Click here for the Weekly Wrap by Briefing.com.
BOTTOM LINE: Overall, last week's market performance was positive considering recent gains and holiday-shortened trading. The advance/decline line rose, most sectors gained and volume was about average on the week. Measures of investor anxiety were mixed. The average 30-year mortgage rate declined for the first time in 13 weeks, falling to 6.28%. This is 107 basis points above all-time lows set in June 2003. Mortgage rates will likely head modestly lower over the intermediate-term. Moreover, the benchmark 10-year T-note yield fell 7 basis points on the week as inflation fears continue to diminish and optimism increased for a Fed “pause” after traders viewed the Nov. 1 Fed minutes. Small-caps and cyclicals continued to outperform on increasing optimism over the health of the US economy. The US dollar rose slightly on the week even as increasing expectations of a European Central Bank rate hike and a US Fed “pause” should have pressured the currency. As well, gold rose again on continuing international diversification out of energy and the euro and into the precious metal. In my opinion, the rise in gold is not a result of increasing inflation fears. Unleaded Gas futures continued their recent collapse and are 50% below September highs even as refinery utilization still remains below normal as a result of the hurricanes. Natural gas supplies decreased slightly this week even as a substantial amount of daily Gulf of Mexico production remains shut-in. Natural Gas has now dropped 24% from recent highs. I continue to believe global energy demand destruction and a substantial increase in supplies into 2006 will continue pushing energy prices substantially lower over the intermediate-term. The S&P 500 is closing in on my mid-year prediction of a double-digit gain. The index is currently up 6.4% for the year.
*5-day % Change
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