All Clear? (Weekly Market Update)
Weekly Market Update (Week Ending October 9th, 2015)
All Clear?
Stocks continued to rally this week with impressive bounces to all markets we follow. Emerging markets were especially strong, adding over 5% for the week. U.S. markets were strong as well with the S&P 500 and Dow Jones Industrial Average adding 3.26% and 3.72% respectively. Even with the impressive rally we've seen over the last week and a half, markets remain negative for 2015.
There isn't anything to pin the rally on specifically, as things haven't really changed in the last 10 days, but I will try to offer up some sort of theory. I discussed last week that perhaps stocks have exhausted themselves on the downside for the time being and that weakness sometimes presents value. That is a possibility. In addition to oversold conditions, perhaps the Federal Reserve minutes released this week have soothed concerns that a rate hike is on the way. The Fed continued to cite global growth concerns. And since the Fed isn't going to raise rates because of soft global growth, perhaps stocks can rally back to the highs. That's plausible too I suppose.
I also think oil is a very important factor in the rally. We've seen oil prices rise back to near $50. And with all the talk of cheaper oil being great for the consumer, I for one believe that collapsing oil prices are not a positive sign. I think right now we need somewhat higher oil prices to help reignite a broad based global stock rally. All of this has come on the heels of the U.S. dollar getting weaker, which has been a concern for corporate profits for some time. Could a weakening U.S. dollar be another positive development?
I may have titled this week's update "All Clear?" ?but that question mark is there for a reason.
Michael J. Basile, CFA
Chief Investment Officer | Principal
Matune Basile Advisors
295 N. Kerrwood Dr. | Suite 102 | Hermitage, Pa 16148
[email protected] | 724.977.6275
Disclaimer: Matune Basile Advisors is a Registered Investment Advisor in the State of PA & OH. This information is intended for informational purposes only. Past performance is not an indication of future results. Please consult your tax, legal and or investment advisor before implementing any of these strategies.