Telemus Weekly Market Review

October 31 – November 4

The stock market registered its second consecutive weekly decline as the looming election contributed to increased caution among participants. For the week the S&P 500 was off 1.94%, the Dow lost 1.50% and the Nasdaq Composite turned in the worst performance, down 2.77%.

With the presidential election coming up on Tuesday, participants saw no reason to rush into stocks, especially when confronted with last Friday’s news that the FBI is once again investigating Hillary Clinton after a new batch of emails was uncovered. The news led to a tightening in polls while market participants who had priced in an easy Clinton victory were forced to adjust their positions.

The down week appeared to be on track for a higher close on Friday, after the S&P 500 resisted a move below its 200-day moving average. However, the index slid from its high in afternoon action, but avoided a close beneath the 200-day average. The Friday volatility took place after the release of the Employment Situation report for October, which was mixed relative to expectations. Nonfarm Payrolls increased by a below-consensus 161,000 (Briefing.com consensus 175,000), but average hourly earnings increased at a faster-than-expected 0.4% (Briefing.com consensus 0.3%).

Although the upcoming election received a lot of attention, market participants also had to deal with the last heavy batch of third-quarter earnings. Facebook was one of the most notable companies to report, but its shares retreated as cautious guidance overshadowed better than expected results.

The busy week also featured the latest policy decision from the Federal Reserve, but to no one’s surprise, the central bank held pat, showing little willingness to rock the policy boat ahead of the election. The policy statement did say that the case for a rate hike has strengthened, but the probability of a December rate raise declined, as indicated by the fed funds futures market. The implied likelihood of a December hike ended the week at 66.8%, down from last week’s 74.2%. Not surprisingly the 10 year U.S. Treasury note finished the week at a yield of 1.776%, roughly 7 basis points lower than last weeks close.

In international news, Brexit remained in the headlines after a British court determined the government lacked the authority to trigger the Article 50 process to exit the EU without parliamentary approval. China PMIs hit a two-year high. The Bank of Japan held policy steady. Spain ended its ten-month political deadlock, returning Prime Minister Rajoy to office following a vote last weekend.

Oil fell in each session during the week, with WTI settling on Friday at $44.07, its lowest level since mid-September and 9.5% below the previous Friday’s settlement of $48.70. It was crude’s worst one-week performance since January.  

November 7 – November 11 Economic Calendar

  • Monday
  • Gallup US Consumer Spending Measure
    8:30 AM ET
  • Labor Markets Conditions Index
    10:00 AM ET
  • Charles Evans Speaks
    2:45 PM ET
  • Consumer Credit
    3:00 PM ET
  • Charles Evans Speaks
    12:20 PM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM ET
  • Tuesday
  • NFIB Small Business Optimism Index
    6:00 AM ET

  • Charles Evans Speaks
    7:45 AM ET

  • Redbook
    8:55 AM ET

  • JOLTS
    10:00 AM ET

  • Charles Evans Speaks
    12:20 PM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM ET
  • Wednesday
  • MBA Mortgage Applications
    7:00 AM ET
  • Wholesale Trade
    10:00 AM ET
  • EIA Petroleum Status Report
    10:30 AM ET
  • Neel Kashkari
    Speaks
    1:30 PM ET
  • John Williams Speaks
    9:00 PM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM ET
  • Thursday
  • Jobless Claims
    8:30 AM ET

  • James Bullard Speaks
    9:15 AM ET

  • Bloomberg Consumer Comfort Index
    9:45 AM ET

  • EIA Natural Gas Report
    10:30 AM ET

  • Treasury Budget
    2:00 PM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM ET
  • Friday
  • Consumer Sentiment
    10:00 AM E

  • Baker-Hughes Rig Count
    1:00 PM ET

  • Charles Evans Speaks
    12:20 PM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM ET

PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. This market commentary is a matter of opinion and is for informational purposes only.  It is not intended as investment advice and does not address or account for individual investor circumstances.  Investment decisions should always be made based on the client’s specific financial needs, goals and objectives, time horizon and risk tolerance.  The statements contained herein are based solely upon the opinions of Telemus Capital, LLC.  All opinions and views constitute our judgments as of the date of writing and are subject to change at any time without notice. Information was obtained from third party sources, which we believe to be reliable, but not guaranteed.