Recap: Week Ending September 25, 2015

Equities across the globe traded lower last week as markets continue to digest statements made from the United States Federal Reserve. In the United States, the NASDAQ 100 index led the way lower falling 2.29% last week to close Friday at 4,224.74. On the other hand, the Dow Jones Industrial Average finished the week down only 0.43%, making it the leading index in the United States. The Dow closed Friday at 16,314.67. From the action last week it appears that the volatility in the markets has settled as stocks began to establish a fairly well-defined trading range. Following the massive slide at the end of August, the Dow has stayed within roughly a 650 point range. It appears that this range which starts at around 16,000 and peaks near 16,650 is one where stocks will be stuck in for some time. A similar statement can be made in various other asset classes such as commodities where crude oil has established a very strong sideways pattern. Last week crude settled higher by $0.02 or 0.04% to close Friday at $45.34. The lack of volatility last week in crude marks the fourth straight week of sideways action for the North American benchmark energy product. With this being said, gold climbed marginally higher last week closing up $6.40 or 0.56% to settle Friday at $1,145.50. The move higher last week in gold is the second straight weekly climb higher in the price of the precious metal. The move higher in gold reflects the argument that investors are under the impression that the US Federal Reserve, or Fed, won’t increase interest rates in the foreseeable future. As gold is a hedge against inflation, any actions by the Federal Reserve to decrease inflation, such as increasing the benchmark Fed Funds Rate would send gold lower. However, one can argue that the market is indeed pricing in an interest rate increase as the price of the 30 year US Treasury Bond sold off last week, closing down $0.85 or 0.55% to settle Friday at $155.09. A move higher in interest rates would indeed send the price and value of Treasuries lower. With various asset classes sending mixed signals in regards to an interest rate hike, it appears that the market could be in for a very choppy October as investors and traders await the next FOMC interest rate decision at the end of the month.