Good Evening, Investor:
Monday, November 30, 2015
Stocks limped to a close in today's session but still managed to close out the month of November with modest gains. This was no small feat given the outsized gains in October. This week sees the release of several major economic reports that could set the tone for the December 16 Federal Open Market Committee interest-rate announcement, including the official jobs report, Institute for Supply Management surveys, factory orders, and speeches by Federal Reserve Chair Janet Yellen.
The Dow fell 78 points, with 20 of its 30 components retreating; the S&P 500 Index lost 9; and the Nasdaq slipped 18. Decliners led advancers by five to four on the NYSE and more narrowly on the Nasdaq. The prices of Treasuries strengthened. Gold futures rose $9.10 to close at $1,065.30 an ounce, but the metal had a dismal month, with the most actively traded contract down 6.7%. Crude oil declined six cents to settle at $41.65 a barrel.
For the month of November, the Dow gained 0.33%, the S&P 500 Index was basically flat at 0.06% higher, and the Nasdaq advanced a more solid 1.07%.
In other business news
- In what it called a "milestone" in China's economic development, the International Monetary Fund today said it would make China's renminbi a reserve currency starting next year, joining the dollar, euro, pound, and yen. Central banks around the globe build up their reserves with these currencies. However, analysts said the announcement was also likely aimed at prodding China to continue reforming its currency policies, as it would have to live up to the demands of global investors and central bankers.
- Chicago's Purchasing Managers' Index seesawed back into contraction territory in November after expanding in October, repeating the volatile pattern of the past several months. The index fell from 56.2 to 48.7; a reading below 50 indicates contraction. Business activity in the Chicago region was dragged down by the sagging new-orders, backlog-orders, and prices-paid components. Employment was a bright spot.
- Pending home sales rose only 0.2% month over month in October and 3.9% year over year, according to the National Association of Realtors' Pending Home Sales Index. Pending home sales measure contracts signed but not closed. The NAR said there is plenty of housing demand but limited supply.
- India's economy picked up pace in the third quarter, advancing at a 7.4% annualized rate compared with the 7.0% rate in the second quarter. The news comes ahead of a busy week in the country, with India's central bank meeting tomorrow to set interest rates after cutting them last month and the parliament set to vote on a tax-reform package that would simplify corporate taxes.
- Concerns over a lackluster Black Friday shopping period sent shares of retailers lower, particularly those of department stores. Shares of Wal-Mart Stores Inc. (WMT) were off 1.75%, Target's (TGT) dropped 1.28%, Macy's (M) sank 2.28%, J. C. Penney's (JCP) lost 2.92%, and Nordstrom's (JWN) declined 2.26%. Best Buy, on the other hand, said it saw good volume of both store and online traffic over the weekend, and its shares (BBY) gained 0.95%.
The holiday gift-giving season is finally here, which means it's once again time to fib to children about the nature of those gifts and where they come from. I'm referring, of course, to hoverboards, the hottest gift of the season. To butcher the famous Christmastime editorial, "No, Virginia, there isn't a hoverboard that actually hovers." To any children reading this daily stock market publication, that's the only fib I'm referring to. Hoverboards. Nothing else to see here.
It's appropriate that the so-called hoverboards made their debut in 2015, the year Marty McFly time-traveled to in Back to the Future II. McFly jumped on a hoverboard and into the dreams of every kid who saw the movie and instantly coveted a fictional device. Two decades later, and devices people misleadingly call hoverboards are everywhere. Perhaps no one has noticed that they have wheels, don't hover, and function instead like entry-level Segways.
The biggest mystery is how hoverboards got named, given that they're neither hovering nor a board. My guess is they started brainstorming on a blackboard by listing all the things it most definitely is not, and then someone forgot to erase "hoverboard." But the second-biggest mystery is where they came from and how they got produced so fast. Reporters from Buzzfeed, Fast Company, and others have been on the hunt for how such a relatively sophisticated technological product could go from nonexistent to the season's hot product in only a matter of months.
It's a long, complicated tale that stretches from celebrity photos on Instagram to China, but the short answer is that Chinese manufacturers are now so sophisticated and nimble that they can create a hot trend via social media and begin mass-producing the newly popular product in almost no time at all. A celebrity sends out an Instagram of him or herself using a product (sometimes as part of a deal with the company). This creates buzz for the prototype while competing manufacturers in China reverse engineer the product and create dozens of iterations with varying degrees of quality. The speed at which this works is astounding. It sounds odd to say this about a product that most people have yet to see in person, but there's now a thriving hoverboard industry in China.
The challenge for consumers is that the product is so new that it's hard to tell the good from the bad. Consumers looking for added excitement will be pleased to learn that there are reports of some boards exploding due to overheating battery packs. I suppose that's one way to (temporarily) hover.
Social Media Managing Editor
The opinions stated are those of the author and are not intended to be used as investment advice. The views are subject to change at any time in response to changing circumstances in the market and are not intended to predict or guarantee the future performance of any individual security, market sector or the markets generally, or any mutual fund.
17,719.92, -78.57 or -0.44%
5,108.67, -18.86 or -0.37%
2,080.41, -9.70 or -0.46%
S&P MidCap 400
1,461.81, -7.17 or -0.49%
1,198.11, -4.26 or -0.35%
10-Yr Treasury Notes
41.65, -0.06 or -0.14%
1,065.30, +9.10 or +0.86%