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This Week's Market Review

The rally continued this week with all three of the major market indices ending the week in the green. We saw positive news on the inflation front as the October core PPI fell a suprising 0.9% while the core CPI only rose 0.1%. This shows that inflation pressures at the consumer level are cleary dissipating. Oil prices fell again this week, to close at $55.80 per barrel, helping to boost optimism on the inflation front. The FOMC minutes released, however, revealed that the Fed is still concerned about elevated core inflation and noted that inflation risks still remain. The Fed did not rule out the possibility of further rate hikes. Economic data this week showed that October housing starts fell 14.6% while October retail sales dropped 0.2%. October industrial production rose only 0.2%, while the key manufacturing component was down 0.2%. While the trend clearly remains up, there are patches of weakness such as housing, although modest growth in consumer spending and industrial output remain. Going forward, the talk of recession has faded and focus will now turn towards holiday spending as we near 2007 and what is forecast to be a year of moderate earnings growth with low and stable interest rates.

The DOW closed the week up, gaining 234.13 points to close at 12342.56. The S&P rose 1.5%, adding 20.30 points, ending the week at 1401.20. The NASDAQ surged 2.3%, climbing 56.14 points, ending the week at 2445.86.