Markets ended a rollercoaster week on an upbeat note, giving the S&P 500 its biggest weekly gain in nearly two years and erasing December losses.[1. http://www.cnbc.com/id/102284110] Markets were pulled in different directions by several factors, including central bank actions, a deep slide in the Russian ruble, and further gyrations in oil markets. For the week, the S&P 500 gained 3.41%, the Dow grew 3.03%, and the Nasdaq added 2.40%.[2. https://www.google.com/finance?chdnp=1&chfdeh=0&chdet=1419173920056&chddm=1955&cmpto=INDEXDJX:.DJI;INDEXSP:.INX;INDEXNASDAQ:.IXIC&cmptdms=0;0;0&q=INDEXDJX:.DJI,INDEXSP:.INX,INDEXNASDAQ:.IXIC&ntsp=0&ei=6dOWVMH5FpS28gbFyIG4Dg]

Falling oil prices stoked additional volatility last week as investors grappled with the potential effects of cheap oil. Oil fell for the fourth straight week, ending with U.S. benchmark WTI at under $60/barrel.[3. http://www.cnbc.com/id/102282630] Gasoline prices followed the decline, putting the national average at $2.409 on Sunday.[4. http://fuelgaugereport.aaa.com/todays-gas-prices/  (As of 12/21/14)] Domestically, low gas prices are a net win for U.S. consumers who suddenly have more discretionary income to spend.

However, Russia, one of the world’s major oil producers, felt the sting of falling oil prices. The Russian economy, which has been battered by economic sanctions over Ukraine, is in real trouble. Nervous currency traders caused a run on the Russian ruble, which fell an alarming 19% within one 24-hour period last week.[5. http://www.businessweek.com/articles/2014-12-16/no-caviar-is-not-getting-cheaper-everything-you-need-to-know-about-the-russian-ruble-collapse]. Russia’s sinking economy is potentially a threat to its major trading partners, who depend on Russian demand for their goods. One report indicates that one in eight German companies are considering a withdrawal from Russia because of the risk represented by its unstable economy.[6. http://rt.com/news/216447-ruble-threat-german-economy/] A deteriorating economic situation could also escalate geopolitical tensions over the Ukraine.

Investors cheered at the news that the Federal Reserve is likely to hold interest rates low for at least the first few months of 2015.[7. http://www.cnbc.com/id/102284110] Though the Fed feels confident enough about economic growth to raise rates next year, policymakers intend to remain “patient” by taking a slow approach to rate hikes.[8. http://www.newsweek.com/us-growth-gives-federal-reserve-confidence-293049] To translate: The Fed thinks that the economy is on track but doesn’t want to spook investors by hiking up rates too soon.

Looking ahead, it’s hard to know which way markets will go in the final weeks of the year. Historically, December has been a good month for equities, and stocks could be poised to go higher.[9. http://www.usatoday.com/story/money/markets/2014/11/30/dec-market-report-santa-claus-rally/70098600/] In the plus column, the Fed promises continued low rates, plunging gas prices are putting more dollars in consumers’ wallets, and spirits about the future are high. In the minus column, investors could be jittery about the knock-on effects of falling oil and may be feeling uncertain about 2015.

As 2014 draws to a close, we want to thank you for the privilege of serving you this year. We are honored by the trust you place in our firm and sincerely appreciate the opportunity to work with you. We are excited about what 2015 will bring and look forward to continuing to support you and your family for many more years to come.

ECONOMIC CALENDAR:

Monday: Existing Home Sales

Tuesday: Durable Goods Orders, GDP, Personal Income and Outlays, FHFA House Price Index, Consumer Sentiment, New Home Sales

Wednesday: Jobless Claims, EIA Petroleum Status Report

Thursday: U.S. Markets Closed for Christmas Holiday

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HEADLINES:

Weekly jobless claims fall. Claims for new unemployment benefits and the four-week moving average both fell last week, indicating that the labor market is doing well in the fourth quarter.[10. http://www.cnbc.com/id/102279896]

Service sector growth slows in December. Activity in the service sector – which contains industries like financial services, retail, and food service – grew at the slowest rate since February. Slow growth could take a bite out of fourth-quarter economic growth.[11. http://www.cnbc.com/id/102279924]

Inflation falls most in six years in October. Domestic prices for goods and services fell by the most in six years as gasoline prices plummeted. However, stripping out volatile food and fuel prices, core consumer prices edged slightly up.[12. http://www.cnbc.com/id/102275854]

Mortgage rates fall, but buyers don’t bite. Mortgage rates dropped to their lowest level since May 2013, but homebuyers don’t seem to be interested. The takeaway? Though interest rates may rise next year, lower mortgage rates can still be found.[13. http://www.cnbc.com/id/102274680]