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Key Dates/Data Releases
10/1: ISM manufacturing index, jobless claims
10/2: Employment situation
10/6: International trade
10/9: Import and export prices
10/14: Producer Price Index, retail sales
10/15: Consumer Price Index
10/16: Industrial production
10/20: Housing starts
10/22: Existing home sales
10/26: New home sales
10/27: Durable goods orders
10/28: Federal Open Market Committee announcement
10/30: Personal income and outlays
Volatility returned to the equities markets in the third quarter, impacted by economic stress in China (the world's second largest economy) and Greece, coupled with underwhelming corporate earnings reports and falling energy stock prices. While some economic sectors, such as housing and unemployment, offered favorable news, others, including exports and wages, showed little in the way of positive movement. As a result, the Federal Open Market Committee once again declined to raise interest rates, noting that inflation still hadn't reached the committee's preferred target rate of 2.0%.
Despite a closing rally in the major market indexes listed here, the third quarter ended a tumultuous period in negative territory. The Dow closed the month of September down 243.33 points for the month and 1,334.81 points for the quarter. The S&P fell 6.94% from the close of the second quarter and 6.74% for the year. The Nasdaq dropped 7.35% for the quarter, but only 2.45% for the year--markedly less than the other major indexes listed here. The Russell 2000 and the Global Dow suffered the biggest percentage losses for the quarter, falling 12.22% and 10.58%, respectively.
U.S. Treasuries were not immune to the economic tumult that befell the third quarter. The yield on U.S. 10-year Treasury bonds fell 31 basis points for the quarter. Oil prices (WTI) dropped from $59 per barrel during the second quarter to $46.36 per barrel at the end of the third quarter. Gold, meanwhile, also felt the effects of the global economy, finishing the third quarter at roughly $1,114.50 an ounce compared to $1,172 an ounce at the end of the prior quarter. Finally, not all falling values are necessarily bad, as the average retail price of a gallon of regular gasoline fell $0.48 to $2.322 at the end of this quarter.
Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.
China's slowing economy sent global markets reeling this summer. Already at its slowest pace in 25 years, China is struggling to reach its target growth rate of 7% for the year. Adding to concerns about the weakening of the world's second largest economy is the Chinese government's repeated intervention in an attempt to halt a massive sell-off and stabilize its securities market. Interest rates were cut and bank reserve ratios were lowered, allowing for more money to be available to borrow for investment. However, Chinese banks are facing increasing economic risks due to the increasing number of bad loans, further dampening the Chinese economy.
The encouraging start to the third quarter in the securities market proved to be short-lived as September saw stock values tumble. China's economic slowdown continues to dampen investors' enthusiasm. Will concern over the world's second-largest economy impact the Federal Reserve's decision to begin raising interest rates in an attempt to normalize monetary policy in the United States?
Data sources: Economic: Based on data from U.S. Bureau of Labor Statistics (unemployment, inflation); U.S. Department of Commerce (GDP, corporate profits, retail sales, housing); S&P/Case-Shiller 20-City Composite Index (home prices); Institute for Supply Management (manufacturing/services). Performance: Based on data reported in WSJ Market Data Center (indexes); U.S. Treasury (Treasury yields); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK); www.goldprice.org (spot gold/silver); Oanda/FX Street (currency exchange rates). All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results. All investing involves risk, including the potential loss of principal, and there can be no guarantee that any investing strategy will be successful.
The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indices listed are unmanaged and are not available for direct investment.
Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2015.
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