Investment Week at a Glance
Stocks finished higher for the week. The Dow Jones Industrial Average rose 0.5%, the S&P 500 was up 0.3%, and the NASDAQ rose 0.9%. Foreign stocks (MSCI EAFE) were also up for the week, rising 1.3%. Bond prices were down for the week, with the 10-year U.S. Treasury ending the week at 4.14%. (Data source: Wall Street Journal)
Fed Expected to Cut Rates
The Federal Reserve will meet this week in its last meeting of the year, and markets are pricing in an 88% chance of a cut. With the Fed expected to cut rates, markets may pay close attention to the “dot plot,” which shows the expected rate going forward for the next 3 years. Markets could see some volatility if we either don’t get a cut or if the Fed indicates this could be the last cut for the foreseeable future. However, the Fed will have a new chair next year as Powell’s term comes up in May, and President Trump is likely to appoint someone who advocates for more rate cuts.
Jobs Report This Week
With the government shutdown lasting as long as it did, a lot of key economic data got delayed or just not reported. One of the most important data points missing was the jobs report for October. We will now get the November report this week, and expectations are for a weak report and a tick higher in unemployment. Wage growth is also expected to move slightly lower but still outpace inflation. With wages growing faster than inflation, the consumer continues to increase its purchasing power, helping drive the economy.
Netflix to Buy Warner Bros. in $72 Billion Deal
Netflix is set to buy Warner Bros. for $72 billion in a cash and stock deal. The two sides have said they expect the deal to take about 12-18 months to officially close. Investors did not have a very positive reaction to the deal as Netflix stock fell nearly 6% last week. On the other hand, Warner Bros stock rose nearly 10% and could still have some room to rise as it is trading 5% under the sale price of $27.75 per share. There is some worry that the deal might actually not go through, as it still needs regulatory approval. (CNBC)
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Quiz
How many times does the Fed meet a year to decide on rates? (Scroll Down for Answer)
- 12
- 8
- 6
- 4
Answer:
- 8. The Federal Reserve board meets 8 times a year to decide on rates. The 8 meetings per year started in 1981 but law states that the Fed is only required to meet 4 times a year.
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