones Industrial Average is comprised of 30 stocks that are major factors in their industries and widely held by individuals and institutional investors.
The NASDAQ Composite Index measures all NASDAQ domestic and non-U.S. based common stocks listed on The NASDAQ Stock Market. The market value, the last sale price multiplied by total shares outstanding, is calculated throughout the trading day, and is related to the total value of the Index.
S&P 500 INDEX
The Standard & Poor’s 500 Index is a capitalization weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
Wall Street Journal, March 2016, http://www.wsj.com/articles/gold-posts-biggest-quarterly-gain-in-decades-1459463809
Wall Street Journal, April 2016, http://www.wsj.com/articles/hilsenrath-jobs-report-leaves-fed-go-slow-strategy-in-place-1459516318
Wall Street Journal, April 2016, http://www.wsj.com/articles/u-s-march-nonfarm-payrolls-rise-by-215-000-jobless-rate-5-0-1459513893
Financial Times, March 2016, https://www.ft.com/intl/cms/s/0/534b5560-f7d1-11e5-96db-fc683b5e52db.html#axzz44oOTDlF0
Wall Street Journal, March 2016, http://www.wsj.com/articles/global-stocks-pressured-by-falling-commodities-prices-1459409764