Market Perspective for September 17, 2016

Policymakers alleviated apprehensions regarding a potential interest rate following a volatile trading week. Federal Reserve Governor Lael Brainard and Minneapolis Fed President Neel Kashkari both warned against raising rates too soon. While the SPDR Standard & Poor’s (S&P) 500 index ETF (SPY) was up approximately 1 percent on the week, the SPDR Technology Select Sector ETF (XLK) rose 3 percent in response to a strong performance late in the week from Apple (APPL) based on strong sales of the new iPhone 7. The Dow and the Standard & Poor’s 500 index rose 1 percent, and the tech-heavy Nasdaq increased by more than 2 percent.

Chinese industrial production numbers rose 6.3 percent due to housing construction and government spending. The UK Consumer Price Index (CPI) and the Producer Price Index (PPI) figures were also released. Both reports reflected slight increases, which continue to allay fears over Brexit. These concerns were also alleviated by Thursday’s UK retail sales figure that was stronger than expected. As anticipated, the Bank of England (BoE) kept their benchmark interest rate unchanged.

Eurozone industrial production numbers unexpectedly fell in July, suggesting the region may struggle in the second half of the year. Thursday’s economic reports also included the latest eurozone CPI figures, which showed a slight increase and met analysts’ expectations. iShares MSCI EAFE ETF (EFA) and the MSCI Emerging Markets ETF (EEM) were relatively unchanged on the week.

On Wednesday, mortgage purchase applications jumped 4.2 percent on speculations that homebuyers would attempt to lock in rates before any possible increase by the Fed. Oil was down more than 7 percent on the week and shares of the Energy Select Sector SPDR ETF (XLE) were down more than 2 percent. Weekly unemployment claims continued to hover near historic lows at just 260,000 first-time claims. Retail sales figures released Thursday, showed an unexpected drop of 0.3 percent, the first decline in six months.

Widely-held tech giant Oracle (ORCL) reported quarterly earnings and revenues that missed both top and bottom line expectations. Shares were lower by more than 2 percent on the news. Shares of Novavax (NVAX) plummeted over 80 percent on heavy volume when the company’s respiratory disease vaccine failed clinical trials.

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