Week in Review
Global equity markets were mixed again this past week due to heavier-than-usual economic data releases with the primary, global market drivers coming from the US. We opened this past week with the release of the Institute for Supply Management (ISM) Manufacturing PMI coming in at a reading of a tepid 50.1. As you can see from the chart below, a reading under 50 for the ISM Manufacturing PMI has typically been associated with recessionary environments:
Additionally, this past week ISM released what some economic analysts see as the more important ISM non-Manufacturing Index. Very simply, the non-manufacturing index gives a reading on the service economy which really is the major portion of the US economy. As you will see from the chart below, the non-Manufacturing Index has held up better than the manufacturing side of the economy.
Finally, the week wrapped up with what may be the piece of the interest rate puzzle for which the Federal Reserve (FED) has been looking. The US Bureau of Labor Statistics released the October non-farm payrolls number showing job additions of 271,000 for October. This number far exceeded all estimates and spurred many analysts to claim that this positive job report will clear the way for the FED to start raising rates. The notion that the FED will be cleared to raise rates, put some downward pressure on both stocks and bonds by the end of the week.
We continue to look at both headline data as well as the detail behind the numbers to gain insight to economic and market direction.
Getting Technical with Market Charts
In this section we present charts of the S&P 500 Stock Index and the US Bond Market Index relative to their 50 day (blue line) and 200 day (red line) moving averages. In addition, we have added the blue shaded area which represents the recent trading channel. The 50 and 200 day moving averages are widely followed market trend indicators that provide a general picture of the health of the broad indexes.
Chart 1 – S&P 500
Chart 2 – Aggregate Bonds
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Disclaimer – Information contained herein is taken from sources believed to be reliable, but cannot be guaranteed as to its accuracy. Market opinions contained herein are intended as general observations and are not intended as specific investment advice. The Standard and Poors 500 Index is an unmanaged group of securities considered to be representative of the stock market in general. The Barclays Aggregate Bond Index represents securities that are SEC-registered, taxable, and dollar denominated. The index covers the U.S. investment-grade fixed rate bond market, with index components for government and corporate securities, mortgage pass-through securities, and asset-backed securities. Contact your investment professional to discuss suitability for your particular circumstances. This article does not constitute an offer of sales of any securities. Securities trading is speculative and involves the potential loss of investment. Past results are not necessarily indicative of future results. Lighthouse Financial Advisors, Inc., dba Lighthouse Wealth Management, is registered as an investment advisor with the SEC and only transacts business in states where it is properly registered, excluded or exempted from registration requirements. SEC registration does not constitute an endorsement of the firm by the Commission nor does it indicate that the advisor has attained a particular level of skill or ability.